California just passed a $15 minimum wage. Even left-leaning economists say it’s a gamble. – Updated by Timothy B. Lee on March 31, 2016, 9:00 p.m. ET

California Gov. Jerry Brown.		Photo by Kimberly White/Getty Images for Fortune

California Gov. Jerry Brown. Photo by Kimberly White/Getty Images for Fortune

The “Fight for 15” movement got its biggest win yet on Thursday as the California legislature passed a bill to phase in a statewide $15-per-hour minimum wage over the next six years. Gov. Jerry Brown is expected to sign the legislation.

There’s a lively debate among economists about the economic impact of minimum wage hikes. Higher minimum wages provide raises to some workers, but some economists argue that they also prompt substantial job losses. Other economists dispute this, saying there’s little or no effect on employment and that businesses compensate for higher costs through reduced turnover, improved productivity at work, lower compensation for better-paid workers, and price increases.

So who is right? When I set out to interview economists about the effects of California’s minimum wage hike, I was expecting some strong disagreements. Instead, I found a broad consensus: California’s hike is so large — and would result in a minimum wage so high — that no one really knows what will happen. None of the three economists I interviewed was willing to make a prediction about how the new law would affect employment in California.

“It would be foolhardy to believe you could project what’s going to happen with any degree of confidence,” said Jeff Clemens, an economist at the University of California San Diego whose research has found that higher minimum wages have caused job losses in the past. That sentiment was echoed by Arindrajit Dube, whose research has suggested that minimum wage hikes do not cause significant job losses.

Of course, that in itself is a reason to be concerned, since California lawmakers are taking a risk with the livelihood of millions of low-wage California workers. But advocates of the California proposal argue that it’s a risk worth taking.

The economic impacts of minimum wage hikes is hotly debated

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Inequality – By Gideon Rose January/February 2016 Issue

What’s Inside

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Back in 1980, Irving Kristol, the “godfather of neoconservatism,” wrote an essay mocking the left’s obsession with income inequality: “The intensity with which economists work out their Gini coefficients, and the subtlety with which they measure income trends in the quintiles or deciles of the population, is matched—so far as I can see—by the utter lack of interest of the average American in their findings.” Having been impressed at the time by what seemed his cool logic, I checked back recently to see how the piece held up in the Age of Piketty. In retrospect, what was most striking was the setup: “It is my understanding, from surveying various studies of trends in income distribution in the United States over the past three decades, that economists have found very little significant change to have taken place.”

That was then; this is now. Were Irving still around to chime in, he would probably continue to mock. But ever the empiricist, he would have to concede that the objective realities of the situation had changed dramatically. Over the intervening years, real incomes and wealth have stagnated for the vast majority of Americans, even as they have skyrocketed for those at the very top. With some national variations, moreover, something similar has happened across the developed world.

These trends are starting to define our era. But what is driving them? What is the significance of the economic inequality that has resulted? And what can or should be done about it?

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Why economists were totally wrong about cheap oil – CHRISTOPHER S. RUGABER, AP MAY 23, 2015, 5:05 PM

gas pump

Matt RourkeGas is pumped into a car at the Eastcoast filling station Thursday, Dec. 18, 2014, in Pennsauken N.J.

WASHINGTON (AP) — If there was one thing most economists agreed on at the start of the year, it was this: Plunging oil prices would boost the U.S. economy.

It hasn’t worked out that way.

The economy is thought to have shrunk in the January-March quarter and may barely grow for the first half of 2015 — thanks in part to sharp cuts in energy drilling. And despite their savings at the gas pump, consumers have slowed rather than increased their spending.

At $2.74 a gallon, the average price of gas nationwide is nearly $1 lower than it was a year ago. In January, the average briefly reached $2.03, the lowest in five years.

Cheaper oil and gas had been expected to turbocharge spending and drive growth, more than making up for any economic damage caused by cutbacks in the U.S. oil patch.

Consider what Federal Reserve Chair Janet Yellen said in December: Lower gas prices, Yellen declared, are “certainly good for families. … It’s like a tax cut that boosts their spending power.”

Other experts were more direct: “Lower oil prices are an unambiguous plus for the U.S. economy,” Chris Lafakis, an economist at Moody’s Analytics, wrote in January.

So what did they get wrong?

It turns out that the economic effects of lower energy prices have evolved since the Great Recession. Corporate spending on drill rigs, steel piping for wells and railcars to transport oil has become an increasingly vital driver of economic growth. So when oil prices fall and energy companies retrench, the economy suffers.

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