The Instigator
Pro (for)
3 Points
The Contender
Con (against)
3 Points

Minimum Wage should not increase to $15.

Do you like this debate?NoYes+2
Add this debate to Google Add this debate to Delicious Add this debate to FaceBook Add this debate to Digg  
Post Voting Period
The voting period for this debate has ended.
after 3 votes the winner is...
It's a Tie!
Voting Style: Open with Elo Restrictions Point System: 7 Point
Started: 9/11/2015 Category: Economics
Updated: 2 years ago Status: Post Voting Period
Viewed: 6,195 times Debate No: 79625
Debate Rounds (4)
Comments (119)
Votes (3)




Resolution: The US Minimum Wage should not be raised to $15 an hour.

- No semantics.
- The time-frame for increase must be reasonable.
- Sources may be in an external link.
- Spelling and Grammar / Conduct sources are void.

The topic of the US Minimum Wage has been a hot spot for political and economic debate since it's creation in 1938. Created by the Fair Labor Standards Act, and set to $0.25 an hour, the wage has been the centerpiece of an unchallenged quantity of studies and academia. Pro (LordHelm) and Con (Romanii) will debate whether the Minimum Wage should be increased to $15 an hour within a fair time-frame (as high as 2025). Voters may only use Sources and Arguments to decide a winner. The debate has been reset to allow the opponents a chance to review their arguments, as neither side felt satisfied with their rounds.

Romanii has been picked for the debate, as he was the most qualified debater. He may start the first round, and I end in the 4th round. Otherwise, first round is for acceptance only.


Thanks to LordHelm for challenging me.

I'll be using this round only for acceptance. Good luck!
Debate Round No. 1


Thanks to Romanii for accepting this debate.

P1: Corporate Income v Employer's Income

A) Large Corporations.

A common misconception regarding the costs of Minimum Wage is that it's paid for by the corporations. McDonald's earns around $28 bn a year [1]. However, only $5.8 bn of this is profit. A lot at first, but McDonald's has 440,000 employees earning $9 an hour, a national average of 1,789 hours a year [2]. This would cost McDonald's upwards of $4.72 bn a year. Costing McDonald's over 80% of their profits.

The problem starts with the employer. The Employer is not the McDonald's company, but instead the franchise owner. Over 80% of their restaurants of privately owned franchises [3]. Whereas the Company earns high profit margins, independent restaurants average 2.4% [4]. A local McDonald's averages $800,000 (based on total revenue / outlets) and an average profit of $20,000 a year. The remaining profit is strictly corporate side. Based on this, and assuming the outlet has 15 workers [5](my place of work in a rural location consists of 27,) it would cost the outlet over $150,000.

This becomes a large issue. Independent franchises can not afford to pay doubled wages. and corporate can not afford to make up the difference for their franchises. This leads into P3: Stock Value.

B) Small businesses.

The next issue would be the cost to local businesses that run separate of a franchise. Profit Margins aren't much higher. The highest profit margins were for Limited Service establishments, at 6% [6]. To reuse the McDonald's estimate, $48,000. Still well under the $150,000 cost for just 15 employees [7]. Most establishments can not afford the increase in cost, and will surely go under, hire employees, or raise costs (leading to going under). New establishments have a 60% chance of going under in the first three years [8]. This number would skyrocket under increased costs and prices.

This leads into a major issue. Ripple effect. While small increases may have small ripples that heal over time (regardless of if it leaves an economic scar), a sudden increase to $15 an hour, even over five years, an increase 15x larger than most any other increase prior, will leave a massive ripple that may not heal. A massive increase in failure rates in new restaurants would eliminate industry growth, and the elimination of rural and independent restaurants that can't afford to raise prices 35% to make up the cost while maintaining the same profit margins. For Franchises, with a profit margin 1/3rd of that, they would have to raise prices by 71%. The Dollar Menu would have to be removed to keep business alive. This is based on wages taking up 35% of restaurant costs [9].

Restaurants make up 18% of all Minimum Wage workers, around 3,750,000 workers [10]. The industry as a whole employs 10% of the total US Workforce, and is set to create over 1.4 million new jobs within a decade [11]. Risking this industry would damage 14+ million jobs and wreck the Minimum Wage demographic. The industry makes up over 4% of the US GDP. This is just one of the many Minimum Wage industries that would get crippled. Supermarkets, like Walmart and K-Mart, manage profit margins between 1 - 2% [12]. They would have to raise prices incredible sums to keep afloat. Most in rural regions would go under, as they don't have the customer base to risk.

Another major industry at risk is the Gas Station industry. Gas Stations run on minimum wage, and they only earn pennies per dollar. $50 in gas can equal $1.20 in profit [13]. Most profit is from the actual store [14], where prices are already too high. Profit margins for gas stations are 1.7% [15]... Any Gas Station that's open 24 hours a day will suffer the worse. Midnight hours would become profitless. This is a dangerous industry to hit hard.

More will be discussed in P3.

P2: Average Annual Wages.

Con must assume that increasing Minimum Wage reduces poverty and increases wages. If it does increase the wages of the entirety of Minimum Wage workers, we'd see a notable increase in annual wages. Instead we see the opposite. As Minimum Wage goes down (based on 2013 USD standard)[16], the average Income of the US goes up [17]. This may not imply lower minimum wages lead to higher incomes, but it does imply that increasing the Minimum Wage does nothing for increasing the annual wages. If higher Minimum Wages led to a positive ripple effect, we should see this... be it from raising the pay of everyone increasing, or the increase in the economy.

Another look into the issue of correlation leads us to measuring the actual increases in the wage along side GDP growth [18]. For Con's case to stand, we MUST see a positive effect on GDP growth. In my chart, red lines show the moment of increase in the Minimum Wage. Of the nine increases, only two see an economic growth follow. The first was after WWII, when millions of high earning US Soldiers returned home. And the second, around 1978, saw rocky growth at best. Economic Growth has, otherwise, never followed an increase in Minimum Wage. For Con's case to be true, there must be a positive ripple effect.

If anything, the GDP decreases after practically all Minimum Wage increases. Again, while not implying the Minimun Wage was to blame, it does defy the logic Con must establish.

P3: Stock Values.

Companies stock would become a huge issue if profits disappear, prices go up without potential new return, or investors get scared. If McDonald's suddenly had it's franchises paying out $4.8 bn more a year in wage, it would cripple their stock. While most companies stock can survive a $0.25 increase, a $7.50 increase is well beyond the safe mark.

Walmart has a market cap of $205.5 bn [19]. Having to double the paychecks of each of their employees would cost upwards of $15 bn. This would eliminate all of Walmart's profits. Since we know the individual profit margins of the individual shops are lower than the overall corporate profit margins, most Walmart shops would have plummeting profit margins, and the stock of the overall company would drop entirely. Bad, especially since their stock has dropped over 30% in the last year, and most companies are struggling to readjust in a post-recession era. But this isn't a Walmart issue...

McDonald's has seen incredibly large sales declines in the past few years. In fact, McDonald's saw larger declines than they expected [20]. This, despite all the efforts put into promoting the franchise recently. This issue is hitting much of the Fast Food industry. Subway is seeing the largest decline [21]. Sales for the industry has dropped due to public awareness, but mostly the efficiency of better quality preserved foods that can be prepared in minutes without driving [22, 23].

All this taken into account, the stocks of minimum wage employers is destined only to fail, along with the companies themselves.

P4: Effect on Employees.

Most Economists have a fairly good idea that increasing the Minimum Wage would lead to a reduction in employment, or at least lead to a slowdown in future employment. One popular study done by the NATIONAL BUREAU OF ECONOMIC RESEARCH claimed that every 1 percent increase in average wages is associated with a 0.12% reduction in employment [24]. The increase is associated with as much as a 0.92% decrease in counties with lower average wages. By such measurements, a 100% increase in minimum wage would lead to a 12% reduction in employment. While obviously an extreme, even a 6% reduction would be crippling to the US economy. Counties facing lower average wages would face major recessions (as the highest possible reduction in employment is 92%. Obviously an extreme, but again, even a fourth the amount would be significant.)

The increase in wages, if not outweighed by a reduction in hours, would be outweighed by unemployment and an economic downturn. Another study by David Neumark found that minimum wages correlated (with controls in place to remove outside variables) with teenage job elasticity of -0.3 [25]. Meaning the demand of teenagers in the job market was reduced as prices increased. In basic terms, demand went down as prices went up. It's a basic principle in economics that when you need less people to buy a product, you raise the prices. Everything is a product. This is why when applying for a job, even at an establishment like McDonald's (where pay starts around $9 an hour), you write down Minimum Wage for the desired wage.


Most fast food companies are not in a position to pay doubled wages. They especially can't afford it when we take into account who is paying. Minimum Wage does not correlate with higher GDP growth or higher paychecks. Minimum Wage does, however, lead to higher amounts of job reduction and would cripple the stock values of major employers who are facing slowing business.

Minimum Wage should not be doubled.



Pro's entire case revolves around the premise that an increase in the minimum wage will severely hurt employers' profits, thus leading to all sorts of unpleasant consequences like businesses going bankrupt, stock values crashing, and unemployment rates rising. However, as I am going to argue, employers' profits will *not* significantly decrease -- if anything, they will *increase*. But of course, this seems absurd -- how can forcing companies to nearly double their labor costs possibly help them in any way? The answer to this lies in 3 critical mitigating factors which Pro has neglected to mention -- (1) increased consumption, (2) higher worker productivity, and (3) lower corporate tax rates.

But before I get into those, let's estimate the aggregate expense to businesses from having to double their labor costs. 42% of the workforce earns below the proposed minimum wage [1], and the current size of the workforce is about 123 million people [2], so that's roughly 52 million workers who would be getting a pay raise. Forbes calculated that the average salary of a person earning $15 per hour would be $17500 [3], and based on that, we can infer that someone earning the current MW ($7.25) would have a salary of around $8750. For the sake of simplicity (and to make this an extremely generous estimate), let's assume that all 52 million benefactors are earning the current MW, so that all of them will get an annual pay raise of $8750. This adds up to a grand total cost of... $455 billion. Keep this number in mind as I delve into my case.

C1) Increased Consumption

This is a fairly basic principle of economics -- when consumer incomes increase, aggregate demand increases as well, and the economy expands (i.e. businesses' profits grow). This is especially true because the consumers in question are poor: "'The marginal propensity to consume is substantially larger for low-wealth than for high-wealth households.' Poor people are what economists call 'borrowing constrained.' They tend to have more needs than are being met, so when money arrives, they spend it." [4]. The point here is that the majority of money paid to employees is quickly funneled back into the economy through consumption of goods. According to a paper released by the Federal Reserve Bank of Chicago, "an increase of $1.75 in the hourly federal minimum wage raises aggregate household spending by roughly $48 billion in the year following the minimum wage hike" [5]. In this debate, we are discussing an increase of $7.75, so we can extrapolate that the resultant boost in overall consumption (i.e. revenues for businesses) would be more than $212 billion.

C2) Higher Productivity

That higher wages result in greater worker productivity is not only intuitive, but also a well-documented theory among economists, as demonstrated this literature review by the National Bureau of Economic Research [6]. In addition to the obvious increase in 'motivation' which comes from large pay raises, workers who have greater income security also experience less poverty-related stress, which further boosts their productivity [7]. Moreover, when they are paid more, workers are far less likely to change jobs, meaning that employers have to spend less on attracting new human capital, and they also receive the immense benefits of having more experienced, long-term employees [8]. In fact, one study published in the Industrial and Labor Relations Review found that "high-wage firms can sometimes offset more than half of their higher wage costs through improved productivity and lower hiring and turnover costs" [9]. Apply this to the $455 billion labor cost increase -- businesses will see at least a $228 billion growth in revenues.

C3) Corporate Tax Cuts

73% of the United States' welfare expenditures are received by employed individuals with insufficient wages [10], and the total amount that the US spends on welfare is about $454 billion per year [11]. However, if the MW hike in question is implemented, then all employed people will be earning a "living wage", and will therefore no longer need assistance from welfare programs. This means that increasing the MW would reduce the amount of money the government needs by approximately $331 billion, thus freeing up space in the federal budget for a tax cut -- more specifically, a corporate tax cut. The total revenue from corporate taxes is currently $342 billion [12], so a MW hike would allow us to virtually *eliminate* the tax. The takeaway here is that businesses would be allowed to keep $331 billion more of their revenues than they otherwise would.


So according to my absurdly generous calculations, the total cost to businesses will be about $455 billion.

On the other hand, it was calculated that businesses would undergo massive increases in revenue from...
Increased consumption -- $212 billion
Higher worker productivity -- $228 billion
Lower corporate tax rates -- $331 billion
TOTAL -- $771 billion

Thus, we arrive at a quite conservative estimate of the net effect of the proposed MW hike on businesses' profits:

+ $316 billion

This large increase in profits has a positive impact on society at large because it enables businesses to create more jobs and pursue the production of innovative goods which improve the quality of life for everyone. With that established, let's not forget the most obvious positive impact of a MW hike -- a drastic increase in standard of living for 52 million people and their families. That is a huge benefit in and of its self; just as we take it for granted that increased unemployment is a "bad" thing, we should also take it for granted that increased standards of living is a "good" thing, and due to the sheer number of people it encompasses, it alone outweighs pretty much any impact my opponent can make.

Raising the MW to $15 has nothing but positive effects.

The resolution is resoundingly negated.

[5] (pdf file, pg. 3)
[8] (pg. 21)
Debate Round No. 2


R1: Increased Consumption.

This claim has already been debunked in My P2: Annual Wages case. Increased Consumption means increased spending. The GDP is merely a measurement of the movement of currency in a nation, aka spending. In R2, I gave evidence that minimum wage increases have never been followed by GDP growth. A case dropped by Con showing that when minimum wage increased [1], GDP growth almost always decreased [2]. For Con's case to be true, we MUST see an increase in GDP growth. History opposes Con's case.

Along with historically inconsistency, Con's case also falls short of academic consensus. In a popular study by famous economist J. Sabia, he shows that increases in minimum wage have only led to a negative impact on the GDP, specifically for low-skilled industries [3].

Reasons for this being that hikes in minimum wage correlates strongly with unemployment rates among teenagers [4]. The increase in unemployment negates a major source of growth in the economy, and reduces productivity. Another inherent issue with Con's claim is that only a small portion of those postivitely effected by hikes in wages are major contributors to the economy. Over 62% of minimum wage workers work only as a summer job, and provide little to the economy [5]. It should be noted that Con's own source on the $17,500 claim states that this income is greatly outweighed by larger unemployment [6]. It must also be noted that Con's math is wrong. The CBO puts the net gain on income for $10.10 an hour at only $2 bn a year once increases and decreases in income are accounted for [12]. Even at $15 an hour, income would, at most, increase by $5 bn, but an exponentially increasing rate of disemployment would have a much larger decreasing effect, so net gain would be lower.

A major contributor to lacking economic growth is that the increase in prices, following basic economic philosophy, reduces demand. This causes less consumption overall. We see this increase in prices across nations with minimum wages above $6.00 an hour. Using minimum wages gathered from OECD [7], and CPI information [8], we find that as minimum wage increases, there is an increase in CPI. Especially in the restaurant field, where a large ratio of employees are mw. The restaurant CPI follows minimum wage to a near perfect degree. We see this supported in academia by Aaronson, French, and MacDonald (2007)[9], where they found unambiguous increases in prices when wages increase. This claim was later supported by studies done in 2015 [10].

Empirically and historically speaking, raising minimum wage does not increase consumption, but instead leads to lower GDP growth. The Heritage Foundation found that increasing the minimum wage to $10.10 an hour would cost 300,000 jobs a year and reduce the economy by $40 bn annually [11].

R2: Higher Productivity.

Con's case is disproven by a study by A. Davies showing that productivity does not increase when minimum wage rose [12]. In fact, increases in unemployment negated any increase. CBO estimates as many as 200,000 workers could lose their job if minimum wage increased to $9.00, as could 1,000,000 workers at $10.10 [13]. By such an increase of 5x for only a dollar increase in wages, $15 an hour would lead to mass disemployment. At $10.10 alone, you lose nearly 2 billion hours of productivity. The economic stress would lead to lower productivity on the rest of the workers who must pick up the slack.

Many studies support this, including one by Nuemark and Wascher [14] which stated that among low-skilled workers, there was a strong disemployment effect. A study by M. Hicks [15] found that minimum wage hikes in the 2000's led to 550,000 fewer jobs being created. Abowd claimed that french men ages 25 - 30 on minimum wage saw their probability of keeping their job decrease by 4.6 percent for every 1% increase in wages [16].

Another hit to productivity was a study by Chaplin, Turner, and Pape [2003] that found that higher minimum wages lead to slight decreases in school enrollment [17]. The long term effect on skill levels will reduce both productivity and the efficiency of productivity over the long term. Backing Chaplin's study was two done by Nuemark and Wascher [18][19]. John Warren and C. Hamrock found the same results in 2008 [20].

R3: Corporate Tax Cuts.

Con's case lacks an understanding of minimum wage demographics. It assumes increasing minimum wage will lead to the wage increases necessary to decrease welfare funding. This isn't true. In fact, Minimum Wage increases barely touch poverty-stricken workers. I will discuss more in P5: Inefficiency and Alternatives, but will explain a bit here in the name of refutation.

Contrary to popular belief, most minimum wage workers are not poor. In fact, a report done by R. Nielsen found that more than 57% of the nation's impoverished were so because they were unemployed [21]. As such, a minimum wage hike will not help them, but will keep them unemployed longer, costing the Government money in the long term. 87% of those who benefited from an increase in wages were not poor, and 56% lived in households earning 2x the poverty level. So the minimum wage increase does little to actually help poverty. Forbes claimed the average Household Income of minimum wage earners was $50,700+ a year [22]. This implies that the average welfare earner was largely unaffected. This is likely because most impoverished with jobs are poor because of family sizes, not individual wages.

Many on minimum wage don't receive welfare because, statistically speaking, minimum wage isn't below the poverty line. Those who live on their own, working the annual average work hour (1780)[23], will bring in $12,900 a year. This is over $1,100 above the poverty level. If they were married with another minimum wage worker, they would earn almost $9,900 over [24]. If the second member were a child, the worker would be impoverished, until the EITC (worth $1,000)[25] and the CTC (worth $3,305 for one child)[26] were added, putting the worker almost $1,300 over the poverty line. This being so, poverty has little to do with their wages, and more with work hours and family sizes where the size is well above the wages of the working members.

As such, Minimum Wage does little to decrease poverty, and therefore welfare. If anything, the effect on unemployment and cut hours would likely throw more people into poverty. Therefore there is no room for Corporate Tax Cuts. Even then, the Fair Minimum Wage Act of 2007 included tax cuts [27], and yet many of the studies I provided that found disemployment and negative GDP impacts included this wage increase, implying tax credits did little for corporations and workers.

P1: Corporate Income v Employer Income.

To reinforce this case, a study of prices in New Jersey claimed prices increased because of a hike in wages [28]. One restaurant rose prices 14% after a minimum wage hike [29]. Another found a price hike of at least 0.7% for every 10% hike in wages, or 1.6% for limited service establishments [30]. Such establishments would have to raise prices by 5% [31]. On that same note, Con never addressed decreasing fast food sales [32].

P2 and P3 need not be expanded upon.

P4: Effect on Employees.

To expand this case, a chart taken from the BLS shows a perfect correlation between teenager unemployment and the minimum wage [33]. A review of studies confirmed disemployment among younger workers [34]. Kosters [35], Henderson [36], and Sabia, Burkhauser, and Hansen [37] confirm this. Mark Wilson found that most minimum wage workers get promoted past minimum wage within a year, displaying a natural progression away from entry-level worker, and when forced, leads to disemployment among those workers [38].This is confirmed in a mass review of studies by Nuemark [39]. Brown, Gilroy, and Kohen found the same results, as did many others [40,41,42,43], and a massive compilation of studies by the JECR found a consensus in academia similar to Nuemark's [44].

P5: Inefficiency and Alternatives.

As stated in R2: Corporate Tax Cuts, the demographics are not in minimum wage's favor. In fact, notable liberal billionaire Warren Buffett claimed he didn't believe the minimum wage was effective [45]. A 2010 study by Burkhauser and Sabia concludes that increasing the minimum wage does nothing to reduce poverty [46]. I've already hit plenty on the topic of inefficiency, so I will move on to the point. Alternatives. The study mentioned increasing The Earned Income Tax Credit, which is the most proposed option [47]. AIE discussed the proposal in depth [48], claiming that the policy is far more precise since the tax credit is based on household income (the defining income for poverty). Therefore, a family in poverty will recieve an increase in income, while a minimum wage worker in High School and with a household income of $50,000 doesn't. The policy is far better targeted and far more precise.

Other reasons for the EITC's efficiency is that it does not cost the employer anything. As many scholars agree on, jobs are the best anti-poverty tool, therefore an increase to wages without decreasing employment is the best path. As the Center on Budget and Policy Priorities found, increases in the EITC and CTC (Child Tax Credit) led to higher grades, healthier children, increased earnings for the children later on, and a number of other benefits [49]. The Tax Credit also encourages work, as the credit is based on a percentage of income. More work equals more revenue [50]. This increases work, productivity, and wages.


Minimum Wage does not reduce poverty, welfare spending, or hardships among earners. It does, however, increase disemployment, prices, and even poverty if doubled. It does not increase consumption, but does decrease GDP growth. It should not be increased to $15 an hour. Increasing the EITC is the best option for reducing poverty and hardship among low-earning households and the impoverished.



Thanks, Pro.
Due to time constraints, I'm only going to be using this round for rebuttals.

== Unemployment ==

A large part of Pro's case is based on the premise that an increase in MW will result in higher unemployment rates. However, his primary strategy for proving this is to throw tons of studies at me which show an unemployment effect. However, I can just as easily throw tons of studies right back at him to show that the unemployment effect does *not* exist:

"John Schmitt (2013), conducted a literature review and found that the minimum wage has 'no discernible effect on employment' [1]. Card and Krueger (1994), looked at the 1992 rise in New Jersey"s minimum wage and found no evidence of negative employment effects [2]. In fact, they found, after comparing evidence from stores in eastern Pennsylvania where the MW remained constant or to stores that were already paying near wages near the MW, that the minimum wage actually worked to increase employment. Dube et al. (2010) replicated the findings of Card and Krueger and found no negative employment effects after adjusting for spatial heterogeneity [3]. Next, a meta-analysis by Doucouliagos and T. D. Stanley (2009) looked at 64 minimum wage studies from 1972 to 2007, and found that, after adjusting for public selection bias, that the evidence is clear that the minimum wage has no effect on employment [4]. Belman and Wolfson conducted a similar meta study on literature revealed since 2000 and, using 27 studies, found no statistically significant negative employment effects [5]" [6].

The academic literature on this topic is divided to the point that simply citing professional statistical studies is not useful in determining the impact of MW on employment. The fundamental problem with the idea that increased labor costs would result in more unemployment is that demand for labor is not elastic. Companies don't just hire employees simply because they can afford to -- they have the number of employees they do because they *need* that many in order fulfill consumer demand. Thus, when faced with an increase in expenses, 'killing jobs' is one of the *last* things an employer will resort to offset it. For that reason alone, we should be skeptical of any "evidence" of MW increases having an unemployment effect. And anyways, if I am able to successfully defend my case next round, then I would have affirmed that MW hikes result in a net profit boost for businesses, thus making the notion of the unemployment effect absurd.

That all said, there actually is one particular study which I would like refute empirically, as it is mentioned numerous times throughout Pro's rebuttal -- Neumark and Wascher's study on teenage unemployment. This study has been demonstrated to have many severe methodological flaws in it, the most damning of which was brought to attention in a commentary written by Card and Krueger: "Neurmark and Wascher's conclusions hinge entirely on whether they hold constant the effect of a variable reportedly measuring 'the proportion of the age group enrolled in school.' When they include this variable, the minimum wage index has a statistically insignificant and positive contemporaneous effect on teenage employment... Neumark and Wascher's enrollment measure clearly is based on a false dichotomy. Not only may teenagers who work also be enrolled in school, but they usually are" [7]. Because this study is founded upon such a blatantly false assumption (among several others listed out in the commentary), its results and all the studies which cite those results should be dismissed.

There is simply no reason to believe that MW hikes result in more unemployment.

== GDP & Income Growth ==

Pro's graphs are misleading, as they only look at the nominal value of the MW. If we look at the real (i.e. accounting for inflation) value of the MW over time, we see that it has only *decreased* since 1968 [7]. Turn Pro's graphs against him because they show that the decreasing real value of the minimum wage is correlated with a declines in average income and GDP growth. Moreover, as Pro notes, there were two instances where the increase in nominal MW did result in economic growth -- BOTH of these were before 1968, when the real MW was increasing as well, thus strengthening the correlation between MW hikes and economic expansion.


I have refuted both of Pro's main harms against the MW. The rest of his case got absorbed into my own case's discussion of whether or not businesses' profits benefit from MW hikes. The resolution remains negated.


Debate Round No. 3


A note before beginning. Romanii made a mistake in his last round. His last source was supposed to be source 8:

I ask the voters not to hold this against my opponent. The reason for this being that I forgot to link my last two sources in R2, but was able to fix it because we reset the debate. Romanii did not recieve that fortune.

R1: Unemployment.

Romanii claims to have sources as well. However, he does nothing to specifically refute mine, or give the readers any reason to prefer his over mine. I must note that I used so many sources because it seems inappropriate to rely too much on meta-studies, which is the equilivant of saying "60+ sources defend me" without actually doing the work myself. It is my job to analyze my sources.

Several flaws in J. Schmitt arise when being reviewed. The first is semantical in nature. The study claims 0.01% isn't large enough to matter ("little to none" impact), but that's 150,000 employees. The second error rests in how the study claims little impact, but assumes the impact is split across the whole population. The impact actually hits mostly only the MW workers. To explain, if the negative elasticity is only -0.1, this is "little to none," until you consider that 2.6% of all workers are MW (1). This means that almost half of all MW employment would disappear, as they would be the target of the negative elasticity. Neumark tends to focus on the elasticity of teenagers or MW workers only.We will return to this in the third flaw. The third flaw is in the conclusion, where they dismiss all other studies to focus only on two by pro-MW researchers.

Perhaps the worst part of the study is that it doesn't aim to prove there is no impact. It asks why there is "little" impact. The study implies a much larger unemployment impact, but explains that the impact is softened by a number of business-side reactions, including prices increases and a reduction of higher wage incomes. Both of which are major negatives. The studies then explains that the tactics help companies avoid moderate incomes in MW. Keep that pinned for future reference.

Card and Krueger's study, while well known, is incredibly flawed. The study focuses only on a singular industry. A study done by S. Hoffman and D. Trace (2) reviewed the same cases, taking into account a number of other industries and variables. They found that workers in Pennsylvania suffered more than workers in New Jersey. The CATO institution did a review of Krueger's book. They claimed that Krueger's methodology was flawed, as they based their results on a "before and after" style of review (where they called 400 restaurants before the MW increase, and then called again after), as opposed to conventional cross-examination and time-based studies (3). Krueger himself even stated that "I want to emphasize that my comments should not be interpreted as support for the position that increasing the MW is sound public policy" -Krueger, 1993 (3).

The conclusion of Doucouliagos's study isn't that there is little to no impact, but that there is too much selection bias. The paper even claims that one of the biggest conclusions they came to was that there might be major negative impacts on employment, but that the white noise often found in economics, and selection bias, makes finding the answer hard. One of my studies, conducted by the CBO, took into account Doucouliago's study, and found a negative impact. When criticized by the White House, the CBO pointed to Doucouliago's study showing selection bias, and claimed that they reviewed all studies showing little to no effect on employment, and came to a lower impact estimate that still led to incredible dismemployment (4). According to a 2013 study, Nuemark took into account new economic science from Doucouliago's study, spatial heterogeneity and an updated evaluation of studies, and found that there is still a consensus in research that MW increases hurts employment (5).

Much of the rest of Con's refutation is that the elasticity effect doesn't exist. He bases this on the logic that companies don't hire more because they can afford to (despite each of his own sources using the elasticity system). That logic doesn't follow... They do hire more when they can afford it (expansion and corporate growth). However, assume they don't, this doesn't mean they don't hire less as costs increase. I do not buy more food than I need when food prices go down, but I do buy less when it goes up. Con's only strength here is that employer's need the number of employees they have. Except it is wrong. Automation eliminates this claim. Most studies disproving this reviews the immediate effects of MW, and found no automation. This ignores basic praxeology. Automation is like buying a new car. When gas prices go up, you don't just buy a hybrid to match on the dot. However, after the costs double, it does speed up the rate at which you buy one (6). In fact, ThinkProgress also agrees that MW leads to more automation (although they see it as good.)(7) In fact, in 2011, McDonald's hired 64,000 Americans, but in Europe (with it's higher MWs), they replaced workers with 7,000 self-serve computers. They intend to do much the same in the US as well (8). Japan even has a restaurant where much of the work is automated by machines, and the workers act less like employees, and more like an assembly line (9).

Con's next case relates to a study by Krueger countering Neumark's case. However, Neumark reviewed Krueger's study. He posted a response to the counter study in 1993 (10). They found most of Krueger's arguments uncompelling, but evaluated new evidence to account for the criticisms anyways. He found that the results still led to disemployment effects.

Returning to the pinned note from earlier... A major issue with Con's sources is that they evaluate the absolute effect from increased MW, as opposed to relative effects. To explain, based on Con's studies, all increases in MW lead to X. This isn't true, as the effects from a $0.50 increase will be different than a $7.75 increase. So different, in fact, that a $0.50 wage increase could be good, and a $2.00 increase be bad. Many of my own studies account for this by measuring effects per percent wage increase. This allows them to find little effect from a $0.50 increase, but large effects elsewhere. Just because Krueger found no effect from a $0.90 increase (which was refuted) doesn't mean this situation remains the same under a $7.75 increase.

R2: GDP Growth

Con criticizes my chart comparing MW increases to GDP growth, as it uses nominal MW. However, I picked this stat for a reason. I wanted to show that when the Government specifically forces a raise in wages, it leads to a decrease in GDP growth. Natural wage increases via purchasing power and dollar strength are different from forced increases in wage. The difference between the two means you can't evaluate what happens during a government-enforced MW increase based on what happens during an inflation-based increase. As the value of $7.25 comes to equal $8.00 through monetary strength, the value of each purchase and dollar earned equally increases to pay for the cost. That being said, higher wages correlate with higher GDP growth, not because they lead to higher wages, but because higher growth is seen when dollar strength increases (as the amount of money stays the same in the economy, but it's PPP increases, therefore the economy looks bigger and is bigger.) Con's case is refuted through a simple understanding of the economy. If MW decreased, its because monetary value decreased, which would reflect in less GDP growth.

Con makes an incorrect claim about my cases. I did NOT say two MW increases led to economic growth. Just that two didn't lead to less growth. One led to a bumpy economic situation in the mid 1990's, and the first one (in the 1940's) didn't lead to economic growth. The end of World War II did. That being said, pro is wrong to claim both took place before 1968. Even if they both did, his claim doesn't stand as 3 other increases took place before 1968 as well, and led to less growth. So in reality, 3 of the 4 increases before 1968 led to less GDP growth, and the fourth didn't lead to growth. Refuting Con's claim.

Even then, Con's claim makes no sense. If MW values were decreasing, increasing it should lead to more economic growth. Con also misrepresents my first chart. I charted PPP MW to Average Earnings and showed that average wages increased as MW value went down. I will repost the chart here:

P5: Inefficiency and Alternatives.

Con dropped my case on the inefficiency of the MW, and the alternatives. My case stands that the demographics of MW makes it ineffictive. I have proven, unchallenged by Pro, that MW does not decrease poverty, and that it does not increase the wages of impoverishes families. However, increasing the EITC and CTC does decrease poverty, and is efficient and well targeted.

Con has also dropped arguments on Corporate Tax Cuts, Increased Consumption, and Increased Productivity.

Another inefficiency (as opposed to making a new P6 case), is turn over. Pro lists less turn over as a good thing. This isn't true. Turn over is what pushes employees up the latter. Replacing a $7.50 job for an $8.00 job and so on. Less turn over among MW earners mean less workers moving up the latter, away from MW. However, turn over for higher wage earners increases, as someone prior earning $14.00 for hard labor may accept a $15.00 job that is twice as easy as their own (which hurts teenagers who are as experienced.) This creates higher negative turn over among high wage jobs and less positive turn over in low wage jobs.


The Resolution is affirmed. Minimum Wage increases do not reduce poverty or benefit the economy. It will have negative effects. Whereas the EITC is accurate and effective at helping the poor.

Minimum Wage should not be increased to $15 an hour.



Thanks to LordHelm for what has been a great debate!

== HARMS ==

1. Unemployment

It is unfortunate that Pro has opted to waste so much of his final round trying to refute 2 of the studies I cited -- his efforts amount to virtually nothing, because I also cited more than 90 other Pro-MW studies via literature reviews. Pro objects to my use of meta-studies on the basis that he had to do more 'work' in citing individual studies, but (1) he himself cited several meta-studies last round, (2) that is completely irrelevant to the accuracy of the meta-studies' results, and (3) realistically speaking, there is no difference between citing a meta-study and individually citing each study with a prefix of "X researcher used Y methodology and found no discernible impact on employment". Both provide the same level of insight.

But anyways, my intention here is not to say "I have more studies on my side, therefore I win". Pro seems to have missed the main reason why I resorted to citing meta-studies in the first place -- it was to demonstrate that the literature on the MW-employment relationship is far too vast and divided to settle the issue through the presentation and refutation of individual academic studies. There are way too many variables involved for any single study to perfectly control for all of them in a way which produces definitively accurate results, which is why there exists academic criticism on virtually every study that has ever been published. For example, all I had to do was Google search "criticism of sabia minimum wage" to find a refutation of the study Pro cited from that researcher [1]. Pro's refutation of the Schmitt and Card/Krueger sources do nothing to contest the crux of my rebuttal -- there is too much empirical evidence on both sides of the debate for Pro's approach to work.

The only meta-study Pro addresses is the one by Doucouliagos (which cited 64 studies). He claims that the conclusion of the study isn't what I said it is, but this is clearly false, as we can see from directly quoting the conclusion... "This paper re-evaluates the empirical evidence of a minimum-wage effect on employment. Several meta-regression tests corroborate Card and Krueger's overall finding of an insignificant employment effect (both practically and statistically) from minimum-wage raises... In the minimum wage literature, the magnitude of the publication selection bias is as large or larger, on average, than the underlying reported estimate. Overall, correcting for publication bias would transform a modestly negative average elasticity to a small positive employment elasticity" [2]

Pro goes on to claim that both the CBO and Nuemark reviewed Doucouliagos's data and came to the conclusion that most studies are anti-MW. Let's take a look at Pro's sources for this claim. In the news article discussing what the CBO did, the only place that Doucouliagos is even mentioned is here: "In support of their decision, CBO analysts included a link to a paper by economists Hristos Doucouliagos and T. D. Stanley finding that, taken as a whole, 'the minimum wage effects literature is contaminated by publication selection bias'" [3]. This is a laughable instance of intellectual dishonesty and taking words out of context (on the part of the CBO) -- I just quoted the actual conclusion of the meta-study, which clearly states that publication selection bias is *against* the MW, and that an unbiased evaluation of the literature yields a slightly Pro-MW result. As for the Nuemark source, I did a control-F search of the words "Doucouliagos" and "Stanley", but nothing turned up... [4]. We are left with no reason to reject the results of this meta-study.

Despite all the effort Pro put into this part of the debate, he has not actually been able to prove that MW hikes result in higher unemployment rates because his approach is fundamentally flawed. Our contradicting meta-studies reveal that the empirical literature is extremely divided -- given that, cherry-picking a bunch of studies that support our respective positions and proceeding to throw them back and forth achieves absolutely nothing. Since the statistical route fails to provide any real evidence that MW decreases employment, and since burden of proof was on Pro to demonstrate that, we must presume that no impact exists.

I will be providing positive reasons to reject the unemployment effect within the defense of my case.

2. GDP / Income

Pro correctly shows that I have misinterpreted the point he was trying to make with his graphs. However, his actual argument is even weaker than what my misinterpretation of it was! There are quite literally thousands of factors which impact GDP growth, from technological innovation, to commodity prices, to interest rates; real wages are just one of those many, many factors [6]. Moreover, we can see from the graph that GDP growth in general tends to fluctuate quite erratically. Given that, Pro's attempts at associating MW hikes with dips in GDP growth, based on nothing more than the fact that some hikes and some dips occurred within the same year, are outrageously fallacious. GDP growth is dependent on far too many variables for any single one to cause such large fluctuations. Pro's graph proves nothing. This all applies to the second graph as well, since average income is similarly subject to influence from a multitude of factors.

As for the Sabia study, let's take a look at its methodology -- Sabia first calculates the impact of MW hikes on employment, determines it to be negative, and THEN extrapolates the effect on GDP from there [7]. In other words, this is just an unemployment study in disguise, and therefore my rebuttal to the unemployment argument applies here, nullifying its conclusions. Pro has failed to demonstrate that an increase in MW would result in a decrease in GDP growth.


VOTE CON -- Pro has neglected to respond at all to what is by far the biggest advantage of increasing the MW to $15: a significant increase in the standards of living for 52 million workers and their families. Even according to Pro's estimates, the average MW worker earns a salary of $12900, so that's more than 1/6 of the country's population receiving a huge pay raise (roughly 35%). Even if you buy both of Pro's harms, it is arguable that the positive utility from increasing the standards of living for such an enormous population outweighs. But given that neither of Pro's harms are still standing, this impact alone is enough to negate the resolution several times over.

Also, let's use Pro's $12900 number to re-calculate the cost to businesses of a MW hike:
(17500-12900)*52,000,000 = -$239 billion

Now onto my 3 arguments showing that, on balance, increasing the MW to $15 would result in a net profit gain for businesses. I'm not sure why Pro thinks that I dropped these arguments... I specifically stated I was using Round 3 as a rebuttal round, so it would have been out-of-place for me to defend my arguments there.

1. Increased Consumption

Pro's rebuttal is based mostly on extending his harms, both of which have already been refuted. The other major point he makes is that an increase in prices usually follows MW hikes -- I agree, as that is actually an *affirmation* of this argument. If there is an increase in aggregate demand (i.e. consumption), then we would *expect* to see higher prices, in accordance with one of the most basic principles in economics -- when sales is going well, companies increase prices to try and maximize profits. Pro has just given us even more reason to believe that MW hikes boost revenues for businesses, alongside my (uncontested) evidence which quantified that boost at approximately +$212 billion.

2. Higher Productivity

Again, ignore Pro's extensions. To rebut this argument, Pro provides... a single study indicating that increasing wages "does not necessarily make workers more productive". Contrast that with the literature review I cited, which incorporates data from many different studies on the subject to show that the efficiency-wage hypothesis holds true across all industries. Additionally, I have actually explained a causal mechanism for *why* higher wages boost productivity, whereas Pro hasn't even attempted to do so. As for the point about slightly lowered school enrollment rates, Pro doesn't quantify this alleged "long-term loss of productivity", so there's no way to weigh that harm and thus it should be dropped from the debate. Meanwhile, I have put forth an (uncontested) calculation revealing that higher productivity from the MW hike will boost businesses' revenues by +$228 billion.

3. Lower Corporate Taxes

This argument was not about who the nation's impoverished are -- it was about who receives the majority of government welfare benefits, and my source states that 73% of such benefits go to members of low-wage households. Nothing Pro said about how most MW workers don't live below the official poverty line contradicted that, and therefore this argument stands -- a MW hike allows the government to make huge corporate tax cuts and let businesses keep +$331 billion more of their revenue. As for Pro's alternative of EITC, the only advantage he provides is that it is better-targeted than the MW, but that is easily outweighed by the MW's advantages -- it doesn't cost the government anything (i.e. no tax hikes), and it generates substantial economic growth (see conclusion).


I have demonstrated that raising the minimum wage to $15 would result in a net profit to businesses of $532 Billion, (thus enabling them to benefit the economy through more job-creation & investment), and would result in a large increase in the standards of living for more than 1/6 of the US population. On the other hand, not only has Pro failed to demonstrate any real harms coming from a MW hike, but both of his arguments seem completely absurd in face of the evidence presented that MW hikes *increase* businesses' profits

The resolution is negated. Vote CON!
Debate Round No. 4
119 comments have been posted on this debate. Showing 1 through 10 records.
Posted by Varrack 2 years ago
NOO I missed the voting cutoff...

Oh, well, sorry guys.
Posted by Romanii 2 years ago
Thanks for your thoughts, Midnight.

So this debate is gonna end in a tie, huh... I don't really object. It was certainly a close debate, as evidenced by the mixed interpretations of it by good voters like whiteflame and YYW. Thett3 also told me privately that he would probably have tied the debate due to uncertainty on the unemployment sources issue.

Also, I'd like to note that LordHelm = Donald.Keller
Posted by Midnight1131 2 years ago
Overall I'll have to give this debate to Con. Their arguments concerning higher productivity, corporate tax cuts, and higher consumption showed that there are many benefits to a 15$ minimum wage. Pro's rebuttals to these was lacking.

You'll notice I didn't conclude the points I mentioned above, that is because most of them eventually fell into the "increased consumption" category of this RFD.
Posted by Midnight1131 2 years ago
The increased consumption argument does go to Con though, they showed that the money comes right back into the economy when people are able to spend it. And Con's 212 billion dollar boost was unrefuted by Pro.

Corporate Tax Cuts
Here Con notes that if all employees earned a living wage, they wouldn't be in need of welfare programs, and this would save businesses $331 billion that they would have paid in corporate taxes.
For his rebuttals, Con notes that most minimum wage workers aren't poor, and therefore welfare doesn't apply to them. He backs this up with studies that found that 50% of people living in poverty were there due to their unemployment. This point I will have to give to Con though. They showed that the majority of gov't welfare goes to members of low wage households, and Pro's stats about unemployment being a cause of poverty doesn't discredit this number. Con then goes on to make their uncontested case, that a MW hike with allow for corporate tax cuts, which will save businesses money.

High Productivity
Here Con states that higher wages result in greater worker productivity, and it is a theory backed by economists. He notes that stress levels are reduced, motivation increases, workers are less likely to change jobs, and employers gain the benefit of experienced long term employees.
For his rebuttals Pro cites a study that shows that productivity doesn't increase when minimum wage rose. He also said that 200,000 if the minimum wage was increased to only $9. He also supports this with other studies. Con wins this point. Both sides had studies supporting them, but Con's 228 billion dollar boost in revenue was unrefuted, and Con also gave some basic reasons as to how a higher minimum wage would increase worker productivity.
Posted by Midnight1131 2 years ago
Increased Consumption
Con notes that when consumer incomes increase, aggregate demand increases, and the economy expands. The point being that the money paid to employees is put back into the economy through consumption. He cites a paper that states an increase of $1.75 in the hourly federal minimum wage increases household spending by roughly $48 billion. He extrapolates that with a $15 minimum wage, the overall consumption would be increased by $212 billion.
For his rebuttals, Pro states that they gave evidence that minimum wage increases are not correlated with GDP growth. Pro states that for this to be true, GDP growth must correlate with minimum wage increases. Con states that Pro's graphs are misleading because they only look at the nominal value of the minimum wage. Con adjusts for inflation and shows that the minimum wage has only decreased since 1968. Con then states that Pro's graphs show a decreasing minimum wage is correlated with declines in average income and GDP growth. And he also notes that the two cases when increasing the minimum wage resulted in economic growth, both were before 1968. Pro points out some flaws in Con's sources, however this simply wasn't enough, Con had given many other studies that supported his case. Concerning GDP increases, Con's defence in this case wasn't worth much. He says that Pro was attempting to associate minimum wage hikes with dips in GDP growth, but this is not the case. Pro had stated before that he was trying to show that there was NO CORRELATION between the two, which would make the increased GDP argument on Con's side null. This did happen, because Con himself admitted that there are too many things accounting for GDP growth. Con states that Pro failed to demonstrate an increase in MW would result in a decrease in GDP growth, but Con has failed to show it would result in an increase in GDP growth, therefore this argument is null on both sides.
Posted by Midnight1131 2 years ago
Ok, I'll break down the arguments below.

Below is a summary of the main arguments used.

Profit and economic growth
Corporate income v Employer's income

Pro talks about large corporations, and notes that the costs of minimum wage aren't paid for by corporations. He gives an example of McDonalds, noting that if the minimum wage was 15$ it would cost McDonald's over 80% out of their profits. He also notes the cost to the owner of each individual restaurant, which is quite high.

Pro talks about small businesses, and notes that most of them couldn't afford the cost. Pro then goes on to talk about the large scale effects of these, saying that increase in failure rates will lead to the elimination of industry growth, and rural and independent restaurants. He also notes that franchises will have to raise prices by 71%. He then notes that gas stations will also be at risk.

Average annual wages
Here Pro discredits the notion that increased minimum wage leads to increased annual wages. He notes that average annual income has risen even in times when wages were down.

Stock Values
Here Pro talks about how company stocks would suffer if profits were lost. He gives an example of Walmart.

Effect on Employee
Pro talks about how most economists believe that the minimum wage would lead to a reduction in employment. He cites a national bureau of economic research study.
Posted by Midnight1131 2 years ago
Ok, I don't meet the elo requirements for voting but here's my RFD anyways.
Posted by whiteflame 2 years ago
>Reported vote: Jonbonbon// Mod action: Removed<

3 points to Pro (Arguments). Reasons for voting decision: I'm almost tempted to just award a 1 point win for the winner because of how close the debate was. Now I'm not an expert on economics by any means, but after analyzing the debate very thoroghly, I was able to find a few points that gave me a winner. Pro made a point, and backed up the point with evidence, that when minimum wage increases, prices tend to increase as well at a nearly proportional rate. I didn't see where con refuted this point in the debate, and I feel it was a major point that refuted his point about an increased standard of living (if prices go up proportionally to your wages, then essentially your standard of living stays the same). And I accept pros defense regarding his graph on the GDP. His explanation made sense, and ultimately those two points were what pushed me to vote pro, although I was very close to voting con. Everyone did well on conduct, S&G, and sources.

[*Reason for removal*] A vote is required to cover both sides of the debate, examining each side's arguments to determine the outcome. This vote does clearly consider 2 major points made by Pro, but fails to analyze any of the arguments made by Con besides standard of living. Much as the voter isn't required to be exhaustive in their analysis of the arguments, they are at least required to hit at the main point each side is making, something that this voter doesn't do.
Posted by whiteflame 2 years ago
>Reported vote: YYW// Mod action: NOT Removed<

733 points to Con. Reasons for voting decision: Also: there were no relevant conduct differences, spelling/grammar differences, or differences with respect to sources. To the extent that anyone disagrees with this, they are wrong. Clear win for CON. People should occasion themselves to actually read the resolution, but of course I'm sure by now I sound like a broken record. See the link for the RFD.

[*Reason for non-removal*] The voter is allowed leeway to consider the resolution as they feel is reasonable, and they are allowed to dismiss arguments they believe don't fit into that interpretation. A vote is not required to be exhaustive in analyzing every point in the same way as the debaters perceived them.
Posted by Romanii 2 years ago
Yes, I would like him to be more specific on what I could have done better. He has agreed to elaborate at a later time.
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by YYW 2 years ago
Agreed with before the debate:Vote Checkmark--0 points
Agreed with after the debate:Vote Checkmark--0 points
Who had better conduct:--Vote Checkmark1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:03 
Reasons for voting decision: Also: there were no relevant conduct differences, spelling/grammar differences, or differences with respect to sources. To the extent that anyone disagrees with this, they are wrong. Clear win for CON. People should occasion themselves to actually read the resolution, but of course I'm sure by now I sound like a broken record. See the link for the RFD.
Vote Placed by whiteflame 2 years ago
Agreed with before the debate:--Vote Checkmark0 points
Agreed with after the debate:--Vote Checkmark0 points
Who had better conduct:--Vote Checkmark1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:Vote Checkmark--3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:30 
Reasons for voting decision: Given in comments.
Vote Placed by kasmic 2 years ago
Agreed with before the debate:--Vote Checkmark0 points
Agreed with after the debate:--Vote Checkmark0 points
Who had better conduct:--Vote Checkmark1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:--Vote Checkmark3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:00 
Reasons for voting decision: I told Romanii that I would vote on this debate. I have spent a great deal of time analyzing and tbh feel this debate hinges on sources. I thought both sides were articulate and thorough. Pro links the harm of lowering stock value, shrinking job market, and risking the fast food industry to raising the min. wage and concludes that the minimum wage should not be doubled. Con argues that raising the Min. Wage to $15 an hour would (1) increased consumption, (2) higher worker productivity, and (3) lower corporate tax rates. As implied earlier both present several sources and it seems to me that the debate mostly revolves around who?s sources are more reliable. I am not well versed in this topic and do not feel I can reasonably vote on this debate. I know you are both waiting for votes, and this will likely frustrate both of you, but I am going to vote a tie.