Minimum wage laws should be abolished
Debate Rounds (3)
For simplicity's sake, let's assume that the minimum wage is $10/hr.
If a small business owner can afford to spend $12/hr on new employee(s), he could only hire 1 person with the existing law at somewhere between $10 and $12. Without the law, he could two at $6/hr, three at $4/hr, and so on. In the unemployment statistics terms, we'd be looking at one employed versus two underemployed or three (very) underemployed. On the surface, this may seem negligible, but let's dive deeper.
Those willing to accept a low wage are most often people who don't need to provide for their family, a big portion being young workers. Providing an opportunity for young workers to gain experience is invaluable for their future. In a year's time, that worker's options may be to have no job, get paid nothing, and gain no experience, or gain a year of experience at a low wage. Looking at it in this way seems obvious to me that eliminating minimum wage laws would benefit more than having those laws in place.
I shall not counter you for now but merely state contentions rebuttals to yours shall be in my round two debate.
Firstly, low wages are inadequate compensation for potential workers who are discouraged from entering the labour market. By making labour more attractive, more human resources will be used, thus raising national productivity. Even where capital is substituted (e.g. through use of machinery instead of people), a rise in efficiency will occur. The reason there is a minimum wage is because the governments of nations that have them calculate the minimum income required to live a life that is just above what would be considered impoverished. So essentially this point is a combination of the fact that a lower wage is inadequate combined with the fact that a decent income is motivation to stop being unemployed and living off benefits and loans, whilst a lower wage that would leave on starving every night is not.
Secondly, governments have a duty to reduce poverty and so to raise the standard of living of all households. There is an absolute minimum quality of life, below which families should not fall. A minimum wage that had no effect on employment would be unnecessary, especially as the wage rate is not necessarily the main consideration of employers when hiring workers. In fact, minimum wage laws can actually increase employment because minimum wage workers will have more money to spend, thereby stimulating the economy and helping everybody from the wealthy to the minimum wage workers themselves.
Please do not start countering my second contention stating the governments do not have a duty to reduce poverty, because a Government's entire reason for existing is to lead a state, or country, to economic and political success.
On a final note, higher wages throughout the economy are not necessarily negative, as an increase in purchasing power leads to a higher quality of life. As the marginal propensity to save increases at higher levels of income, higher earnings should in theory increase the amount of savings available for reinvestment. Conversely, decreased marginal propensity to consume will limit any inflationary potential.
In summary, to create a decent incentive for workers to compete to get a job and do it as well as they can, you must have a decent enough wage to promise them a better life than one living off benefits and welfare. Additionally, it is a government's duty to reduce relative poverty in a country, whilst reducing absolute poverty is solved by the welfare system and benefits offered in many European countries, and less so in USA but still being present. Additionally, an increase in the purchasing power of even the lowest paid worker leads to overall high quality performance of corporations producing goods as well as those who provide services and this would benefit a state or country immensely more than one in which only the rich have a say.
Why does the minimum wage need to be set at the rate that government feels would be just above poverty? That seems pretty arbitrary, since minimum wage jobs are rarely ever the main and sole source of income. They are, in most cases, either a second job for an individual, or a part time job for a member of a household (child or spouse). In this sense, it cannot be argued that a lower wage would cause one to starve.
You stated "governments have a duty to reduce poverty". I will ignore the government's role portion, because that is out of the scope of this debate, but you are implying that a minimum wage would reduce poverty. I fail to see how creating an enormous number of jobs would increase poverty. Minimum wage laws only hurt the poor, not the middle class or the rich. There are 12 million people unemployed and looking for jobs right now. They are currently earning $0/hr. Minimum wage laws are decimating the number of jobs that are able to be created.
In your final note, you say that since workers are making more money, then more money gets circulated in the economy, and everyone is happy. The problem with this is that it's the same amount of money being circulated, whether it's given to one person or split between multiple. The longer this growth continues, the more of an impact it would make towards the economy. More jobs mean more workers gaining experience, which means a larger skilled work force. Those experienced workers will then go on to make much more money than they would have had they been unemployed for the time they were making under the minimum wage. If government were serious about reducing unemployment and helping young people get their first job, this would be the first step they would take.
Young Americans are being decimated by these policies. Teenagers still living with their parents get much more benefit from the work experience than any wage they may earn. There is a drastic difference between getting out of a recession with a skilled workforce than it is to get out of one with an unskilled workforce.
What would happen if there was a law put into place that all cars must be sold for at least $1000 and no lower? What would happen to those cars worth less than $1000? Would someone pay $1000 for a car worth $500? I think they would just not buy that car.
"In many cases, especially with the US economy in it's[sic] current state, one may have to choose between a low wage or no wage at all." Well that is why we have benefits and a welfare system, for it is very clear that all impoverished countries are without a welfare system.
"They are, in most cases, either a second job for an individual, or a part time job for a member of a household (child or spouse)." Most minimum wage jobs are very physically demanding for a large period of time (usually 9 to 5, or night-shift hours) they tire the individual out (such as construction workers, house painters, tea-leaf pickers etc et era). Only in the western world is having a second job even heard of most of the time. Additionally, many workers for minimum wage simply do not have the time to run a second job, and if they do usually will break down or collapse from exhaustion.
"I will ignore the government's role portion, because that is out of the scope of this debate..." The government has a role to stop its people being impoverished. The best way to do this is ensure that the minimum wage is above absolute poverty in that nation.
"I fail to see how creating an enormous number of jobs would increase poverty." If those jobs pay insufficient amount of money to prevent the person living in absolute poverty then that is how it will increase poverty since it would be lower then unemployment benefits or welfare. In countries such as India where there is no welfare, it is clear how poverty is very present, and how even though there are virtually unlimited jobs available, the workers themselves live in poor conditions. It it also largely because so many people are desperate for jobs whilst an increasing population leave more competition indefinitely.
"There is a drastic difference between getting out of a recession with a skilled workforce than it is to get out of one with an unskilled workforce." In a minimum wage society, there are less jobs than without it. Thus making people compete to get and stay in those jobs more (since if less is available competition is higher) and hence will force them to increase their efficiency or get fired since almost all minimum wage jobs involve easily replaceable roles in the corporation.
"What would happen if there was a law put into place that all cars must be sold for at least $1000 and no lower?" The minimum wage of a country is for human beings, not cars. It is to ensure that the human being who is getting paid is not living in absolute poverty, which is an unforgivable sin for a government to allow (yes this could be seen an attack at African and Asian Governments but why do you think those cultures are almost always largely impoverished with huge inequality?). A car is not being paid to get food so don't be silly with such a comparison.
Well that is why we have benefits and a welfare system
So you would rather have someone on welfare, being supported by the taxpayers, than to have them earn their own wage? You are not addressing the very valuable fact of on-the-job training and work experience. This does not exist if an individual in collecting welfare instead of working.
I fail to see your point about the low wage jobs being very demanding. I would agree that they are, but that does not address my point that these jobs are supplemental income, and in many cases, the wages are not needed.
Thus making people compete to get and stay in those jobs more
This is a very valid point, and I could see this being a valid argument if the US unemployment was around 3%. Unfortunately, that is not the case. The reason that is not the case has nothing to do with competetion or wages being too low, there just aren't enough jobs available. With growth stagnant, what incentive to business owners have to hire non-essential employees. Those that would be considered as non-essential are the unskilled laborers that would be making minimum wage.
If I wanted to get into a new career field in which I have no experience in, but it has been my lifelong dream to be in that field, I may be willing to work for less than minimum wage, or maybe even no wage at all to gain that experience. Getting paid anything to be in a job that I probably am not skilled enough for would be a gift. This is one situation. I don't need the income, but that's not true for everyone. The point is, shouldn't I be allowed to sell my services for $2/hr if I'm okay with that?
If I want to hire someone to get me coffee at $2/hr and he/she has nothing better to do, shouldn't I be allowed to offer that? Should they be allowed to accept that? I'm creating a job at that point that would certainly not be created if I would have to pay a "coffee-getter" the California minimum wage of $8/hr. While getting coffee wouldn't provide a ton of valuable experience, the new employee would see how insurance companies are run, and how software developers go from a concept to a final product.
In June 2006, before the 40% increase in the minimum wage, 42.1% of teens age 16 to 19 were employed. By June 2010, only 28.6% of teens age 16 to 19 were employed.
The welfare system isn't set up for people to sit on their bums (although it can be abused this way, this is only when it is implemented wrong) the actual welfare system only pays those who either cannot physically work or cannot find a job but have showed consistent evidence of trying to. Tax payers are supporting potential workers, not a lazy bum. And if they are, then there is a problem with the system, not with the correct system in place. So your point renders invalid.
You question what incentive there is to hire non-essential employees. Why would you want to force a company to hire non-essential employees when the company could better spend their money as well as the employee be doing and actual essential job?
Your argument for you being okay to work at $2/hour is simple. If someone is okay with earning so little that they starve to near death due to lack of ability to afford a basic meal and rent a house then there is something mentally unstable about that person and we should either send them to a therapist or force them to earn a decent wage. I think the minimum wage is a far better system to force people who are happy to be in poverty not to be in it.
Your romantic idealistic view of a willing worker entering the world of work simply for the thrill already exists. It exists as unpaid apprenticeship for work experience. If they wish to have a paid job and use that as their main source of income we can't possibly allow them to harm themselves willingly into absolute poverty.
On a final note, in order to prevent exploitation, absolute poverty and lack of skilled workers in an economy we need to have a minimum wage otherwise there is no incentive firstly for the company to work very hard to make enough profit to afford minimum wage workers and secondly for the workers to keep their highly demanded less readily-supplied job. Thus, I have proven that minimum wage has a double benefit, it prevents exploitation of workers and encourages hard work and efficiency both outcomes the government most certainly would like.
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