Minimum wage should be increased
Debate Rounds (3)
It's basic sense that as wages increase, the cost of living increases. That's why Washington, DC has apartments for rent that cost $1595 per month rather than places in Wyoming that cost only around $630 (I) (DC has a minimum wage of $9.50 versus Wyoming with $5.15 (II)). Imagine if Wyoming took on the same minimum wage as DC! An apartment there would cost the same as in DC! It just doesn't make sense.
If minimum wage is increase across the board, an employer will have a skin tight compensation budget. This will lead to employees loosing their job because it will nearly double the cost of employee compensation. So, while some employees may be making slightly more money, others will be left unemployed (III).
Finally, an increase in minimum wage will depress new hirings. If this law goes into effect, employees will be doubly expensive to an employer. This means that employers will have to pay one person previously equivalent to two employees. It stretches compensation budgets and leads to a continued high unemployment rate, which is something that we don't need to continue right now (IV).
Like I stated earlier, keeping minimum wage the same is just common sense. It adds to the cost of living, stimulates layoffs, and depresses new hirings. Raising minimum wage is just another outrageous plan that is set forth. It doesn't make sense and is going to come back and bite America sooner or later.
I = apartmentguide.com
II = US Department of Labor
III = wheniwork.com
IV = foxbusiness.com
Thank you to CON for instigating a debate on this subject.
As expected, the BOP is on me to prove why the minimum wage should be increased.
Minimum Wage - "an amount of money that is the least amount of money per hour that workers must be paid according to the law" (1).
Con lists four sources, but does not tell us specifically from where he has pulled his information. I ask that he do that or the voters ought to award me the source point. Also, his fourth source, Fox Business, is not a credible source. The Fox network is predicated on being a propaganda arm of the GOP; its operates as a spokesperson for Republican ideas, never substantiates those ideas, and betrays a cruel ignorance of actual economic science and facts. His third source, wheniwork.com, is the link he uses to attempt to establish that the MW leads to unemployment. However, it is the link to a website for a company that deals with employee scheduling. This cannot possibly be pertinent to our resolution.
I'm going to rebut Con's arguments while establishing my own.
Con states, without any evidence that the minimum wage raises the cost of living. By this he is saying that the minimum wage sparks inflation. This is completely wrong. According to the BLS, only 4.7 percent of hourly works earn the federal minimu, wage (2). Indeed, increasing the minimum wage would spark an increase in AD, which would lead to an increase in demand; some employers may respond by increasing prices either to cover costs or to adjust to the increase in demand. However, the cost hikes will be miniscule and will not way into overall price inflation.
A paper from the Cleveland Fed confirms this thesis:
"There is little systematic evidence that wages...are helpful for predicting inflation. In fact, there is more evidence that inflation helps to predict wages..The policy conclusion to be drawn is that inflation can appear regardless of recent wage trends" (3).
Instead of wage inflation leading to price inflation as Con deceptively, though baselessly, asserts, price inflation tends to lead to wage inflation, as the public's expectations of inflation tend to adjust in the long term via the Fisher effect (4), thus pushing up nominal wages with inflation. This isn't always the case; for instance, the real value of the minimum wage has fallen over the past three years in spite of increasing nominal value. If the real value of the minmum wage today were to have the same purchasing power as it did in 1968, it would be $10.69 (5). Nominal wages in the short run tend to be rigid, and this is especially true of the minimum wage. While median hourly wages and compensation flatlined over the past three decades, at the same time that productivity skyrocketed and pay of the top 1 percent soared, real purchasing power of minimum wage workers had declined (6). If we adjusted for productivity, the minimum wage today would be $21.72 (7). ;Con speaks of rising costs of living, but he is attacking the wrong source. If COLA increases by 5% and nominal wages increase by 5%, your standard of living hasn't channged. His concern should be to un-stick sticky nominal wages and to promote price stability. This cannot be achieved by simply doing away with or refusing to raise the MW; price stability and control over inflation is the primary responsibility of the Federal Reserve (8).
If Con were to say that an increase in the MW leads to some price increases which are hardly significant and don't at all impact the overall price level or cost of living, he would be correct, though this would hardly be a point against an MW hike.
We have further evidence for this point from Sarah Lemos:
"The overall reading...is that the minimum wage increases the wages of the poor, does not destroy too many jobs, and does not raise prices by much" (9).
Con states that an increase in the minimum wage stimulates layoffs. Note that this is a contradiction. As I noted, demand-pull inflation is brought on by an increase in AD. An increase in AD occurs when people have more money in their pockets with which to consume. If Con's thesis were true that the minimum wage led to any form of "inflation," then this would mean a net increase in jobs. If the minimum wage led to layoffs, a net decrease in jobs, we would see disinflation, not inflation.
This is a crucial point of our discussion: does the minimum wage kill jobs? I've alreay provided one piece of evidence from Lemos saying that it doesn't, but there is much more.
Next, we have an influential meta-analysis study from Card and Krueger. They conclude:
"Contrary to the central prediction of the textbook model of the minimum wage, but consistent with a number of recent studies based on cross-sectional time series comparisons of affected and unaffected markets or employers, we find no evidence that the rise in New Jersey's minimum wage reduced employment at fast-food restaurants in the state" (10).
This study showed that increases in the minimum wage actually lead to a slight increase in employment.
Another meta-study from Doucouliagos and Stanley pooled together 64 studies on the minimum wage studies, and found that after controlling for public selection bias, the most reliable studies on the MW "corroborate [Card and Krueger's] finding of an insignificant employment effect (both practically and statistically) from minimum wage raises" (11).
A study by Dube, Lester and Reich essentially replicated and confirmed the Card and Krueger and found "strong earnings effects and no employment effects of minimum wage increases" (12). They also noted a fatal flaw in past research on the MW which did lend itself to a negative employment effect by noting that employment trends vary endogenously by region. Schmitt explains:
"The three economists demonstrated that overall employment trends vary substantially across region, with overall
employment generally growing rapidly in parts of the country where minimum wages are low..and growing more slowly in parts of the country where minimum wages tend to be higher...Since no researchers..believe that the minimum wage levels prevailing in the United States have had any impact on the overall level of employment, failure to control for their underlying diffeences in regional employment trends, Dube, Lester, and Reich aruged, can bias statistical analyses of the minimum wage" (11).
This led Schmitt to conclude that the minimum wage has "no discernible effect on employment" (11).
Con points to relative apartment prices in Wyoming and Washington D.C. and minimum wages and concludes that COLA must be higher. There are several problems with this analysis.
Firstly, correlation does not equal causation. I have pointed to evidence demonstrating that wage inflation does not spar price inflation or increase COLA.
Secondly, Con only points to the costs of apartment. By no means is this one cost indicative of the overall price of living.
Thirdly, we have no reason to trust the numbers has provided to us because they are unsourced. He linked to a home page of a website, but did not provide us any specificity as to where the numbers came from.
Fourthly, his analysis ignores endogeneity. This is a similar case to the Dube, Lester, and Reich study; there may be internal factors within those states influencing relative apartment costs, so Con does not establish causation
Con states that an increase in the minimum wage will "nearly double employee compensaton." He provides no source or no mathematics as to how he came to this conclusion. Increasing the minimum wage will not increase costs across the board, as he says, but will apply upward pressure on the wages of workers earning around the minimum wage. However, this actually produces a net benefit for the economy. Let's go to the CBO:
"The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates" (13).
I have refuted all of Con's arguments and provided a series of evidence showing that an increase in the minimum wage is beneficial. I pointed out that Con contradicted himself in arguing that the minimum wage would lead to an increase in inflation and unemployment, and that increasing the minimum wage would result to, per the CBO's number, $31 billion in new economic activity. Raising the minimum wage becomes a matter of utilitarianism. Workers benefit from increased purchasing power and employers benefit from reduced turnover, higher productivity, and more customers. There are more points I would like to make on this subject, including proving my last remark, but I will save that for the next round as I am currently out of characters.
riverbendebate18 forfeited this round.
riverbendebate18 forfeited this round.
M.Diz forfeited this round.
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