The U.S should abolish the Minimum Wage
The resolution is: The U.S Should Abolish the Minimum Wage
I will be arguing against the resolution, Pro will argue for it. BoP is shared.
I am mainly debating this to confirm my position on this, but I am definitely leaning towards the pro-MW stance.
Minimum Wage: Lowest wage permitted by law.
Abolish: get rid of
Not many really, just no kritiks or semantical arguments. If you wanna negotiate definitions please use the comments.
Oh yeah, but no new arguments in the last round pls.
My opponent can either use the first round to write opening arguments, or my opponent can use the first round for acceptance. If he/she chooses to use first round for arguments, he/she will need to waive their last round.
I would like to follow the pattern of Acceptance -> Arguments -> Rebuttals -> Defense
Thanks to my opponent for accepting the debate. I think this debate will be a great learning experience for me :)
Framework & BOP
My arguments will mostly be running via a utilitarian framework; placing emphasis on doing the most good for the most amount of people. Of course if my opponent accepts a utilitarian framework, he will need to prove why the minimum wage does not benefit the most number of people, as well as why its abolition would prove to be more beneficial to society.
So the first part of my arguments are going to be attacking some of the common reasons put forth as arguments against the minimum wage, and demonstrate why they do not justify its abolition. The next part of my arguments are going to highlight the benefits of the MW, and explain why removing the MW would result in a net detriment to society. To remind the voters, the majority of my arguments are going to tie back to the utilitarian framework, as the well-being of society is of the utmost concern with respect to this debate.
(1) The Inflation Argument against the MW
A correlation between overall inflation and minimum wage can’t be used to prove that the the MW caused the inflation. Moreover, if my opponent does put forth this argument, he would not only need to prove that the MW causes inflation, but that the effects of whatever minimal inflation caused by it are enough to offset the benefits that come from the MW.
(2) The Market is not ‘Objectively’ Fair
The ‘fairness’ of free market wages is questionable at best. This is especially true since fairness isn’t exactly the goal of the market anyways - it’s profit. Since this is the typical desire of all businesses in the free market, it becomes clear that the competitive nature of the market is not necessarily enough to overcome the incentive of businesses to cut production costs (as much as possible) while also maximizing revenue, to yield a maximized profit. This desire of the market pretty much tells you that there needs to be some regulating factor - apart from free market competition, to keep minimal wages at healthy levels.
(3) Access to Basic Goods
Essentially, the minimum wage allows for more disposable income to those on the lower end of the ‘class spectrum’. This, in turn, allows those who receive minimal wages to access more of the basic living essentials that they would not otherwise be able to afford, should the minimum wage cease to exist.
This does have positive effects on the economy as a whole. Providing more people with the ability purchase more basic goods increases demand in those markets and in turn results in more production, leading to more economic growth.
This is in many cases referred to as the consumption function, which is a mathematical formula developed by Keynes, which goes like: 
C = A + MD
A represents the level of spending at zero income
M is the ratio of the rise in pay a person will spend
D is disposable income
C is total consumption spending
So, all other things equal, if the level of disposable income were to be increased, there would be a higher level of consumption spending. Of course this does not warrant a MW rise of, say, $50, but reasonable MW levels would promote healthy levels of consumption in the economy.
(4) Productivity Benefits
A rather strong theory applied to the Minimum Wage argument is known as the efficiency-wage theory. In a nutshell, the theory is that setting a wage higher than the one set by the basic supply & demand mechanism would in turn have positive benefits to the productivity of that business.
The application of this theory to the MW allows us to notice that the MW does most likely have a net positive effect on the productivity of a business.
(5) Income inequality
While I will agree that income inequality is not inherently bad, as it is probably an inevitable byproduct of a growing capitalist economy, that does not mean it can’t grow to unhealthy levels. As indicated in Thomas Piketty’s Capital in The Twenty-First Century, development in widely available capital such as modern technology does play a role in today’s inequality. Piketty points out that when the rate of returns on capital investment outperform the rate of overall economic growth, inequality is bound to rise.  It can’t keep rising without eventually becoming a problem, and although technological advancements are pretty much inevitable today, we need to take alternative steps to somewhat alleviate the issues of inequality on low-wage workers.
The minimum wage does in fact send a strong counterbalancing effect to that rising inequality. An MIT economics paper studying this very issue concludes that:
“...between 1979 and 1989, the decline in the real value of the minimum wage is responsible for 30 to 55 percent of the growth of lower tail inequality in the female, male, and pooled wage distributions” 
So to conclude, the MW is a necessary policy to combat the effects of rising inequality in the modern economy, making the effects of its abolition completely counterproductive and detrimental in terms of inequality.
*Note: Given how famous the book in source #3 is, simply looking up “Capital in the twenty-first century forces for divergence” would be enough to read about the source. Here is one article that explains it: http://tinyurl.com...
Minimum Wages and Employment: Theory
Neoclassical Model : The neoclassical model, which is the model taught in most textbooks, is very straightforward. The model assumes labor and product markets are competitive, there is only one type of labor, output is produced with labor and capital, and workers are covered by the minimum wage. According to the model, setting the minimum wage above the equilibrium wage raises a firm’s marginal cost of production, and leads to two effects.
First, the price of output rises and thus demand falls, leading to a decline in production (scale effect). Second, higher wages cause firms to substitute capital for labor (substitution effect). As a result, employment declines.
Thus, setting a minimum wage prices out workers who do not produce a certain amount per hour. A worker worth $5 an hour will have a hard time finding work at $7, for example.
The Keynesian Model : Despite Keynesianism’s association with the left, most Keynesian economists believe minimum wages produce unemployment. Keynesian models say prices are sticky, and sticky prices for labor cause unemployment. During a recession, prices do not fall, and it is difficult for the market to adjust. In a classical perspective, prices adjust rapidly, turning downward and, over time, going back up with full employment quickly restored. But, as prices are sticky, this adjustment does not occur rapidly in a Keynesian model; this is why fiscal and monetary stimulus are so important during downturns. A minimum wage worsens this: prices for labor cannot fall below a certain point, making a recovery much more difficult. This leads to more unemployment.
Monopsony Model : The monopsony model is the only model that claims minimum wages do not reduce unemployment. In this model, a business is the single employer and thus faces a downward sloping supply curve. For this reason, a monopsonist must provide higher wages than would occur in a competitive marketplace. Minimum wage hikes, therefore, have no effect on employment—and, in some cases, increase employment. This model, however, is generally “not viewed by most economists as a sensible model of low-wage labor markets, which in most industries and geographic areas consist of numerous small firms.” There are exceptions, of course, but this theory is not accepted.
Therefore, on a theoretical level, we can infer that minimum wages lead to higher levels of unemployment than there otherwise would be.
The Historical Consensus: Studies dating before the 1980s almost unanimously concluded that minimum wages reduced employment. While a few economists had dissenting theories, the evidence was fairly lopsided. The old research culminated in the Brown, Cohen, and Gilroy review of 1982. The scholars surveyed hundreds of studies on the topic, and concluded that a 10% increase in the minimum wage would lead to a 1-3% decrease in employment for low-skilled workers . The study was seen as to rigorous, so expansive, that little research was published on minimum wages for the next decade.
New Minimum Wage Research: The first wave of new minimum wage research arrived in 1992, ten years after the Brown et al. review, in a symposium of the Industrial Labor and Labor Relations Review, a prestigious economic journal. This is where the famous (or infamous) Card, Krueger, and Katz studies were published. These studies challenged the Brown consensus, and argued minimum wage hikes had little effect on employment. A flurry of new research came forth, either backing or opposing the Card et al. research. By the end of the decade, most researchers had again come back to the Brown consensus, and believed minimum wages reduced employment.
This section of research culminated in the review by David Neumark, of UC Irvine, and William Wascher, a Federal Reserve economist. They reviewed hundreds of studies from the 1990s to 2006, and confirmed the Brown report: a ten percent increase in the minimum wage leads to a 1-3% decrease in employment .
Voting with their feet
The way people “vote with their feet”—that is, how people migrate from one area to another—is one of the most accurate ways of gauging how certain policies affect certain groups. The hordes of East Germans who attempted to enter West Germany in the aftermath of World War II suggest the living and political conditions were better in the free West than in the repressed East. The hundreds of Chinese citizens who fled to Hong Kong, one of the freest economies in the world, during the Cold War also suggests the conditions in Hong Kong were superior to those in Communist China. The fact no Western nation had to set up walls to keep people in suggests a lot.
In the same way, we can determine the effect minimum wage laws have on low-skilled workers by seeing if low-wage workers flee higher minimum wages. Research by economist Joan Monras, who works with the Paris Institute of Political Studies, answers the question. She believes, theoretically, if minimum wages harmed low-skilled workers, these type of workers would flee to jurisdictions where minimum wages were lower or nonexistent. She empirically tests her theory.
To do this, she looked at state minimum wages between 1985 to 2012. Her models showed a few predictable results: 1) Those who kept their jobs earned more. 2) Workers with few skills had an easy time finding full-time employment before minimum wage increases. After minimum wage hikes, the job search became much more difficult. 3) High wage workers, who would not be affected by minimum wages, were used as a control group—evidence also bore out the conclusion that they were not affected.
Monras also found that minimum wages, while they increased wages, reduced employment—and employment fell more than wages rose. A one percent increase in wages due to minimum wage hikes led to a 1.2% reduction in full-time employment. Based on this evidence, the model predicted that low-wage workers would flee areas with high minimum wages—and they did.
Monras found that, “A 1 percent reduction in the share of employed low-skilled workers [following minimum wage increases] reduces the share of low-skilled population by between .5 and .8 percent. … workers for whom the [minimum wage] policy was designed leave the states where the policy is implemented.”
Harms of unemployment
As I have written in other publications, minimum wages price “young workers out of the market and prevents them from getting valuable work experience.” Lowering, or fully abolishing the minimum wage, would allow unskilled workers to “enter the workforce and learn important skills.” For teenagers, who are the most affected by minimum wage laws, abolishing the minimum would “increase their future wages and reduce their idleness.”
As I’ve written elsewhere, “If the job market were to be represented by a ladder where more experienced and skilled workers climb to the top, a minimum-wage hike would saw off the bottom rungs – unskilled workers wouldn’t even have a chance to jump on!”
Minimum wages, by pricing workers out of the market, make workers worse off because the longer people are idle, the fewer skills they have. Minimum wages undoubtedly harm workers in the long-term.
Not only that, but unemployment in general, outside of skill acquisition, causes larges amount of financial and emotional distress. Long-term unemployment leads to not only less income, but also worse health. Children in homes with unemployed parents have lower academic achievement.
A Gallup survey found that, “unemployed Americans are more than twice as likely as those with full-time jobs to say they currently have or are being treated for depression—12.4 percent vs. 5.6 percent, respectively.”
We must remember those who are unemployed due to minimum wage laws are not just statistics. They are living people with dreams, needs, and feelings—just like us. The unemployment caused by minimum wages reduces their future income, is deleterious to their mental health, and is deleterious to their children, who are innocent bystanders in all of this.
With this in mind, I call for an end to the immoral, destructive, and disgusting minimum wage law.
1. Neumark, David and William L. Wascher, Minimum Wages, 39.
3. Neumark and Wascher, Minimum Wages, 54.
5. Minimum Wages is one version of their survey.
To summarize my opponent’s last round, the unemployment effects of the MW are his only contention. Since unemployment is his only argument, needs to prove that the MW has significant unemployment effects. To win this debate, I need to prove that the MW is not responsible for significant unemployment effects. My opponent, in turn, would also need to rebut my arguments in R1 regarding productivity, consumption, and inequality.
As per my opponent’s explanation of the three models he has introduced in his arguments, it appears that the neoclassical and keynesian models hold great disagreement with MW policy, while the monopsony model, which my opponent claims economists do not accept, does not.
Even if we assumed that this was true, my opponent can’t claim that because economists reject an economic model in general, that there can’t be the odd issue that economists would accept its position on. In this case, my opponent is saying that because the monopsony economic model is rejected by economists, that it is wrong on ALL issues.
It wouldn’t be very productive to address the specifics of each economic model my opponent brought up, but I’d just like to remind the voters that this argument is purely theoretical. It makes the assumption that companies are not at all willing to accept reduced profits, especially when it still benefits them more to keep all their employees instead of saving by laying them off. For example, if John employs 2 minimum-wage workers who work effectively, and the MW rises by a few dollars. If it is still beneficial to John to keep all his employees than it would be to lay one off, then he would most likely keep both employees. I know this is a hypothetical, but its purpose is strictly to rebut the false dilemma that my opponent has introduced: that there is either no minimum wage where the most people are employed, or there is a MW where much fewer people are employed. The point is to try and find a balance, where there is a MW and a maximum number of people are employed.
Here my opponent bases his unemployment argument on the “Brown consensus”, which he states is the most generally accepted theory against the MW. While he says this, however, he attempts to dismiss contradicting theories such as the one formed from the famous Card & Krueger study, which is still viewed as a relevant and powerful study by award-winning economists like Paul Krugman.  Additionally, Krugman also mentions that “There’s just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America.”
This study was not mentioned in my arguments, however since my opponent has brought it up, I should be able to discuss its contents. In essence, the study was conducted at the border between two neighboring states: New Jersey and Pennsylvania. The study found that when New Jersey raised their MW while Pennsylvania did not, there was no negative effect on employment. In fact, the study had found that employment increased in the state where the MW was increased. 
Since this is a conflict of sources, my opponent would need to explain why he thinks the consensus regarding the MW is centred around his study, especially when famous economists like Paul Krugman have changed their opinions on the MW due to the Card-Krueger study, as Krugman mentions in a fairly recent article (2015) in source #1.
Voting with their feet
For some reason my opponent is analogizing countries with the MW policy to oppressive countries like Communist China. The analogy does not work. The fact is that there are many stronger factors that play into the migration of people from one nation to the other. Surely today you, or most people would agree that living in the US is better than living in Hong Kong, despite the fact that there is a MW in America. Why? Maybe due to unrelated factors such as poor air quality.
The fact that I have not seen any economist cite, or even comment on the study my opponent has referred to brings into question the reliability/validity of the study. It’s not possible to go over the entire study and analyze it for any issues in the short time frame provided by the debate, but if the evidence was conclusive in the debate, then there would at the very least be a few economists who refer to it on this issue. Since this has not occurred, the study can’t be used to jump to the conclusion that the MW is bad.
I am not going to address my opponent’s last argument regarding the harms of unemployment in too much detail, since we both agree that unemployment is bad. The question is whether or not the MW causes this unemployment, which is the direction this debate has headed.
While I never made this argument, my opponent attempted to preempt the argument. It should be noted that most research finds that minimum wages increase inflation a moderate amount, and the inflation costs primarily fall on the backs of the poor.
To a degree, my opponent may be correct: assuming everything he says is true, the inflation effect will be outweighed. As we shall see, little of what he says holds up to close scrutiny.
R2) Is the Market Fair?
My opponent bases this argument on the arbitrary and undefined term “fairness.” Fairness is a weak criteria for analyzing any policy proposal because what one calls “fair” is dependent upon background, ideology, and education. “Fairness” is not measurable.
What I will say is that the way the market sets wages is not the way my opponent says it does. He says the market is about “profit.” This makes it sound like a businessman will always pay workers as little as possible if there is no minimum, which means market wages are “unfair.” This argument is flat out wrong.
Unless there is a monopoly on an industry (which is rare), it is not one singular business owner setting the wage; instead, there are multiple businesses competing for high quality labor. This leads to a competition over workers, meaning wages are set by supply and demand.
In a competitive marketplace, an efficient worker who feels as though his current employer is paying him too little has two options. First, he can demand higher pay; sometimes the worker may have help from a labor union. The worker may receive higher pay because the businessman—who is thinking about profit—wants to keep the worker in order to continue running a profitable business. Second, he can quit his job and look for work elsewhere—this usually occurs if the first step fails.
This system is how wages are set today. In fact, Switzerland still has zero minimum wage law—they voted against the highest minimum wage in the world when it was put on a ballot, because they are smart—and employers, on average, pay over $25 per hour.
In the US, California illegal immigrants—totally unregulated with no protections or minimum wages whatsoever—earn over $11 per hour. In the United Kingdom, the abolition of wage councils did not reduce wages at all.
Wages are determined by supply and demand, not a greedy businessman who want to pay all of his workers slave wages. If he was to do that, workers would flee his business to another offering suitable wages—and he would suffer as a result. A businessman, who is interested in profit, must pay his workers a “fair” amount in order to keep them employed. It is not out of the goodness of his heart—it is out of necessity from the marketplace.
On top of all of that, this entire begs the question: Are government mandated wages “fair?” Minimum wages are entirely arbitrary. Why $7, $9, $10, or $15? These arbitrary price floors are determined more by politics than by economic realities. Market wages, on the other hand, are entirely determined by economic realities and much more effectively compensate workers in a “fair” manner.
R3) Access to Basic Goods and Consumption
As I noted above, abolishing the minimum wage would likely have little effect on the vast majority of workers as their wages are determined by supply and demand. As most workers already earn above the minimum—again, indicating a minimum wage is not needed to have people being paid large amounts—I question the logic that a minimum wage is needed to ensure a certain living standard.
In fact, there are much better ways to ensure access to basic goods and services than minimum wages. Replacing the welfare system with a Universal Basic Income of a certain amount would make minimum wages obsolete, and expanding tax credits (like the EITC) for labor would also increase wages to a certain specified level. Neither of these policies would have the disemployment effect trade-off of the minimum wage.
These policies would also be much better targeted to the poor. The vast majority of those affected by minimum wage laws are not poor, and many poor people do not even work. EITC and a UBI would be much more of a boon to poor workers (and, in the case of the UBI, non-workers) than minimum wage laws.
My opponent then claims minimum wages increase consumption and, therefore, lead to more jobs and economic growth. Unfortunately, this is not what minimum wages accomplish, and there are a couple reasons why.
First, it assumes the increased consumption by the poor will outweigh the disemployment effects minimum wages have. Economist Joseph Sabia has calculated the effect, and finds that minimum wages reduce GDP. The negative effect on sectors that hire low wage workers outweigh the positive impacts on other industries due to more consumption. There is no evidence that minimum wages will be the big stimulus advocates hope it will be.
Second, minimum wages are a de facto tax increase. They reduce the returns on capital and investment as one cost—labor—increases. They serve a similar function as taxes do: to take money from the wealthy in order to give it to the poor. So this means there is a tradeoff: more consumption, possibly, but many business owners will be facing higher costs and thus invest and expand less.
A minimum wage may theoretically increase consumption, but the two competing factors—increased costs to business investment and the harm done to industries that rely on low wage work—act to counterbalance this effect. I strongly doubt the argument that minimum wages increase economic activity; if anything, they reduce it.
R4) Efficiency Wages
My opponent’s portrayal of efficiency wages is disingenuous; he forgets to mention that efficiency wages have always been about explaining persistent unemployment.
As Harvard economist Greg Mankiw notes, “Persistent unemployment is a puzzle for economic theory. Normally, economists presume that an excess supply of labor would exert a downward pressure on wages. A reduction in wages would in turn reduce unemployment by raising the quantity of labor demanded. … New Keynesian economists often turn to theories of what they call efficiency wages to explain why this market-clearing mechanism may fail. These theories hold that high wages make workers more productive. The influence of wages on worker efficiency may explain the failure of firms to cut wages despite an excess supply of labor. Even though a wage reduction would lower a firm’s wage bill, it would also—if the theories are correct—cause worker productivity and the firm’s profits to decline.”
To summarize the theory, it attempts to explain why firms do not cut wages when they should. Due to the fact firms do not cut wages, unemployment increases. There is a trade-off that cannot be ignored.
My opponent may see this as a positive trade-off. That’s perfectly fine, but not discussing the trade-off is mendacious.
Efficiency wages do not really call for higher minimum wages, either, for a few more reasons.
First, efficiency wages only work if a firm is paying more than everyone else. Firms, like Costco, that wish to do so are therefore at an advantage. But if everyone is paying a higher amount due to minimum wages, the efficient wage effect will dissipate.
Second, what one firm does is not necessarily good for others. Costco built its entire model around paying their workers more; a small business owner, or another company, may not have the resources to do so. What is good on a microeconomic level may not be good on a macroeconomic level.
Third, businesses analyze their profits all the time. They are always looking for ways to increase profits and reduce costs. If paying workers above a prevailing market wage was a good thing, companies would do it on their own. If they are not doing it now, they must’ve decided that is not good for their business. I highly doubt politicians and bureaucrats know what is good for businesses more than the business owners themselves.
For the multiple reasons above, efficiency wages do not really provide a strong reason to have a minimum wage. There is a trade-off, businesses would raise wages if they thought it would help them, and mandating higher wages would reduce the effect as everyone is paying more. Minimum wages do not “increase productivity” and help businesses—if they did, business owners would already be doing it; we wouldn’t need a mandate.
Piketty’s key argument is that r > g—the return on capital is larger than economic growth. If this continues, all of the wealth will end up in the hands of those who control the capital (the evil capitalist pigs!) and then everyone will be worse off because of it. I doubt this claim.
The biggest issue with it is that people die, people do not live forever. When they die, their wealth is dispersed and the cycle begins again. If people lived forever, sure, the top one percent would end up owning all of the wealth. But they don’t. And their inheritors are generally not good at keeping all of the wealth: after a generation or two, the rich get poorer. This makes it impossible for all of the wealth to become controlled by one group of people, and blunts the harms of inequality.
And Pikketty also ignores socioeconomic mobility. Between 1996 and 2005, the top 1% saw a decline in wealth by 26%. How? Because many people in the top fell to lower income levels over time.
Not only that, but a recent paper from the National Bureau of Economic Research finds that minimum-wage hikes reduce “average income, and income growth of low-skilled workers over short and medium-run time horizons,” and, even more disturbingly, finds that these laws lead to “declines in economic mobility.”
3. Neumark and Wascher, Minimum Wages, 291.
Thanks to 16kadams for a great debate. I learned quite abit.
Also, sorry for taking alot of time this round, I've been quite busy, with school and other work. Anyways, here is my defens
The study linked by my opponent concludes that a 10% increase in MW may cause inflation of no more than 4% on food prices and overall inflation of 0.4%. This is largely outweighed by the disposable income benefits of the MW, could be attributed to the higher demand generated from increased consumption that occurs due to the existence of the MW.
The argument here was misunderstood by my opponent. I did make note of the existence of the “natural” buffer to changes in wages, known as competition, which I referred to as “the competitive nature of the free market”. My argument was not so much that the supply & demand chain is bad, but again more of a preemptive argument against the naturalistic fallacy that is assuming the natural supply & demand cycle is inherently the ‘best’ system, especially for the labour market, simply because it occurs naturally.
As he proceeds this argument, he brings up Switzerland and their “high” minimal wage levels, implying that the lack of an MW enforced at the federal level has directly led to high wages. But Switzerland is also very famous for its extremely high cost of living.  Besides, Switzerland and America are very different countries in very different ways. America has many more and much larger financial responsibilities around the world than Switzerland does, paired with a much larger economy and a much greater population, comparing the two countries would be like comparing apples to oranges.
Access to basic goods
The EITC and UBI do sound like reasonable ways to alleviate the poverty issue. However, those are more directed to helping the unemployed rather than helping the employed. The MW and the EITC (and UBI) could all exist at the same time, so to say that one replaces the other isn’t exactly accurate. The EITC, for example, could incentivize the unemployed to find work by applying a tax credit on low income work, but the MW is designed to protect the wages that those people earn while they are working.
My opponent argues that rises in MW levels reduce GDP, making this another trade-off. However, assuming for a minute this is true, since my opponent hasn’t made clear exactly what areas in the market are experiencing lower production, then we would need to deduce that the drop in GDP is caused by the lack in capital investment as my opponent explains in his next paragraph. If capital investment is in fact decreased from the MW, it would result in jobs being more labour-intensive, which is desirable in the effort to solve the income inequality issue, as returns made from capital investment only get re-invested into more capital, shrinking the number of unskilled labour jobs in the market.
The point is to balance out the effects of technological development, which would increase the labour’s share of GDP.
In fact, the argument of ‘less capital investment’ contradicts the ‘substitution effect’ that my opponent argued on the neoclassical economic model in R2. Since my opponent has already conceded that capital investment is moderately reduced by the MW, then he cannot argue for the substitution effect mentioned in R2.
The theory of efficiency wages is clear: paying a worker at a higher rate than the one set by the supply demand chain has a positive effect on productivity. My opponent is attempting to minimize its application, just because the theory was formed for a specific reason. Here, he is saying that because the efficiency wage theory was designed to explain why some businesses pay higher than others, the theory is not applicable here. If theories could be dismissed like that, then we could also dismiss many accidental discoveries and the theories derived from those discoveries based on the notion that theories are only valid in the contexts they were discovered in.
This is not a matter of competition, as my opponent is saying, where companies like costco achieve more productivity because they give more wages than everyone else, and if the other companies gave higher wages then the effect of efficiency wages would be lost. My opponent is clearly misapplying the concept of competition in this scenario. Wages may be somewhat competitive in the market, but for the worker it is not a matter of competition. If staff A at costco makes more than staff B at walmart, but suddenly walmart increases wages given to staff B, and staff A and B make the same, how would that make reduce the effects of efficiency wages to staff A or B? I doubt the workers from either staff group care what the workers from other groups are making, as long as they are satisfied, or at least okay with their own wages.
My opponent is trying to isolate my argument in an attempt to negate the resolution based on the one argument alone. I’m not saying that the MW should exist because just because it would benefit companies. I’m saying that, paired with the benefits of the MW (as mentioned in my other arguments), there are also minimal impacts, if not, positive impacts on businesses from the existence of the MW.
As I mentioned in R2, I acknowledge that income inequality is not inherently bad. I didn’t say that everyone is worse off because of moderate levels of income inequality, as capitalism increases the overall availability of wealth to both the rich and the poor. However, I also said that inequality can eventually become a problem.
The problem with the r > g theory is not that people die. A “generation or two” is enough time for inequality to rise to very unhealthy levels. It’s happening now, as Piketty states, that capital returns are mostly re-invested into more capital, maybe expanding the national income, but at increasing amounts circulating back to the rich and not invested into labour. If this continues, the labour’s share of GDP will eventually shrink, as it is happening now. 
Economic classes are relative, since the it is a comparison of one person’s level of income to everyone else’s. The wealthy may have seen a small decline in wealth between 1996 and 2005, but the share of wealth by the wealthiest classes have seen an overall (general) upwards trend to this day .
I have demonstrated that a minimum wage is necessary to not only protect worker wages from the decline caused by market forces, but also to aid in the process of solving the extreme inequality issues that America is facing today. Overall, this debate focused greatly on the unemployment issue, as well as the economic effects of the MW. My opponent's arguments about unemployment consists of innaccurate analogies as well as the unwarranted dismissal of the Card-Kreuger study. I have addressed these issues in R3, and have shown that the U.S should not abolish the minimum wage.
My opponent claims my argument against the monospy model is like this:
1. Economists reject it
2. Therefore, it is wrong
He then claims, with this logic, it is wrong to assume the model “is wrong on ALL issues.” This final bit I don’t even understand—some industries (like electricity companies) function are monopolies, but this is the exception rather than the rule. The argument was not that the monopsony model is always wrong; rather, it is that it is generally wrong and not applicable to the economy at large, especially low-wage industries that rely upon minimum wage workers.
Also, the claim wasn’t simply a simple appeal to authority. The argument was economists generally throw out the model because monopsony is extremely rare and not applicable to low-wage markets in the United States.
My opponent then claims “argument is purely theoretical.” Ignoring theory simply because it is “theoretical” is foolish. Philosophy, which is based on logic, is “theoretical,” yet we have relied on logic and philosophy throughout this debate in order to make our cases. Simply because something is “theoretical” does not make it wrong.
In fact, theory is extremely important in economics. As economist George Schultz once said (in a form of a song to Milton Friedman), “A fact without a theory, Is like a ship without a sail, Is like a boat without a rudder, Is like a kite without a tail. A fact without a figure Is a tragic final act, But one thing worse, In this universe. Is a theory without a fact.” Theories are dependent on facts in order to demonstrate their veracity. But a fact without a theory—in this case, empirical studies backed up by the neoclassical and Keynesian models—are fairly strong. The simple fact that the monopsony model is very rarely applicable puts a whole in my opponent’s empirical response via the Card and Krueger study.
It should also be noted that my opponent’s counterargument is entirely microeconomic. John’s firm might very well be able to function with a higher minimum wage, but that doesn’t mean it would have the same effects on a macroeconomic level nor does it mean a government mandated minimum is more efficient than the world before the mandate; in fact, it is very likely that the new wages actively harm John’s business. His reduced profits make it harder for him to hire future workers, and thus the argument still stands.
Not only that, but the example also assumes there are no alternatives. With higher wages, things like automation—which beforehand were not economically competitive with labor at lower wages—become more attractive. This means minimum wages may force labor to become substitutes with automated technology. Even the example with John seems to mesh well with neoclassical theory!
D2) Ah, Card and Krueger
Card and Krueger is the classic pro-MW study. The study is essentially bogus, and I suspect Krugman’s support of the MW is more due to ideology than empirical facts—which is odd, as Krugman is usually a legitimate economist (despite the fact we often disagree). There are multiple flaws with the approach.
First, as the study relies upon surveys, the study misses out on a lot of data. For example, the study will only obtain data from the survivors! As the brilliant economist Thomas Sowell has observed, “Imagine that an industry consists of ten firms, each hiring 1,000 workers before a minimum wage increase, for an industry total of 10,000 employees. If three of these firms go out of business between the first and second surveys, and only one new firm enters the industry, then only the seven firms that were in existence both ‘before’ and ‘after’ can be surveyed and their results reported. With fewer firms, employment per firm may increase, even if employment in the industry as a whole decreases.”
Second, phone survey data is notoriously unreliable and, even when accurate, the results are rarely precise. David Neumark and William Wascher, economists from UC Irvine and the Federal Reserve, respectively, reanalyzed the date using official payroll datasets. With this superior methodology, they found “a decline in employment in New Jersey fast food restaurants relative to the Pennsylvania control group.” Therefore, the minimum wage hikes in New Jersey did not have a positive impact—they harmed workers they wished to help. The Employment Policies Institute found many other issues with the study, noting that the survey failed to define to the employers what part time work was and the time frame in question.
The study is so bad, EPI argued, that no meaningful conclusions can be drawn from the data.
It should also be noted I did not base my argument on the brown consensus. I also cited two literature reviews by Neumark and Wascher—2006 and 2008—which were published well after the Card and Krueger studies. In fact, Neumark and Wascher only look at studies published since then, and still come to the same conclusion as Brown did two and a half decades before.
The evidence is clear: minimum wage hikes reduce employment and harm workers.
D3) Voting with feet
My opponent completely misread my argument. Nowhere did I say minimum wages were in any way, shape, or form like communist China. All I said was if policies like those in China had caused people to “vote with their feet” because they had a better life elsewhere, it meant if low-wage workers vote with their feet due to minimum wage laws, it would be indicative on the overall effect minimum wages have on the poor. If minimum wages make workers flee their state to states with lower minimums, that would indicate they have “voted with their feet” and have decided lower minimums are better for them than higher ones. The argument is fairly simple.
My opponent’s only response to the research here is this: “The fact that I have not seen any economist cite, or even comment on the study my opponent has referred to brings into question the reliability/validity of the study.”
This makes absolutely no sense. The vast majority of economists do not comment on every single published study. In fact, the vast majority of the studies published in the American Economic Review—the most prestigious economic journal in North America—likely receive few (if any) comments. That does not mean the studies are meaningless, flawed, or unimportant. My opponent’s entire response is a cop-out—he has no response to the research. In other words, he essentially drops all of the information.
With no information—or, for that matter, theory—opposing this argument, it essentially flows towards Pro by default. Low wage workers have decided minimum wage laws are so deleterious to their economic health that it is worth it to move away from their established home into states where the minimum wages are lower or nonexistent. That is significant, and it strongly suggests minimum wage laws hurt those they are meant to health: the poor, the downtrodden, and those who have little hope of rising up.
Minimum wage laws are well intentioned. My opponent—and those who support minimum wages—are genuinely nice people. They don’t want to deprive entire families of employment. They don’t want to deprive entire communities of wages. They don’t want to cause pain. But that’s exactly what their policies do. Don’t let feelings interfere with public policy; we need to look at the real world results of these policies. Unfortunately, the effects are more poverty, less employment, and less economic mobility. I hope the voters choose to vote for the motion to abolish mandatory unemployment—I mean minimum wage—laws.
2. David Neumark and William Wascher, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment,” American Economic Review (2000): 1390.
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