The minimum wage should not be raised to$9.00 as campaigned for by the President.
Debate Rounds (4)
Round 1 for acceptance only
I wish you good luck.
Let's start with a brief history of the minimum wage. The first minimum wage was established by Franklin Delano Roosevelt in 1938, and was 25 cents and hour. It was established under the Fair Labor Standards Act, as part of the New Deal. Since then it has been increased over 50 times, most recently reaching 7.25 under President Bush. (1) A good and necessary thing, the minimum wage protects workers, especially unskilled workers, from abuse and under-payment. However, there is a point at which raising the minimum wage hurts not just business and the economy, but workers and the poor and unskilled as well.
THE MARGIN OF PROFIT
Many people think that employees are paid solely on how the pay that corporations believe they can get away with. In reality, pay is based on two things: competition and margin of profit. I will get on to competition later. The margin of profit is how much an employer makes off a given employee. Margin of profits, especially with a minimum wage as high as ours, are at an all time low. McDonalds this year has a margin of profit at 19.71%. (2) That means off a minimum wage employee, McDonalds makes 1.44 an hour. Add this to the minimum wage, and it comes out to $8.69. So, if you raise the minimum wage to $9.00, McDonalds will average a net loss on literally every employee, as all would have to be paid that number. This would give McDonalds three options: close, causing huge layoffs, move many jobs overseas, causing huge layoffs, or raise it's prices significantly, hurting both business and the lower class who rely on it for cheap food.
The margin of profit of McDonalds is higher then many, like Starbucks, with 11.17%, and Chipotle, with 10.76%. (3) Raising the minimum wage is a fiscal impossibility for most businesses, and will cause immense layoffs and higher prices, hurting unskilled workers and the poor, often the same.
COMPETITION IN THE JOB MARKET
While most media and popular sources constantly talk about people competing for jobs, businesses face huge competition for the most skilled and experienced workers. Every corporation will try to beat their opponent's pay in an attempt to get better employees. This works on the same principle as why prices decline. This is what protects many people from low pay, and in a competitive market what keeps pay rising. It is the reason less than 1% of the workforce is paid minimum wage (4).
Raising the minimum wage would punish the 1% who get paid minimum wage, as businesses would have to rely on skilled and experienced workers, as unskilled workers would not be worth it. The people who would suffer are the same people who the minimum wage is designed to help.
While employees receiving minimum wage often struggle to pay for bills and car and home payments, the people who are truly poor are those who have no jobs, who are unemployed. These are often uneducated and inexperienced. people, and they live in abject poverty. These people need jobs, and the way to produce mass jobs is not to raise the minimum wage to a point where businesses can't afford to risk hiring them. A lower minimum wage allows for more jobs for these people who really need them. For example, a business will not pay someone $9.00 to stand on a street corner and hold a sign, but a lesser pay may be justified for the business. An unskilled job, bringing much needed income to low-income and unemployed individuals.
THE DISASTROUS MODERN HISTORY OF THE MINIMUM WAGE
When FDR established the first minimum wage, some jobs were killed, but it evened out and managed to be an improvement to many worker's lives. As were many later increases. The latest was a 2009 increase to 7.25 which turned out disastrously. Over the next few months, more than 300,000 low-income employees lost their jobs as a direct impact, even with a 4% growth in the economy that quarter. (5) A UGA study finds that the raising the minimum wage does not alleviate poverty. Robert Nielson of the study said ""By and large, evidence says that minimum-wage increases don"t go to the people they are intended to help..." (6) Less than 15% percent of wage gains from minimum wage raises go to people below the poverty level, and that is far offset by people lowered below the line and dropped further down. Raising the minimum wage is a disaster.
Take a look at this chart comparing teenage, often unskilled, jobless rates to increases of the minimum wage:
This shows the effects of minimum wage raises on unskilled and inexperienced workers. (Teenagers) As the minimum wage increased, businesses were less and less willing to employ teenagers, creating an almost linear connection between the minimum wage and teenage unemployment. This is a very telling chart.
It is apparent that raising the minimum wage hurts the same people as it intends to help, and ends up helping almost nobody. Perhaps inflation will justify minimum wage raises in the future, but today it is a horrible idea for the economy, for business, and for minimum wage and unemployed people.
I'll leave it there for now. I look forward to my opponent's argument. Good luck!
(4) (5) http://www.thecommentator.com...
Now I will begin to Address your points:
Conservatives usually oppose minimum wage increases on the grounds that they will hurt small businesses and job growth. However, study after study has shown that raising the minimum wage does not have a negative effect on employment. In fact, an analysis of state minimum wage increases showed that those state boosting their wage "had job growth slightly above the national average." This holds true even when the economy is weak. Following Obama's State of the Union address, business representatives and conservative media pundits echoed the same talking points. Analyzing Obama's speech for Fox News, Nina Easton, an editor for Fortune magazine, repeated the claim that increasing the minimum wage is a "job killer." Michael Saltsman, research director at the business-backed Employment Policies Institute, told Fox Business News that "minimum wage hikes lead to job losses." Bill Herrle, executive director of the National Federation of Independent Business' Florida affiliate, told Sunshine State News that Obama's plan was a "job killer." But such dire predictions have never materialized. That's because they're bogus. In fact, raising the minimum wage is good for business and the overall economy. Why? Because when poor workers have more money to spend, they spend it, almost entirely in the local community, on basic necessities like housing, food, clothing and transportation. When consumer demand grows, businesses thrive, earn more profits, and create more jobs. Economists call this the "multiplier effect." According to Doug Hall of the Economic Policy Institute, a minimum wage hike to $9 would pump $21 billion into the economy. Moreover, since most minimum wage jobs are in "sticky" (immobile) industries -- such as restaurants, hotels, hospitals and nursing homes and retail stores -- that can't flee overseas, raising the level doesn't lead to job flight. Not surprisingly, the National Restaurant Association is, along with the U.S. Chamber of Commerce, one of the fiercest opponents of a minimum wage hike. In recent years, the nation's job growth has been concentrated in low-wage sectors, led by Walmart, the nation's largest private employer, whose pay levels are so low that many employees are eligible for food stamps. More than one-quarter of all jobs pay poverty-level wages. According to a National Employment Law Project study, the majority of new jobs created since 2010 pay just $13.83 an hour or less. This has contributed to the nation's widening economic inequality. Nobel laureate economist Joseph Stiglitz recently said, "Increasing inequality means a weaker economy" for all of us.
Overall we can see that a minimum wage increase is needed and beneficial.
My opponent makes his case by saying, "study after study has shown that raising the minimum wage does not have a negative effect on employment." This is simply a falsehood. Many reputable sources have found the disastrous effects of raising the minimum wage that I presented in round 2. I will show a few here:
1. A study done by the Southern Economic Journal, under economists Joseph Sabia and Richard Burkhauser, found that raising the minimum wage has absolutely no positive effect on poverty. "When we then simulate the effects of a proposed federal minimum wage increase from $7.25 to $9.50 per hour, we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from $5.15 to $7.25 per hour" (1) This study found no change in poverty, one of the studies more favorable to my opponent's side. Many find quite the opposite of what he claims.
2. A study by renowned economist David Neumark shows that a minimum wage hike actively kills jobs. "Minimum-wage leg- islation will increase wages at the cost of modest but significant reductions in employment". (2) Neumark did not elaborate on whether the unemployment out-weighed the wage gains, but it does not matter. Even if raising the minimum wage had no effects on poverty whatsoever, that implies what this study does; that some people are getting paid more, while other are laid off. This supports my argument, because while minimum wage employees may struggle to get by, they are much better off then those without jobs. (See "True Poverty", Round Two)
3. A third study, reported by the Daily Caller, report a University of Massachusetts study, led by Professor Bob Pollin, finds the same. He says "[Minimum wage] not a cure-all to poverty. In fact, the biggest source of low-income poverty is that people don't have jobs at all." (3) The study also finds "no statistically significant evidence that a higher minimum wage helped reduce hardship"
Indeed, despite my opponent's claims, studies almost invariably show either no or a negative effect due to the hiking of the minimum wage.
My opponent says of Republicans expectations of the minimum wage, "But such dire predictions have never materialized". However, history shows they have. 63% of states with minimum wage above the national average are suffering unemployment above the national average. (4) As reported by the Wall Street Journal, 300,00 unskilled teen workers lost their jobs following the 2008 minimum wage hike. (5)
And check out this chart, comparing Alaska's economic growth after the recession, before and after the minimum wage hike:
As you can see, Alaska's post-recession job growth was phenomenal compared to the rest of the country, until the minimum wage hike, where a noticeable difference in growth is perceived, where growth should have been accelerating as the recession grew farther away.
My opponent cites the "multiplier" effect, which states that the additional money workers would get from a minimum wage increase would be used to grow other business. This, of course, is a roundabout effect. The same money is stunting job growth and leading to layoffs. WIthout the hike, money is already in the hands of job-makers.
In conclusion, raising the minimum wage kills jobs, and does not in any overall way reduce poverty. Getting paid 7,25 an hour may be tough, but getting paid absolutely nothing is a whole lot worse.
I look forward to my opponent's next argument.
Sgt.Swag forfeited this round.
Sgt.Swag forfeited this round.
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