The Instigator
mongeese
Con (against)
Winning
18 Points
The Contender
brian_eggleston
Pro (for)
Losing
7 Points

There ought to be a government-mandated minimum wage.

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Post Voting Period
The voting period for this debate has ended.
after 5 votes the winner is...
mongeese
Voting Style: Open Point System: 7 Point
Started: 6/5/2011 Category: Economics
Updated: 5 years ago Status: Post Voting Period
Viewed: 3,390 times Debate No: 16885
Debate Rounds (3)
Comments (25)
Votes (5)

 

mongeese

Con

This debate is part of Freeman's tournament, Round 2. I will be arguing against the minimum wage.

Bob is a store owner who is looking to employ some workers for help with his store. He puts out job offers, and finds a person, Joe, willing to stack cans for him. Joe's ability to stack cans is worth about $6 per hour, so Bob offers him $5.50 per hour to do the job, and Joe accepts.

However, the local beurocracy declares that there must be a minimum wage of $7 per hour. If Bob hires Joe, he will lose about $1 per hour, so he chooses not to, and instead stacks the cans himself, more slowly. Bob has to do more work that he'd rather not do, and Joe is now unemployed. Joe wishes he could work for $5.50 per hour, but he can't, because the government said so. With less employment and more inefficiency in the shop, the store's revenue decreases, and the government gets less money from taxes. Everybody loses.

The minimum wage is clearly a negative force to be opposed.

Good luck, brian!
brian_eggleston

Pro

I would like to thank Mongeese for this interesting challenge and assert that, while labour costs, together with fixed and other variable costs, have an impact on a company's profit margin, labour costs cannot be treated in the same way as the others, and need to be subject to government legislation.

To illustrate why, I shall examine and extend my opponent's analogy as follows:

Bob's is clearly not running a viable business unless it makes enough profit to pay its staff the going rate of pay, but that's not what my opponent is saying, he's just saying that Bob is too mean to pay for a worker to re-stock his store and he'd rather do it himself to save a few dollars.

Well, that's fine, but Bob's business will never prosper unless he invests in human resources. Indeed, the service Bob provides his customers is likely to be inferior due to his store being short-staffed: not only will the shelves not be replenished during busy periods but shoppers may well have to wait in line for extended periods of time in order to be served.

This would provide Joe with the opportunity to escape the poverty trap of low wages and unemployment by opening a rival store opposite Bob's.

Joe could ensure his shop is fully staffed with shelves properly stocked with attractive goods, and have check out desks adequately manned so customers don't have to wait in long lines for the privilege of paying for their groceries.
Bob's former customers would, naturally, flock to Joe's store and Bob's business would soon go bust, leaving Bob bankrupt, legally-barred from becoming a company director, and out of work.

Now, Bob's wife would not be impressed by this change in the family's fortunes and the following conversation may well ensue:

"Bob, I've had enough. Our home is being repossessed because you haven't paid the mortgage; the children have been thrown out of school because you haven't paid the fees and, to top it all, my credit card was declined in the hair salon this morning and I had to spend the rest of the day sweeping up to pay for my cut and blow dry, and Charlene from next door spotted me and tweeted all my friends and they all came down to point and laugh at me through the window, and all this because you were too mean to pay Joe the minimum wage, and now he's eating your lunch. I'm sorry, Bob, but I'm leaving you and I'm taking the kids with me."

"But where will you go, Mrs Bob?"

"You know all those evenings you spent stacking cans instead of spending time at home with me? Well, Joe was round here keeping me company. I'm a woman, Bob, with a woman's needs and Joe was able to fulfil those needs – better than you were ever able to, ‘Mr Floppy'. Now Joe's store is making good money and he's bought a big house and he has asked us to move in with him, so I am. Good bye, Bob."

And so, the newly-estranged Bob would be left homeless and desperate for a job so he might decide to go to Joe's house, knock on the door, and when he answers, prostrate himself at his feet.

"If you've come to get your wife and kids back, Bob…" Joe might say, but Bob would probably interrupt him and reply: "No, no. All I'm asking for is a job."

"Well," Joe might reply "as it happens I do have a vacancy for a shelf-stacker, but I only value your time at $5 an hour so I'll hire a younger, fitter, more customer-focused candidate and pay them the minimum wage of $7 an hour instead. Now get out of my sight and never darken this doorway with your presence again."

So Bob would be obliged to accept any job going, which might be as a fluffer in the local gay bar where he would earn the minimum wage. This could be just enough to pay for a room in the neighbourhood crack house, where prostitutes might use his bed to turn tricks while he's out at work, and where he would probably have to check the sheets for used condoms and AIDS-infected syringes before he tried to go to sleep amongst the din of demented crack-heads trashing the room next door.

Then, some months later, a new government might be elected and announce that, in order to compete with countries such as China and India, the minimum wage in America is to be abolished.

On hearing this, Bob's boss at the gay bar could call him into the office and inform him that his wages would be cut to $5.

"$5 an hour!" Bob might exclaim.

"No, $5 a day." His boss might reply.

"But I can't survive on that sort of money," Bob might say.

"You ungrateful little wretch, fluffers in Calcutta make half that money," his boss might rage, "If you don't like it, you know what you can do."

So, no longer even being able to afford to rent a room in a crack house, Bob would find himself sleeping rough on the streets.

Then, one winter's night, he might be laying in a gutter, with cold and hunger having taken their toll on his weakened body, and Mother Nature might envelope him in a grim embrace and clasp him to her icy bosom, and as Bob twitches his last, he might well say to himself: "Oh, I wish I had never opposed the minimum wage."

Thank you.
Debate Round No. 1
mongeese

Con

Thank you, Brian, for posting your argument, although your story seems far from realistic.

My story, meanwhile, is actually visible in many instances across the country, as discussed here:
http://www.foxbusiness.com...

The incidents range from teenagers no longer getting their entry-level job to expensive robots replacing manual labor completely, killing jobs. Would you rather the employer hire a person for $5 per hour or a robot for $6?

Now, regarding your story. Firstly, you make it seems as if Bob is a greedy, miserly store owner who almost deserves his eventual fate. This is far from true. Bob wishes that he could hire Joe, but government just isn't making it economical. Many employers honestly regret that they cannot save these people from unemployment.

You claim that Joe opens up a new store to compete with Bob. This is doubtful, and Joe doesn't appear to be able to get even a minimum-wage job. Opening a store is rather complicated, and requires lots of work without seeing any real income for extended perionds of time. That just isn't going to happen. Secondly, Joe wouldn't be able to make his store more efficient by hiring the workers that Bob did not. The reason Bob did not hire Joe is because he realized that Joe wasn't worth the $7 per hour. If Joe ignores Bob's calculations, he will end up in the red, not in the green, and quickly realize why Bob couldn't hire him under the minimum wage laws. If Joe's plan does even better than Bob's plan, Bob, being more experienced than Joe, would have come up with Joe's plan years ago, and followed it accordingly. Logically, Joe cannot create a store that beats Bob's unless he has some hidden skill as a shop owner, which is rather unlikely, to say the least.

Moving on further through the story, Mrs. Bob claims that Joe was able to help her where Bob couldn't. However, if Joe is busy opening up a new store and trying to gather customers, he will have just as little free time as Bob, if not less. Add the fact taht Joe will not put Bob out of business, and he will not be able to take away Bob's wife.

Regarding Joe's decision not to hire Bob, the minimum wage is irrelevant. If Joe found a worker who is more efficient than Bob, then that worker will get the job. The minimum wage only means that if neither worker can be more efficient than the minimum wage, neither one can get the job.

Finally, we come to the abolition of the minimum wage in the United States. The idea that wages would fall to rock bottom is egregrious. Even in third-world countries, first-world companies will pay up to seven times the local wage: http://whiskeyandgunpowder.com.... They could pay only twice as much, but they don't. They pay well more. If they were competing not with the low wages of third-world countries, but each other in America, the wages would sit not far from where they are now. The difference is that more people would be hirable who could not be feasibly hired before.

So, our story ends not with the death of Bob, but Joe sitting in the soup kitchen, wishing he could actually do something with his life, when he sees a newspaper announcing that Congress has finally abolished the minimum wage. Elated, he goes to Bob, who hires him for $5.50 per hour, and with this entry-level job, Joe is slowly able to improve his worth until eventually he is happily promoted to assistant store manager. Both Bob and Joe are glad that the government is no longer destroying this mutually beneficial economic transaction.

Thank you.
brian_eggleston

Pro

With thanks to Mongeese for his rebuttal, I actually agree with him when he asserts that my ‘little guy pulls himself up by the bootstraps at the expense of a greedy and exploitative businessman' scenario is highly unrealistic.

He's right: even in the supposed ‘land of opportunity' a young man with drive and ability but without the benefit of an expensive education and not having access to private funding from a wealthy family would find it almost impossible to raise the finance to start a new business so, in reality, Joe would be almost certain to spend his foreseeable future in the poverty trap of low wages and unemployment, leaving Bob free to continue fobbing his customers off with a shoddy service.

One day, things may change and education will be provided according to academic ability rather than the ability to pay but, until then, the rich kids will prosper and the devil will take the hindmost.

Anyway, with regard to the minimum wage my opponent's economic analysis of the effects of the minimum wage is fundamentally flawed and the stories quoted courtesy of Fox Business are highly biased in favour of business owners, and here's why:

The primary responsibility of any profit-making organisation is to maximise the returns on its shareholders investments and the best way to achieve this is to keep costs, including labour costs, to a minimum.

Therefore, Bob would not employ someone if he didn't absolutely need to, whether the hourly rate were $5 or $7. If he did need an employee, he would employ one: either on a full- or part-time basis, as required.

The fact that he would be legally obliged to pay the employee $7 per hour rather than what he, personally, felt the market rate should be, puts him at no competitive disadvantage because all the rival stores in the area are similarly obliged to pay the minimum wage.

Of course, Bhobindra's Stores in Bombay, Bo-Bo Stores in Beijing and El Bobi´┐Żo's Stores in Bogota are not obliged to pay their staff $7 per hour and could pass that cost saving on to their customers, but it seems an awfully long way to go for a loaf of bread and a pint of milk.

Naturally, it is different for manufacturers with production facilities based in the US: but in order to compete with manufacturers in developing countries such as India, the government would not only have to abolish the minimum wage to allow firms to pay their workers the equivalent wage of the average Indian factory worker: INR1,600 (US$36) per month [1], but also to scrap the health and safety legislation that is designed to protect employees at work but which costs firms money to implement, and also turn a blind eye to the use of child labour.

The US Federal Government could do all that but to do so would be to turn the clock back at least 150 years and the United States didn't rise to become the greatest economic power the world has ever known by undercutting rival countries on price - it did so by using innovation and ingenuity to produce products that weren't necessarily cheap but were technologically superior and of better quality to those of any foreign competitor.

So, in conclusion, while workers' wages are, indeed, entered as a cost on the balance sheet, ruthless and unscrupulous bosses should not be allowed to treat them as just another commodity because, as well as being workers, they are also human beings and without the protection of the minimum wage it would be impossible for financially-exploited workers to live the dignified lives that all hard-working, law-abiding Americans Citizens deserve.

Thank you.

[1] http://www.indiastat.com...
Debate Round No. 2
mongeese

Con

Thank you, brian, for your response.

Ignoring the off-topic discussion of education, the first contention is that Bob will only hire people if he "absolutely" had to. However, this is false. An employer will hire an employee as long as the employee brings in more revenue to the business, using the employer's building and materials, than the employer pays the employee. Both parties must profit from the transaction.

Bob is looking into adding a new check-out line at his store. He predicts that this added line, requiring him to hire one additional employee, would bring in about $6 per hour. Therefore, he will only hire a cashier if their wage is less than $6 per hour. Joe wants to be that cashier, and is willing to work for $5.50 per hour, because he needs a job to sustain himself while at the local community college. However, because the government said that Bob must pay $7 per hour, he cannot hire Joe. Therefore, Joe is unemployed, Bob gets less revenue, Bob's customers must wait longer in line, the government collects fewer taxes, and everybody loses.

The employment, as you can see, is conditional to the minimum wage, opposing brian's suggestion. The minimum wage indeed causes unemployment. I even sourced business owners lamenting this everybody-loses scenario.

Brian mentions the rival stores, that are also handicapped by the minimum wage. They are also unable to hire more cashiers for more check-out lines. Therefore, none of the stores can expand, leading to longer lines everywhere. If the minimum wage is eliminated, it only takes one of a dozen stores to add a new check-out line, shortening waiting times and attracting customers from rival stores. This will compel other stores to also hire more cashiers to get their customers back. With no net change in customers, no stores will have an overall increase in revenue, but more people will be employed, and there will be shorter lines in all of the stores. If there aren't any more potential cashiers to hire, then the demand for cashiers will instead drive the wages of the cashiers up before settling on a fair market price.

My opponent goes on something of a tangent regarding competition from foreign countries, but I don't think Bob will be looking to move his store overseas, and cashiers and most other workers must be hired locally, making international competition completely and utterly irrelevant.

Brian makes a single final claim that the minimum wage is necessary "for financially-exploited workers to live the dignified lives that all hard-working, law-abiding Americans Citizens deserve." However, 98.5% of all working Americans make above the minimum wage [1], and those that do are only making that much temporarily. Current minimum wage jobs are entry-level jobs that allow the workers to show their ability to work and climb up the economic ladder. If business owners weren't willing to pay above the minimum wage where it is due, then everybody would be making the minimum wage. It is also certainly much better to hire a hard-working, law-abiding American Citizien for an amount that some beurocrats in Washington think is slightly too low than for that same American to have no employment at all, instead kicked to the street to stand in line at the soup kitchen and the welfare line, tragically degrading into a lazy leech all because of the government-imposed minimum wage.

Thank you, voters, for reading this debate, and thank you, brian_eggleston, for taking this debate, and good luck with your final round!

[1] http://talkofliberty.com...
brian_eggleston

Pro

Many thanks to Mongeese for providing me with the opportunity to participate in one of the most challenging, interesting and, above all, enjoyable debates I have ever had on this site and for proving to be such a worthy and courteous opponent.

Firstly, I would like to address my opponent's remark that "98.5% of all working Americans make above the minimum wage". Shouldn't that figure be 100%? This means that three out of every two hundred American workers are being illegally exploited by unscrupulous employers who are lining their pockets while their employees toil like coolies for less than the minimum wage. There should be a crackdown on these cowboy employers and the culprits should be punished to the full extent of the law.

Moving on, the fact is that if the minimum wage were abolished, shareholders would insist that company directors slash their wages bills in order to boost profits and, thus, increase the shareholders' dividend payments.

The result of this would be that the workers at the bottom of the pile, the unskilled or semi-skilled, would be forced to accept savage cuts in their pay or face being replaced by people who are currently unemployed.

This would not create any more jobs: it would just mean that the existing jobs would be less well-paid – that's because companies don't employ people unless there is work for them to do, no matter how little they have to pay them – corporate expansion is driven by customer demand, not by any desire to do the taxpayer a favour by reducing the number of people who have to rely on welfare payments.

The bottom line is that the abolition of the minimum wage would benefit wealthy investors at the direct expense of manual workers and their families, which would mean that the rich would get richer and the poor would get poorer.

And it would be a mistake to assume that everybody on the minimum wage is a school-leaver, by the way: cleaners, farm hands, menial workers in manufacturing and construction, road sweepers, shelf-stackers and so and so forth, can be of any age,

Anyway, back to Bob's Store. So he's thinking of adding a new check-out line to reduce the length of time his customers have to wait for the privilege of handing their money over to him, is he? Well, about time too, the service at Bob's Stores is absolutely appalling - if I was one of his customers I would shop elsewhere – even if it meant I had to pay more for my groceries.

Now, Bob has done his sums and he estimates this new check-out desk will generate $6 per hour profit, which is not enough to cover the wages of the person manning it (at least if he pays them the minimum wage). Okay, but it therefore follows that the same calculations would apply to the existing check-out desks, which is bad news indeed for Bob because it means his business is insolvent and he is legally obliged to cease trading unless he can raise sufficient capital externally to cover the losses his store is making.

Poor old Bob, it looks like he's going bust after all. Let's hope his house isn't repossessed and that wife doesn't run off with a business rival and that he doesn't end up employed as a sex worker in a gay bar and living in a filthy, rat-infested crack house.

Above all, for the sake of Bob's life, let's hope the government doesn't abolish the minimum wage.

Thank you.
Debate Round No. 3
25 comments have been posted on this debate. Showing 1 through 10 records.
Posted by F-16_Fighting_Falcon 5 years ago
F-16_Fighting_Falcon
Brian's story is absolutely hilarious! I'd give you points if I could.
Posted by ShackledNation 5 years ago
ShackledNation
I realize thidebate occured a month ago, but I had to respond to Brian's last statement. In that statement, he said that Bob could not hire a cashier because the costs of having a cashier were higher than his business could bear. Therefore, Brian concluded, the business was insolvent t and the services appalling.

What he fails to notice is that it is minimum wage that causes the services to deteriorate and make the business insolvent. In the end, because of minimum wage, businesses may actually be destroyed, thus creating less production in the economy, causing less workers to be hired, and increasing the price of goods as supply decrease while demand remains constant.
Posted by sadolite 5 years ago
sadolite
Think about how much you make and what your living standards are and go up or down from there. That is if you do work for a living. I couldn't possibly support my wife and two children making $20.00 an hour and not live in the most substandard conditions and provide all the things that I listed earlier that are deemed basic rights by the culture of entitlement. Nearly 1/2 of my paycheck would go to paying health ins. As a single person I could live some semblance of a life and save for retirement on $20.00 an hour.

But the point is really moot, wealth is amassed by what you do after work. Your job only pays bills. I laugh at people who complain about their lot in life when they just go home after work and sit on their a@@ and watch TV and play video games or even worse go to bars and spend what little money they do have on alcohol and partying or squandering it on money pit cars to look cool. It's pathetic.
Posted by mongeese 5 years ago
mongeese
Wouldn't that depend on where you lived and how many hours you worked?
Posted by sadolite 5 years ago
sadolite
If the point of a minimum wage is to pay a living wage as it so often argued by the left then the minimum wage should be $20.00 an hour for a single person. If one is going to have a car a house, health insurance a phone electricity, water all things considered to be the most basic things by the left. Then one would have to earn at least $20.00 an hour to pay these expenses.
Posted by RoyLatham 5 years ago
RoyLatham
There was no reason have made this debate entirely in the abstract. Congress had their research office round up about a hundred studies on what happens when the minimum wage is increased. In a few cases, the minimum wage was below the free market wage, so nothing happened. In that case, almost no one was making less than the new minimum wage anyway. Nearly always, unemployment increased.

The alternatives to hiring at the minimum wage are: 1. Move to fewer, more highly skilled employees, 2. Automate (e.g., McDonald's put in drink machines that automatically fill to the correct level), 3. Abandon operations that don't have enough margin to sustain the increase.

In any case, Con had the correct arguments, even though they would've been more convincing if backed up by references.
Posted by seraine 5 years ago
seraine
Kinda unfair to make a joke argument in round 2 and an actual argument in round 3 once con can't really refute.
Posted by mongeese 5 years ago
mongeese
But then Ted, who asks for $7 per hour, would rather lessen his demand to $5 per hour, more appropriately related to Frank, than go unemployed.
Posted by Ore_Ele 5 years ago
Ore_Ele
There are more workers than job openings, so an example that has more job candidates than available jobs is actually going to be fairly accurate.
Posted by mongeese 5 years ago
mongeese
1) That isn't necessarily true. If there are multiple auto-repair shops, and enough cars are breaking down, then people will go to the shop that can fix them up the best and/or the fastest. The shop that is fixing cars better will be more popular, and people will tend to go to that shop.

Naturally, if the customer doesn't care how long it takes for you to fix a car, and not enough cars are breaking down, then the speed in which you fix their car doesn't matter, but the quality still counts. They want their cars fixed well. The better you fix the cars, the better of a reputation the shop gets, and the more revenue the shop receives. If anybody, no matter how unskilled, can bring in just as much revenue as you, then that's really not a very important job, and you can't expect to be paid very much for it. Do auto-repair workers make minimum wage, though?

2) I still don't see your point. Why does this matter?

3) Comparing Indian workers to the American minimum wage is a far cry from comparing Americans to it. It may not be the stat you expected, but it isn't false, either.

4) BP is only going to hire you for millions less as the CEO if your ability to run the company doesn't cost them millions of dollars per year. Frank's skill can't compensate for his wage demand, so he can't get the job. One problem with your example with Bob, Frank, and Ted is that it assumes that there is only one job. If there's only one job, then we'll have an employed guy and an unemployed guy, and Frank is going to lower his standards accordingly. If there are multiple jobs, then Frank can go get a different job, and we've still got just as many people working.
5 votes have been placed for this debate. Showing 1 through 5 records.
Vote Placed by RoyLatham 5 years ago
RoyLatham
mongeesebrian_egglestonTied
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Total points awarded:70 
Reasons for voting decision: This a tournament debate which requires me to give all 7 points to the winner. Otherwise, it would be just Args to Con. More in Comments.
Vote Placed by CiRrK 5 years ago
CiRrK
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Reasons for voting decision: Gah, i dont like debates like this. However, I decided to vote Con because Pro merely utilized hyperbole to make his point but that didnt counter the economic analysis of Con. I believe there are too many variables to completely go Con's way but just in the debate itself I buy the argument that the MW hurts businesses and ties their hands so to speak into doing economically harmful acts. Tournament rules: all 7 pts to Con.
Vote Placed by Ore_Ele 5 years ago
Ore_Ele
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Reasons for voting decision: I felt that Pro failed to provide any mathematical counters to Con's example. And for Con, it would have been recommended to use some less bias sources, and maybe even check their numbers, I'll go into that in the comments.
Vote Placed by Cliff.Stamp 5 years ago
Cliff.Stamp
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Reasons for voting decision: Amusing side from Brian as always and mongeese could not carry the burden of proof as the argument that lower wages create more jobs was refuted by the argument that this would just induce a shift in wealth up the chain from brian. 2:1 Pro
Vote Placed by baggins 5 years ago
baggins
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Reasons for voting decision: Con creates a situation to present his case - which is not very compelling. It works only when the extra income earned ($6) will be below minimum wage ($7). And in this case the owner is willing to offer ($5.5) or do the work himself! I agree with Con that the shop is about to go bust anyway. I thought about penalizing Pro for profound ignorance about India. But it was way too funny. So I let it go...