The Instigator
SomethingOrdinary
Con (against)
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The Contender
tumeric
Pro (for)
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Raising The Minimum Wage

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Voting Style: Open Point System: 7 Point
Started: 10/21/2018 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,048 times Debate No: 118649
Debate Rounds (3)
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SomethingOrdinary

Con

Albeit a noble cause to champion the betterment of the lower class and fight for the right to higher income, I think there are some serious potential repercussions that could stem from arbitrarily raising the minimum wage or allowing it to adjust freely and based on the consumer price index or by some other impartial means of quantifying the current cost of living.

For instance, If you raise the minimum wage in general or allow it to fluctuate based on expenses, Either way you would be creating some kind of interference with where the equilibrium lies in the job market.

Why is that bad you may ask. . .

Arbitrarily setting wages to high would create a surplus of labor as employers wouldn't be able to instantly adapt to the increased labor costs and stop hiring/layoff current workers deemed non-essential. Allowing the wage to fluctuate with the cost of living would most likely cause wages to shoot up in the long term leading to a similar effect only with a higher cost of living to go along with it.

This is assuming that because wages would go up to match the new cost of living associated with various products and services, More money could now be spent on these items the next year creating a demand that would otherwise not be there. As a result the market would react and prices would go up causing wages to than react under this system and rise once more the following year, And so the cycle would continue either inflating the currency indefinitely, Or if wages became so high that employers were unwilling to pay them, You would then once more have a surplus in labor, As well as a surplus of overpriced goods that would now be in an economic free fall. People would be unemployed and unable to afford things, Then prices would fall out and businesses would shut their doors entirely.

At least that"s my doomsday scenario. What do you think? Is my understanding of the economics at play here at all accurate?
tumeric

Pro

Great topic, Thanks for bringing it up for debate.

There are also repercussions to not raising the minimum wage. I'll get to that.

But first, $15 is not arbitrary. It's based on an estimate of today's cost of living. Wages from yesteryear are more arbitrary by today's standards, And become increasingly arbitrary as time goes by.

Second, The whole point of capitalism is that it establishes it's own equilibrium despite constant change. That's the best thing about capitalism -- it balances itself out. Technology is constantly disrupting the equilibrium and nobody cares. But when we talk about labor's share, All of a sudden the economy is a finely tuned watch that can't handle disruption. This is a ridiculous double standard and bogus representation of economics.

Third, Businesses cut non-essential expenses anyway -- they're not charities. This is why we see more automation even without higher wages. Businesses are in competition with each other. Because wage laws apply to all businesses under jurisdiction evenly, Minimum wage is a non-factor in peer-on-peer competition.

Forth, Prices would probably go up, But more people have more money to pay for things. Where does the extra money come from? It's diverted away from owners and financiers who live downstream, And into the pockets of people who buy goods and services and keep the economy going. As you stated, This increases demand. But where you're wrong is that demand for goods increases demand for labor and that's what balances out. The difference is that more people are included in the economy.

Which brings me to the repercussions of not raising wages. The economy is becoming more narrow-based. This is why the stock market keeps going up even though people don't feel the economy is very good. Most people don't factor into the economy anymore -- we're just tagging along behind the major players. Prices of assets aren't based on what users can afford, They're based on their value to investors who trade them between each other.

Another repercussion is work ethic. If you pay workers less, Work literally becomes "worth less. "
The people who work the hardest are dead-enders and illegal immigrants -- it's only a matter of time before younger people don't see work as valuable, And they will be right as we don't reward the work people do.
Debate Round No. 1
SomethingOrdinary

Con

Thank you for accepting my debate.

You raised some interesting points, But i found some of them conflicting. You mentioned for instance that the good thing about capitalism is that equilibrium will in theory find itself if a market is left be. That I agree with. You also mentioned the repercussions of not raising the minimum wage which all seem like sound reasons, But then you would be inherently disrupting that equilibrium.

I guess what I meant by arbitrary is really any means of changing the minimum wage via policy and not letting the free market decide where wages should be. What I've observed in the economy currently for instance is that for slightly more skilled labor and above employers are having a tough time finding candidates either due to lack of people skilled enough to take those jobs or simply because they're not paying enough. For those companies to survive they will either have to offer more money, Be willing to train less qualified people, Move to more automation where possible, Or a combination of all the above. I think in general when left to their own devices all companies more or less will experience this and the end result whatever their decision may be on how to proceed will be the right answer. When you extend that argument to the low and unskilled labor market (i. E. Those being affected by minimum wage laws) you'd eventually find the same principles holding true and a price equilibrium for labor would be found.

In other words, I think were saying the same thing when it comes to the nature of free-market capitalism and that it's resilient enough to handle and respond to change. I think what I'm trying to get at is that if we impose to many artificial limitations, Whether they be based on sound research or not, We may not always know or like the end result, Or at the very least there may be undue consequences to our actions.

As far as some of the repercussions of not raising wages you mentioned they may very well hold true, But ultimately if these challenges were to persist we both could certainly agree that the markets for labor, And all others for that matter, Would have to change and shift in some way, Whether it be towards more automation or what have you. Trying to stop the natural 'flow' of the economy towards one end or another I feel is a bad choice to make. Instead I think we as a society just need to constantly be vigilant and able to be more dynamic in how we adapt to changing economic pressures as opposed to react and try to stop them or prevent change we see as undue when the reality may be otherwise.
tumeric

Pro

I didn't mean to say that markets should be left alone. I'm saying that they never are, And that capitalism takes into account any input imposed. Markets are the result of human interaction, So capitalism is a joint venture of economics, Society, And government. In many countries religion is involved. There's no such thing as an "artificial" policy influence because free markets don't exist without policy.

Which is not to say that markets don't have rules, And I think its best to go along with market logic as mush as possible. But the direction of the market is the emergent result of local interactions -- therefore markets do not follow any intended direction, And is not a source of moral guidance. Those things should be decided by society and that's what policy is for. To expect the market to make value judgments like that is a cop-out.

One goal of policy is to align market values with social values. The problem with letting the market decide minimum wage is that the market value of a person's labor is way off from the social value of their work (ie, What we think they "deserve"). If markets corrode or offend social values (like work ethic), People will impose their values on the markets, Which is how we got minimum wage laws to begin with.
Debate Round No. 2
SomethingOrdinary

Con

SomethingOrdinary forfeited this round.
tumeric

Pro

To close out the debate, I'll just state the fact that minimum wage has been increased many times with no negative effect on the economy. Also wages in general used to be much higher adjusted for inflation.

Actually I hate to bring facts into the picture, Because political debates are always about values, And never about factual solutions. So the question about wages is not about what's best for the economy. The question about wages is about who benefits. Working people should benefit more.
Debate Round No. 3
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