The Minimum Wage Is a Sound Economic Policy

Thank you to Ron-Paul for this intriguing debate. I’ll jump right in: Con’s first claim is that I am assuming that businesses will pocket the difference between marginal productivity and wages. Yet, he offers no evidence that the the opposite would be the case. In fact, his argument states “For if they were to reduce prices according to the drop in costs of production, they, in their capacity as entrepreneurs and sellers of the products, would derive no advantage from cutting wages.” If, as he says, there is little gain for the business if prices were to be reduced based on the drop in cost of production, it is unlikely that a business would choose to make such a choice. It would likely choose instead to pocket at least the majority of the difference. Next is presented another mostly irrelevant argument in which Con argues that if wages are set above the marginal productivity, then employment will decrease, however, this assumes a MW that is set above the marginal productivity of most workers. My opponent’s attempt to discredit my argument concern the Industrial Revolution does not achieve its purpose as his source concedes that wages were low during this period. “The factory owners did not have the power to compel anybody to take a factory job. They could only hire people who were ready to work for the wages offered to them. Low as these wage rates were, they were nonetheless much more than these paupers could earn in any other field open to them.” [1] This supports my argument. I never claimed that factory owners forced people to work, nor did I claim that conditions were so good before the IR (another point addressed by Con’s source). My points were that the IR provides an example of a time when people were payed below their marginal productivity, and also that when only low paying jobs are available, people will end up being forced by the situation to take a low paying job. A MW means that the lowest paying jobs will at least have some decent pay associated with them. I have demonstrated and Con has not proven that wages will necessarily remain close to marginal productivity. Conceding the Post Hoc of his R3 evidence, in R4 Con presented several new charts to support his MW-unemployment correlation claims. His first two graphs make the previously addressed assumption that a MW would be set above marginal productivity. His third graph is not to be found on his cited source #5. I suspect that he meant to cite it as source #6 as that source reveals a picture of the graph, but provides no information on what the true source of the graph is. This means that neither I, nor the readers, have a good way of verifying the information. The graph states that it is using the real MW, but does not state for what time the MW is adjusted. Next Con writes that there is “a mountain of empirical evidence that the minimum wage increases unemployment particularly among teenagers” and cites two studies. Although some economists have done work that would lead to such a conclusion, others disagree. A study done at the University of California concluded just the opposite [2]. Con attempts to refute my initial R2 argument with a ridiculous amount of unneeded sources such as a dictionary definition of the word positive and are based on the same unproven assumptions as the rest of his argument. I have already addressed his arguments that the MW causes unemployment and that wages will not fall without the MW. Finally, Con states that a MW of $2 would be unnecessary, however I have already explained in the previous round that without a MW wages could gradually fall and unemployed people in desperate situations would essentially be forced into working for ridiculously low wages. An interesting point concerning this is that Newsweek conducted an experiment the results of which concluded that some Americans said they would settle to work for 25 cents an hour [3]. I have shown that the MW is economically sound and necessary for a healthy society. Vote Pro!! Sources: [1]- http://www.fee.org... [2]- http://www.irle.berkeley.edu... [3]- http://www.thedailybeast.com...