Raising Minimum Wage Damages the Economy

<<< REBUTTAL AGAINST PRO >>> 1. Rebuttal to :: Raising the minimum wage increases unemployment In the previous round, I pointed out that many of the older studies on which my opponent relies have been criticized by researchers because these studies employed flawed experimental methodologies and were subject to publication bias that led to inaccurate conclusions – thus, we could not rely on these studies to determine the effects of minimum wage on employment. In addition, I provided contemporary studies – that did not use the flawed experimental approach – which showed that the minimum wage had either neutral or positive effects on employment. In response, my opponent argues that one review of past research supports his argument. He cites a study by Neumark and Wascher (2007) that reviewed past minimum wage studies and found that “the evidence points to disemployment effects.” This review that my opponent cites has been strongly criticized by other researchers. In 2009, a meta-analysis study examining publication bias argued that the existing data and Neumark and Wascher’s conclusions were not consistent, stating “the contrast between their subjective narrative review and the meta-analysis is quite striking.”[1] Another 2011 study by Berkeley researchers argued that Neumark and Washer did not properly interpret the studies because they did not take into account that many of these studies used flawed experimental approaches. These researchers stated that “interpretation of the evidence in the existing minimum wage literature (such as those reviewed by Neumark and Wascher) must be revised accordingly.”[2] From the studies provided by my opponent, we cannot conclude that the minimum wage has negative effects on employment. He has provided studies that employed flawed experimental designs and he has provided reviews of those studies that failed to take into account that those studies used flawed experimental designs. However, I have provided numerous studies that conclude the minimum wage has no negative effect on employment. My opponent has provided no evidence that my studies are flawed or otherwise incorrect. Therefore, I suggest that the only rational interpretation of this data is to conclude that there is no evidence that the minimum wage harms employment. 2. Rebuttal to :: Raising the minimum wage will not benefit the poor My opponent argues that raising the minimum wage will not benefit the poor. In supporting this contention, my opponent argues that raising the minimum wage will not create jobs, will actually decrease the amount of money one makes, and doesn’t actually put money into the hands of the poor. I will respond to each of these in kind. First, my opponent states that raising the minimum wage will not create jobs. I have provided several studies that suggest raising the minimum wage can stimulate job creation by injecting money into the economy. [3][4] My opponent has not refuted these studies, and has only provided studies that have been shown to utilize flawed experimental designs. On this basis, the data provides a much stronger support of my position than my opponent’s. Next, my opponent argues that the “minimum wage decreases the amount of money one makes.” He provides a quote by economist Reed Garfield that states “the California parent would be better off if the tax wedge were reduced, rather than increasing the minimum wage.” This quote does not, in any way, support what my opponent is arguing. Mr. Garfield is simply saying he believes that reducing payroll taxes would put more money into the hands of minimum wage workers than raising the minimum wage. He does not say that raising the minimum wage will not increase the amount of money one makes. This argument has no value. Finally, he also argues that the demographics of low-wage workers do not overlap with the poor. However, the data shows that moderate raises to the minimum wage would benefit approximately 15 million individuals with families that have a total income below the national median income.[5] One-third of those families earn below $20,000 per year. Half of the workers that would benefit from an increase in the minimum wage earn about half of the total family income. And, over 21 million children in the United States have a parent who would benefit from an increase to the minimum wage. While the minimum wage will not exclusively help the working poor, it is clear from these demographics that the working poor and their families will benefit from a moderate increase. <<< CON ARGUMENTS >>> 1. Raising the minimum wage acts as an economic stimulus and create job growth By directly placing money into the hands of individuals that are most likely to immediately use that money, moderate increases to the minimum wage provide an instant economic stimulus that drives growth. [See previous rounds 2 and 3 for my full arguments and studies]. 2. Raising the minimum wage increases productivity and reduces costly employee turnover Economic researchers have found that wage increases result in decreased employee turnover and increased productivity. Reduced employee turnover leads to savings by the employer because it spends less on recruitment, re-training, and re-staffing.[6] As a result of lower turnover, these employees will be more experienced, and consequently more productive. Improved worker wages, stability, and productivity, as well as decreased employer expenses all provide a benefit to the economy as a whole – and, to workers, employers, and consumers individually. 3. Raising the minimum wage reduces reliance on welfare By increasing the incentive to work through higher wages, more individuals will be compelled to leave welfare and engage in active employment. Studies have supported this argument, finding that a higher minimum wage reduces welfare participation.[7] 4. Raising the minimum wage will increase living standards by helping the poor The real value of the federal minimum wage has fallen 30% since 1968. The United States currently has 47 million working poor – individuals whose income falls below the poverty line. As many as 23 million workers would benefit from a moderate increase in the minimum wage, the majority of which make less than the national median income.[8] Increasing the minimum wage will put money into the hands of the individuals who need it most, thereby improving their buying power and living standards. <<< CONCLUSION >>> I have shown that my opponent’s studies are experimentally flawed, and that when these flaws are removed, raises to the minimum wage do not negatively affect employment. Further, I have shown that moderate raises to the minimum wage will benefit the economy by: (1) acting as an economic stimulus by injecting money into the hands of individuals most likely to spend it; (2) increasing worker productivity and reducing employee turnover; (3) reducing reliance on welfare; and (4) improving living standards increasing wages of the lower economic class. Thus, moderate increases to the minimum wage can have a net benefit to the economy! <<< VOTE CON! >>> SOURCES [1] http://www.deakin.edu.au... [2] http://escholarship.org... [3] http://www.ibrc.indiana.edu... [4] http://www.ibrc.indiana.edu... [5] https://docs.google.com... [6] http://www.irle.berkeley.edu... [7] http://www.ipr.northwestern.edu... [8] http://epi.3cdn.net...