Raising Minimum Wage Damages the Economy

The Effects of Minimum Wage Increase UnemploymentFirst, many newer studies still find the minimum wage harms employment. A 2006 meta-analysis finds most studies and data support the position that a minimum wage increase harms the economy. The oldest studies allowed in the analysis was from the early 1990s. Most comprehensive reviews on the "old research" was already cited. The data almost unanimously supports the position that minimum wage increases harm the economy. The study I am currently citing is the first review of the research known as the "new research". The study--dated in 2006, fairly modern--looks at the studies within the last 15 years. The first research--dated in the mid-early 1990s--finds no effect (or a positive effect) of the minimum wage increase. These studies, however, have been not replicated and poorly constructed. The majority of studies in the 1990s-2000s show a negative impact of the minimum wage on job growth. The study concluded:"Although the wide range of estimates is striking, the oft-stated assertion that the new minimum wage research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. Indeed, in our view, the preponderance of the evidence points to disemployment effects. Of these, by our reckoning nearly two-thirds give a relatively consistent (although by no means always statistically significant) indication of negative employment effects of minimum wages, while only eight give a relatively consistent indication of positive employment effects. In addition, we have highlighted in the tables 33 studies (or entries) that we view as providing the most credible evidence; 28 (85 percent) of these point to negative employment effects."[1]As we can see, the modern evidence still strongly supports the position that the minimum wage raises unemployment. Although some of the studies provided statistically insignificant results, the authors narrowed the data to those that did provide them (including those that showed statistically significant positive effects). Using the strongest studies, 85% of them support my position. So even if we assume my data was too old, it is still clear the newer data supports my position. He claims there is a bias and that flaws exist in the studies. False. A 1998 study funds publication bias does not explain the minimum wage hurting the economy, in other words the studies do not suffer from this problem. [6]My Opponent's Arguments1. Raising Minimum Wage will NOT increase living standardsIt makes little sense that the minimum wage would create better living standards (for legal citizens). For a few reasons:I. Minimum wages hurt legal citizens and promote businessmen to hire illegal immigrants. The logic is simple. Say one job is worth 5 dollars to an employer. The employer, therefore, will only pay $4.99 so that he makes a profit. Say the minimum wage is $4. He finds someone willing to do the job, but they are not really efficient. They give little gain, but are worth that: $4. So he pays them the minimum wage. But, the government decided to make the wage $7. The job is not worth the money, nor are the workers. So, he fires the workers and now has to drop that job. BUT, an illegal immigrant comes along. He is willing to work for $4, and not tell anyone. The businessman takes the offer and runs for it. A high minimum wage, therefore, logically supports this position. Studies also confirm this idea [2].II. As explained, the minimum wage does not create any jobs. It only makes it illegal for you to pay workers what they are worth (again, why pay someone money i they actually lose you money? You fire them.) As quoted last round, "In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result."[3]How will the minimum wage improve living if all it does is increase unemployment and causes peoples wages to be 0?And there are a few other reasons the theory fails:III. First, as explained, the minimum wage decreases the amount of money one makes. To reiterate the argument by Economist Reed Garfield, "To put this gain in perspective, each minimum wage worker who earns $4.25 an hour brings home $3.92 for each hour worked once payroll taxes are deducted. The employer costs of a minimum wage worker is $4.58 an hour when the employers share of the payroll tax is included. If workers could take home the amount of money it costs the employer to hire workers, they could have 62 cents more per hour. Clearly, the California parent would be better off if the tax wedge were reduced, rather than increasing the minimum wage."[4]IV. It is unlikely the minimum wage will raise wages for those it needs to help. After calculating the data, a single mother living in California with two children will only have a salary boost of 26 cents from a 90 cent increase of the minimum wage. [4] Further, it makes no statistical sense the minimum wage increases the standard of living--it actually makes it WORSE. Studies have found the minimum wage increases the amount of time on welfare. States with higher minimum wages have people on welfare for 44% longer then states with lower minimum wages [4]. I would also like to note that the minimum wage cannot help the poor for a simple reason. Here are the facts: 35.5% of people on the minimum wage live with their parents, meaning no one will benefit from the extra money, 23% are in a married family (not necessarily meaning children). In this case, the person is usually a secondary earner which is livable without [4]. Only 8.2% are the main earner. Only 2.8% are a single parent. Only 21.8% are a single individual living alone (again, an extra 30 cents out of a 90 cent raise is nothing... and the fact they might get fired)8.3% are a sub family member (maybe lie a roommate or grandma in the basement)[5]So even if the minimum wage works, you are mostly helping secondary earners or people who don't need it, proving that it wont help peoples standard of living.CONCLUSION:Data proves that the minimum wage increases unemployment and that it has no effect (or negative effect [4]) on ones living standards. If someone is making a lower wage (or is making little benefit), it is hard to argue ones living standards rise.1. http://www.nber.org... 2. http://web.archive.org... 3. http://www.lewrockwell.com... 4. http://web.archive.org... 5. http://web.archive.org... 6. Neumark, David, and William Wascher. "Is The Time-Series Evidence On Minimum Wage Effects Contaminated By Publication Bias?." Economic Inquiry (1998)