The minimum wage should be raised to $12.50 gradually, by the year 2020

Since we are now in our last round, I would like to avoid a tax debate with you. It is a very deep and interesting topic and I would be more than happy to discuss it in a separate debate. For now, allow me to make my final point. Minimum wage is an excellent way to stimulate the economy. in fact, it is one of the only ways to do so without federal spending, which increases national debt. Economic theory tells us that if wages were to increase, consumers would buy more products, pay off debts, and/or start saving more money. In all three of these instances more money is being put into the economy. Since businesses are taxed and regulated so heavily in America, much of this capital is being sucked out of circulation via the multitudes of business taxes. If the minimum wage were to increase, we would see stimulus in the economy. The Circular flow model Since I am unsure how to post pictures on this site, I will try to illustrate this concept to the best of my ability with words. In the product market, firms sell goods and services which are purchased by households. Households in turn, provide labor, capital, natural resources, and entrepreneurship on the resource market, which is purchased by firms. In the product market, Households provide expenditure, which is turned into revenue for firms. Firms then convert that revenue into wages, rent, interest, and profit. These things are turned into income for households. Although record high worker productivity has allowed businesses to earn more revenue, we have not seen similar growth in the wages of workers. If you can imagine that the circular flow model functions as a wheel (capitalism) an increase in any one section should lead to an increase in all of the others, but instead wages increasing corporate profits are receiving this benefit. This is why much of this extra revenue is sucked out of circulation by taxation. If wages increased to meet, or at the very least be closer to, worker productivity, this would allow the wheel of capitalism to turn even faster. While this theory is widely accepted by economists, there is empirical evidence that shows this same truth. There was a study done by Eric French and Daniel Aaronson, economists at the federal reserve bank in Chicago, that showed the effects of raising the minimum wage on aggregate household spending. They estimated that a $1.75 increase in the minimum wage would increase consumer spending by $26 billion dollars. Finally, I would like to cite one last piece of empirical evidence. Economists Alan B. Kreuger and David Card conducted a study that analyzed the Full time employment effects on the fast food industry in 1992, when Pennsylvania had it's minimum wage at $4.25, and New Jersey's minimum wage was at $5.05. New Jersey experienced an employment increase in the industry, Pennsylvania experienced an employment decline. If this were to happen on a federal level as well, the employment increase would definitely lead to economic stimulus. I hope this debate has enlightened you just as much as it has myself, and I hope I convinced at least some of you that raising the minimum wage to $12.50 would benefit the economy. I'd like to close by thanking my opponent for an excellent debate and I am anxiously awaiting our results. Thank You! sources: Chicago Fed Letter: How Does a Federal Minimum Wage Hike Affect Aggregate Household Spending? By Daniel Aaronson and Eric French Minimum Wages and employment: A case study in the Fast Food industry of Pennsylvania and New Jersey. By Alan B. Kreuger and David Card Microeconomics: A Contemporary introduction. By William A. McEachern Special Thanks to my mentor, whose name I am hesitant to publish on the internet, for guiding me in myriad ways throughout this journey. I wouldn't have debated nearly as effectively without you.