The Minimum Wage Should be Raised to $15 an Hour

Just want to remind everyone that this addresses the current minimum wage proposal for $15 an hour. The current U.S. minimum wage is $7.25 an hour.I. The Minimum Wage Increase Leads to Job LossesA study by the American Action Forum analyzed minimum wage increases under different proposals. Many people argue that the minimum wage would help those in poverty, but the truth is that it doesn't: "For the $15 federal minimum wage, when assuming moderate negative employment consequences, we find that the policy would cost 6.6 million jobs. On net, it would raise the earnings of low-wage workers by $105.4 billion, at most. Again, however, only a small minority of that additional income would benefit families in poverty. In particular, only 6.7 percent of the increase in earnings would go to workers in poverty. Overall, the income gains from raising the minimum wage would come at a significant cost to the large number of workers who would become jobless. In effect, raising the minimum wage transfers incomes from the low-wage workers who are unfortunate to become jobless to the low-wage workers who remain employed. It accomplishes this without effectively helping those who are most in need." [1]History is on the side of conservatives in this debate. George W. Bush was the last president to raise the minimum wage and it had bad results as described by David Brooks in The New York Times:"Recently, Michael Wither and Jeffrey Clemens of the University of California, San Diego looked at data from the 2007 federal minimum wage-hike and found that it reduced the national employment-population-ratio by 0.7 percent percentage points (which is actually a lot), and led to a six percentage point decrease in the likelihood that a low-wage worker would have a job." [2]Other research by Robert Cherry and Chun Wang finds similar results. A $15 minimum wage increase sabotages advancing careers for young men, particularly minorities:"While these adverse employment effects may be quite modest, they can only add to the already low employment young workers are experiencing, especially less-educated black men. The lack of early sustained employment has adverse long-term effects on this vulnerable group. For young black men with low educational attainment, without a sustained work experience, it is likely they will face serious employment difficulties as they age. Among 25-to-29-year-olds, when those incarcerated are included, Neal and Rick estimated that the employment rate for black and white men, respectively, is 57 and 78 percent. It is, however, less than 30 percent for the almost one quarter of black men in this age group who have no more than a GED." [3] An older study from the Southern Economic Journal backs up the argument that minimum wage increases hurts jobs among young adults and blacks:"We use monthly data from the Survey of Income and Program Participation and the Current Population Survey to estimate the effect of the minimum wage. Minimum wage increases significantly reduce the employment of the most vulnerable groups in the working-age population—young adults without a high school degree (aged 20–24), young black adults and teenagers (aged 16–24), and teenagers (aged 16–19). While we also find that minimum wage increases significantly reduce the overall employment of young adults and teenagers, these more vulnerable subpopulations are even more adversely affected." [4]II. The Minimum Wage Increase Slams BusinessesIf the minimum wage really did stimulate the economy, it wouldn't be hurting both big and small businesses, but it does just that. The new $15 minimum wage threatens economic expansion and growth.A study from the Economic Policies Institute by Joseph J. Sabia shows how a minimum wage increase affects GDP:"Turning to GDP effects, the results suggest that minimum wage increases are associated with small, often statistically insignificant declines in overall and private sector GDP; however, there is some evidence of larger adverse GDP effects in a number of industries that employ relatively larger shares of lower-wage workers, including wholesale trade, manufacturing of durables, warehousing and storage, rental and leasing services, and administrative and waste services. Falsification tests suggest that minimum wage increases are unrelated to contemporaneous output in industries that employ more highly skilled workers. Difference-in-difference-in-difference models that control for unmeasured state-specific time trends common across industries suggest that a 10 percent increase in the minimum wage is associated with a 2 to 4 percent decrease in state GDP generated by lower-skilled industries." [5]The simple reason for this is because a minimum wage hike raises labor costs: Businesses will not stand and take a hit in profits. They will need to adjust in order to survive, especially those with narrow profit margins:"Employers have more flexibility in the long run and will find ways to economize on the higher-priced labor. New technology will be introduced along with labor-saving capital investment, and skilled workers will tend to replace unskilled workers. Those substitutions will occur even before an increase in the minimum wage, if employers believe such an increase is imminent. There will be fewer jobs for low-skilled workers and higher unemployment rates—especially for minorities—and participation rates will fall as workers affected by the minimum wage drop out of the formal labor market." [6]Robots making food and powering restaurants are an easy replacement for businesses that will lose profit from higher labor costs: "It’s possible that new inventions could start to eliminate positions faster than they have in the past. The labor-saving technology that has so far been rolled out most extensively — kiosk and ­tablet-based ordering — could be used to replace cashiers and the part of the wait staff’s job that involves taking orders and bringing checks. Olive Garden said earlier this year that it would roll out the Ziosk system at all its restaurants, which means that all a server has to do is bring out the food." [7] III. Looking at other Minimum Wage IncreasesOther countries and states are moving to raise their minimum wage policies. Thanks to comparative politics, we can see the differences between different policies. Let's take the states first. Economists Arthur B. Laffer, Stephen Moore, Rex A Sinquefield, and Travis H. Brown published a book on the wealth of states in 2014. They compared 31 states that kept the federal minimum wage and the 19 states that have a higher state minimum wage using equal-weighted averages as of 1/1/2013. From 2002 to 2012, the 31 states with the federal minimum wage had population growth of 9.6 percent, net domestic in-migration growth of 1 percent, nonfarm payroll employment growth of 5.3 percent, personal income growth of 54 percent, and gross state product growth of 55.3 percent. During that same period, the 19 states with a minimum wage higher than the federal law had 8.9 percent population growth, 0.6 percent net domestic in-migration growth, 2.3 percent nonfarm payroll employment growth, 46.2 percent personal income growth, and gross state product growth of 45.9 percent. [8]Seattle is raising their minimum wage to $15 an hour, but it doesn't seem to be working as they hoped: Mark J. Perry of the American Enterprise Institute describes the problem:"Starting in the spring of last year, there has been a noticeable downward trend in the year-over-year growth rate of Seattle area restaurant jobs (quarterly averages), which fell below 3.6% in each of the last three months (May, June and July) for the first time since July of 2012, three years ago." [8]The United Kingdom has a minimum wage that's close to what American liberals are proposing, but it isn't working there either. Companies are not taking a hit in profits, but they are raising prices on consumers are creating automated jobs. [9]Unemployment rises there too: "The number of young people from ethnic minority backgrounds who have been unemployed for more than a year has risen by almost 50% since the coalition came to power, according to figures released by the Labour party. There are now 41,000 16- to 24-year-olds from black, asian and minority ethnic [BAME] communities who are long-term unemployed – a 49% rise from 2010, according to an analysis of official figures by the House of Commons Library. At the same time, there was a fall of 1% in overall long-term youth unemployment and a 2% fall among young white people." [11] This concludes my case for rejecting a $15 minimum wage increase. I await my opponent's case.Sources1. http://americanactionforum.org...2. http://www.nytimes.com...3. http://www.realclearpolicy.com...4. http://econpapers.repec.org...5. https://www.epionline.org...6. http://www.forbes.com...7. http://www.washingtonpost.com...8. Laffer, Arthur B., Stephen Moore, Rex A. Sinquefield, and Travis H. Brown. An Inquiry into the Nature and Causes of the Wealth of States How Taxes, Energy, and Worker Freedom Will Change the Balance of Power Among States. Hoboken: Wiley, 2014. Print.9. https://www.aei.org...;10. http://www.forbes.com...11. http://www.theguardian.com...