Raising the minimum wage

I accept and will be arguing in favor of raising the minimum wage. CON has instigated this debate, but nevertheless I feel it is customary that we share the BOP. I would advise our audience to vote for the person who most successfully evidences their position. I will begin by rebutting CON's opening arguments, within which I will provide my own contentions, and then move on to cover why I believe we should raise the federal minimum wage. I. Inefficiency vs. EfficiencyCON asserts that raising the minimum wage will lead to companies laying workers off or cutting back on hours, which would lead to falling output. Of course, he provides no evidence for this claim whatsoever. I will demonstrate that it is false. First, it is simply wrong to say that raising the minimum wage, ipso facto, would shed jobs. Indeed there may be a point where this is so -- a "Laffer Curve," if you will -- but this does not mean that any modest increase (say, to $10.10 an hour) would lead to job losses. The basic logic behind this, which I will prove later on when I begin my contentions, is that employers will look to ways to become more productive, will employ more efficient technologies, or will reduce their own profits, which isn't exactly difficult given the massive disparity in CEO: pay of the average worker, another point that I will touch on later. The point is, there are and have been aways to circumvent rising labor costs brought on by raising the minimum wage. In fact, CON disregards that people earning the minimum wage have a higher MPC than people who aren't, meaning that they will consume with most if not all of their income. Therefore, the additional labor costs would simply go right back into the circular flow of the macroeconomy, increasing economic activity and leading employers to increase hiring, for they cannot hire without customers. What CON refuses to realize is that employing workers below their marginal product of labor -- that is, paying poverty level wages -- this is in fact inefficient. They would be much more loyal and much more productive, and companies would more likely succeed, with higher wages.II. Law of Supply and DemandI believe that CON meant to say the "law of demand," as he has not referenced the law of supply in this initial argument. I would like to note that this is a concession on CON's case that people actually WILL be making more money, so much so that it will result in a net increase in demand. If employers laid off workers and reduced their hours because they were unable to afford their labor, that would led to a net decline in aggregate demand and less consumption, which would drive prices down and lead to a death spiral of layoffs, as lack of demand begets lack of demand. If CON concedes that raising the minimum wage would lead to a net increase in demand, it is safe to say that this debate is largely over.The point is, CON cannot have his cake and eat it, too. He cannot say that the minimum wage will kill jobs and depress wages, which would lead to a deflationary spiral, and at the same time be inflationary because people are earning more and spending more. He needs to choose which argument he would like to stick to. III. Does the Minimum Wage Create Inflation?There are two kinds of inflation: demand-pull and cost-push. For the minimum wage to create inflation, there would either need to be a wage-price-spiral on a large scale or an intense shock to supply comparable to the oil crisis of the 70s. Is the minimum wage remotely comparable to that?No, not even close. Jeannette Wik-Lims explains (1): "This fear of inflation from the minimum wage is not based on any reasonable description of how these minimum wage hikes will likely impact businesses, or the economy more generally. The potential impact of minimum wage hikes on the overall price level is simply too small to have any appreciable impact on inflation...Past research on how business costs rise with minimum wage hikes indicates that a 10-percent minimum wage hike can be expected to produce a cost increase for the average business of less than one-tenth of one percent of their sales revenue...If the average businesses wanted to completely cover the cost increase from a 10-percent minimum wage hike through higher prices, they would need to raise their prices by less than 0.1 percent."Sara Lemos addresses this same point, as well as some of CON's other concerns regading possible reductions in employment (2):"The overall reading of the above evidence on price effects, together with the evidence in the literature on wages and employment effects is that the minimum wage increases the wages of the poor, does not destroy too many jobs, and does not raise prices by too much..This suggests that firms respond to minimum wage increases not by reducing production and employment, but by raising prices."Converse et al. came to a similar conclusion in 2008 (3):"The most common types of responses to the increase in the minimum wage were price increases and wage ripples. No single type of disemployment response was reported with nearly the frequency of these."Of course, we have already covered that those prince increases will be minute, hardly worthy of being called "inflation." IV. Con's HypotheticalObviously CON's numbers are not rooted in reality, but I assume that he knows this and is merely offering a hypothetical scenario. Of course, there are a number of problems with it right off the bat: he is admitting that raising the minimum wage will lead to a net increase in demand, rendering the "job loss" narrative in his first contention null. Next, he appeals to the "inflation" narrative which I have already debunked.Third, his view of the market's reaction to a minimum wage is highly flawed. If demand for a product were to rise, the employer would be able to provide more of that product and would want to provide more of that product to meet the rise in demand. Because there are more customers and thus higher profits, the business now has the ability to expand its investment in inventory, meaning that an increase in the quantity supplied of the product offsets the increase in the quantity demanded for the product. Again, changes in prices are negligible, and wages adjust even in the case of inflationary pressures, of which of course, this isn't one. I run low on characters, but I'm going to present some preliminary arguments in favor of a minimum wage increase and then pass this back to CON. V. Does the Minimum Wage Cause Job Losses?There's a wide body of empirical literature on this, and the answer on balance is "no." I pointed to some studies earlier, and now I'll point to a few more. John Schmitt says the minimum wage has "no discernible effect on employment" (4):"[T]wo recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers. The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms' overall costs and only modest relative to the wages paid to low-wage workers."There were also a study conducted by UC Berkeley economists which revealed that increasing the minimum wage up to $13 per hour has no "measurable effect on employment" (5). Lynn Thompson of the Seattle Times summarizes (5):"Businesses absorbed the costs through lower turnover, small price increases at restaurants, which have a high concentration of low-wage workers, and higher worker productivity, the researchers found."Obviously I have more contentions that I would like to make, including the addition of a philosophical component to this discussion on the minimum wage, but I am short on characters. Sources:(1) http://tinyurl.com...(2) http://tinyurl.com...(3) Converse at al.: "The Minimum Wage: An Employer Survey," Report of the Minimum Wage Study Commission, 6, 241-341.(4) http://tinyurl.com...(5) http://tinyurl.com...