Raising the federal minimum wage would be a net detriment to the U.S. economy

Thanks again to BobtheCanOpener. I will present my case in this round and rebut his in the next. Neg CaseI. ConsumptionRaising the minimum wage would be a boon to the U.S. economy because it would increase consumption. Carroll et al., 2013, found that the marginal propensity to consume is far greater for lower- and middle-income households is far greater than for high income households (1). The CBO finds that "The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO"s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates" (2). In other words, wage pressures would build not only for minimum wage workers, but for many more workers, all of whom are likely to consume with those dollars.II. Efficiency Wage HypothesisThe efficiency wage hypothesis "states that workers" productivities depend positively on their wages" (3). A literature review by Wolfers and Zilinsky, 2015 (3). In other words, higher wages tend to induce workers to work harder, which benefits businesses, which are able to produce more and thus sell more. Yellen, 1984, found higher wages led to "reduced shirking by employees due to a higher cost of job loss; lower turnover; an improvement in the average quality of job applicants and improved morale" (4). Holzer, 1990, arrived at a similar conclusion: "high-wage firms can sometimes offset more than half of their higher wage costs through improved productivity and lower hiring and turnover cost" (5). There's evidence that workers with less income security also have poorer on-job performance. The World Bank's 2015 Development Report found "The constant, day-to-day hard choices associated with poverty in effect tax an individual"s bandwidth, or mental resources. This cognitive tax, in turn, can lead to economic decisions that perpetuate poverty" (6). In addition to increased productivity, higher wages also increase labor supply, attracting better and more productive workers. Rossi et al., 2013, found that "offering higher wages attracts individuals with higher previous earnings, and who have both higher IQ and more desirable personality traits, as measured by the Big 5 personality and public service motivation tests" (7). Higher wages also reduces labor turnover, reducing the cost of training and hiring new workers and thus saving businesses money. Reich et al., 2003, in a study of the San Francisco airport, found that higher wages reduced labor turnover by 34%, thus saving the airport $6.6 million per year (8). Reich et al., 2007, found that a San Francisco wage floor policy reduced labor turnover from 95% in the mid-2000s to 18.7%--a 763 basis point decline (9). There are also a multiplicity of other ways in which higher wages improve labor efficiency. Fisher et al., 2006, used data from 500 retailers to find that higher wages improve customer service and customer satisfaction (10). Capelli and Chauvin, 1991, found that higher wages improved employee discipline (11). Zhang et al., 2013, found that in Canadian firms higher wages resulted in reduced employee absenteeism (12). Finally, Georgiadis, 2008, find that, because higher-wage workers tend to require less supervision than low-skilled workers, "higher wage costs were more than offset by lower monitoring costs" (13). Therefore, there a myriad of ways that raising the minimum wage would actually save businesses money through greater efficiency, thus negating the argument that my adversary will bring up with respect to increased costs spurring layoffs or even widespread price pressures. III. Income Inequality The U.S. is plagued with the worst income inequality since 1928 (14), and research by Saez, 2013, it has been increasing steadily since the 1970s (15). This coincided with the deregulation and tax cuts under Ronald Reagan and his attacks on labor unions (16), and a nearly doubling of productivity over the past three years, but flat wages for most workers, adjusted for inflation (17) , and falling real wages for minimum wage workers, whose wages aren't adjusted for inflation (18). For instance, the minimum wage from 1979 to 2012 fell 21 percent (19). This is undesirable not only on a moral basis by paying people not what they"re due, but placing them at a lower rung of the economic ladder as their starting place--based on characteristics outside their control, such as what their families income levels were--and thus denying their equality of opportunity, much of which is self-reinforcing as the more affluent will be able to donate to the public campaigns of their choice to coax politicians in pursuing policies beneficial to only them; it is also economically undesirable. Nobel Laureate Joe Stiglitz adds the following: "There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth...Second, the hollowing out of the middle class since the 1970s, in a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses..Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks...Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable" (20).Now, how does the minimum wage tie to this? Simple: it"s contributed to the widening disparity in income distribution to the top which dates by to the 1970s, and is in fact part and parcel of it because it"s declined in real terms. Autor et al., 2014, estimate that 30 to 50% of the growth in income inequality from 1979 to 1989 can be attributed to the falling real value of the minimum wage, and a still significant contributing from 1979 to 2012 (21). Note that the authors admit that these estimates are conservative, and there"s a body of literature attributing as much as 85% to 110% of the rise in inequality to the falling real value of the minimum wage. IV. $10.10 is negligible The parameters of this debate force me to argue for increasing the minimum wage to only $10.10 an hour. My adversary and I can both agree that if this rate were instead, let"s say, $100 an hour, the costs would far outweigh the benefits. But there simply is no sound evidence that this value would have widespread negative effectives. Moreover, if the minimum wage were indexed to inflation starting in 1968, it would be $10.52 as of 2012 (22). If it were indexed to productivity gains, which primarily went to the top--e.g., 95% of new income created since the recovery trickled up to the top 1 percent of income earners (23)--it would be about $22 an hour (19). Nevertheless, I am not arguing for either of these numbers, and $10.10 doesn"t even account for inflation. There"s a strong case to be made for an even higher minimum wage, but raising it to $10.10 is better than maintaining it at $7.25. V. The MW does not kill jobs A canard that my adversary will raise is that MW results in layoffs. Obviously that falls short in light of the evidence I presented earlier in this round, but the claim is without strong empirical backing. In fact, John Schmitt, 2013, conducted a literature review and found that the minimum wage has "no discernible effect on employment" (24). Much of this is because, per Krugman, minimum wage jobs exist in industries which are non-exportable (25). Let's explore some of the relevant literature. Card and Krueger, 1994, looked at the 1992 rise in New Jersey’s minimum wage and found no evidence of negative employment effects (26). In fact, they found, after comparing evidence from stores in eastern Pennsylvania where the MW remained constant or to stores that were already paying near wages near the MW, that the minimum wage actually worked to increase employment. Dube et al., 2010, replicated the findings of Car and Krueger and found no negative employment effects after adjusting for spatial heterogeneity (27). Next, a meta-analysis by Doucouliagos and T. D. Stanley, 2009, looked at 64 minimum wage studies from 1972 to 2007, and found that, after adjusting for public selection bias, that the evidence is clear that the minimuym wage has virtually no effect on employment (28). Now, how far could we go? Michael Reich, economist at U.C. Berkeley, finds that, "“Our data show that an increase up to $13 an hour has no measurable effect on employment" (29). ConclusionsI'm out of characters, so I will pass back to PRO. The resolution is negated. Sources1. http://tinyurl.com... 2. http://tinyurl.com... 3. http://tinyurl.com... 4. http://tinyurl.com... 5. http://tinyurl.com... 6. http://tinyurl.com... 7. http://tinyurl.com... 8. http://tinyurl.com... 9. http://tinyurl.com... 10. http://tinyurl.com... 11. http://tinyurl.com... 12. http://tinyurl.com... 13. http://tinyurl.com... 14. http://tinyurl.com... 15. http://tinyurl.com... 16. http://tinyurl.com... 17. http://tinyurl.com... 18. http://tinyurl.com...19. http://tinyurl.com...20. http://tinyurl.com...21. http://tinyurl.com...22. http://tinyurl.com...23. http://tinyurl.com...24. http://tinyurl.com...25. http://tinyurl.com...26. http://tinyurl.com...27. http://tinyurl.com...28. http://tinyurl.com...29. http://tinyurl.com...