Raising Minimum Wage Damages the Economy

My task, as the CON position, is to show that raising the minimum wage can have a net positive effect on the economy. I will begin by addressing my opponent’s arguments and follow by offering my own arguments. <<< REBUTTAL AGAINST PRO >>> 1. Rebuttal to :: Raising the Minimum Wage Will Increase Unemployment My opponent’s primary argument is that raising the minimum wage is harmful to the economy because it will increase unemployment. In support of this argument, he states that increases to the minimum wage during 2007 and 2008 were followed by an increase in unemployment for teenage workers in subsequent years. My opponent, however, fails to demonstrate why this increase in unemployment should be attributable to the increase in minimum wage, particularly when the economic collapse occurred at the exact same time. In addition to the economic collapse, several other factors are known to have increased the unemployment of teenagers during this time – including competition with older men and women who have increased their attachment to the labor market, single mothers, and young adults unable to find employment.[1] Moreover, numerous economic studies over the last two decades have found that raising minimum wages does not result in job loss.[2][3][4][5][6] While simplistic models of supply and demand could lead one to predict that an increased minimum wage would lead to job loss, the empirical data from these studies demonstrates that moderate increases to the minimum wage do not result in increased unemployment. The reasons for why increased wages do not lead to increased unemployment may be attributable to the reduced expenses of the employer. When the wage is increased, employees are less likely to leave their employer, thus leading to reduced costs associated with recruitment, re-training, and re-staffing. [See study in CON ARGUMENT below] Additionally, employees that remain with their employer longer are likely to be more productive due to their greater experience. <<< CON ARGUMENT >>> I present the following arguments in support of my position that increasing the minimum wage can have a net benefit to the economy. 1. Raising the Minimum Wage Acts as an Economic Stimulus and Creates Job Growth Increasing the minimum wage provides a direct economic stimulus by placing money into the hands of low-wage workers – the class of people who are most likely to immediately spend that money in their communities. Increased spending power for low-wage workers will result in increased demand and stimulate economic growth. One dollar in increased minimum wage results in $2,800 in new consumer spending per person over the year, and would inject as much at $60 billion into the economy.[7][8] Studies demonstrate that an increased minimum wage will stimulate the economy. The decade following the federal minimum wage increase in 1996-1997 experienced one of the largest periods of job growths, and individual states that raised their minimum wages above the level of the federal minimum wage experienced job growth that was larger than those states that kept theirs at the lower federal level. [9] These beneficial economic effects hold true even during periods of high unemployment and recession. [10] 2. Raising the Minimum Wage Increases Productivity and Reduces Costly Employee Turnover Economic researchers have found that wage increases result in decreased employee turnover and increased productivity. Reduced employee turnover leads to savings by the employer because it spends less on recruitment, re-training, and re-staffing.[11] As a result of lower turnover, these employees will be more experienced, and consequently more productive. Improved worker wages, stability, and productivity, as well as decreased employer expenses all provide a benefit to the economy as a whole – and, to workers, employers, and consumers individually. 3. Conclusion Raising the minimum wage does not result in job loss, as shown by numerous studies. Instead, empirical evidence supports that raising the minimum wage will actually result in stimulation to the economy, job growth, increased worker productivity, and decreased employer expenses. SOURCES [1] http://usmayors.org... [2] http://www.irle.berkeley.edu... [3] http://www.irle.berkeley.edu... [4] http://www.cepr.net... [5] http://www.cepr.net... [6] http://nelp.3cdn.net... [7] http://www.chicagofed.org... [8] http://www.epi.org... [9] http://www.fiscalpolicy.org... [10] http://www.epi.org... [11] http://www.irle.berkeley.edu...