An increase of the Federal minimum wage would have adverse effects on employment

Neoclassical predictions do not entail a specific time frame. If the wages are above the market equilibrium, those in worth less than the equilibrium will not be hired. If the equilibrium changes, as most things do in the market, the minimum wage in 20 years may have no effect. However, this is merely a red herring. The debate entails an adverse effect on employment. An employment effect do be adverse need not be highly long term. Since the minimum wage cannot create new jobs itself, its most positive effect would be around zero (which itself does not make sense, based on economic theory). If employment does down 1%, then 5 years later flat lines because it is a short term effect the overall effect on society is zero. Further, if the minimum wage is raised ten percent, it temporarily stunts future growth anyway. My opponent essentially argues that more wages entail more spending and investment. Although this is true to a degree, the question is a matter of employment. However, since the minimum wage increases prices, this easily cancels out the wage benefits. And the employment downsides—which are long term as I will explain later—remain and the net effect is negative. To say that the effect of the minimum wage is small is impossible to comprehend. Studies have nearly always showed that the minimum wage makes it harder to employ the least skilled. 27 million people can’t get a job because they are not worth enough to the employer, and a 40% increase in the minimum wage led to 550,000 people losing their jobs. A ten percent increase is roughly equal to 55000 losing their jobs, ignoring the long term schooling effects as well as the higher likelihood of those working above the minimum wage to slip into poverty in these situations [1]. Empirical Evidence My opponents source is blatantly wrong. The article relies on a new wave of studies who claim to have superior research designs then those who come before it. However, to claim that “all” the recent research comes to their conclusion is false. For example, the studies I cited before (Neumark and Wascher 2008, for example) summarized much of the modern research. They find that very little literature actually supports minimum wage increases. To say that “all” studies support the minimum wage is simply a lie. Further, this new research relies on worse designs. The new controls have actually been shown to be less robust then the research before it (which almost universally opposed minimum wages) and have problems of their own. The research my opponents article cites is not a victory. It merely relies on weak research with a host of new methodological problems. The study is less suited to argue its point then the ones I cited [2]. Nobel Laurate Gary Becker notes, “. A very recent study by Neumark, Salas, and Wascher (January 2013] goes over a few recent studies challenging this conclusion. They conclude, as Neumark and Wascher did in their 2008 book, Minimum Wages, regarding earlier evidence, that the recent evidence does not overturn the conclusion that higher minimum wages do significantly reduce employment of vulnerable groups, like teenagers. [emphasis added]”[3] These new studies themselves are weak and fail to control for the factors they wish to control for. The information cited here is totally misinformed about the academic rebuttal to the studies cited. Productivity If this is irrelevant to unemployment, my opponent should not have brought it up. This debate is about employment, not overall economic growth (though employment does affect economic growth—to deny this is idiotic). But the reason GDP is growing is easy to explain. New technology, pro growth policies implemented by JFK, Reagan, Nixon, and everyone in that bunch except Bush II and Carter. Technological advancements throughout the era (dot com boom, space and other scientific knowledge). Basically, the fact we are seeing growth is not shocking. Since my opponent claims employment has no effect on growth, though, it is irrelevant in his own words. Numbers Ever heard of hypothetical’s? They were devices to help you understand the basic theory… 1. A living wage is merely a high minimum wage. It is merely a different name which sounds nice to garner it votes, but it’s the same thing. For example, lets say I called a 1% tax cut a tax cut, but a 20% tax cut a money giveaway economy boosting drug. Mouth full ain’t it? But it’s the same thing. And again, it was a hypothetical. The same standard applies to $5 an hour and $7 an hour, if we insist that there is a difference. 2. If the rate employers hire decreases, unemployment rises, too. It also prevents people from entering the workforce. This is a subtle effect of a minimum wage. Small business lay people off all the time. Just recently (it’s a personal story—is that an example that counts?) we fired a front desk manager because she was not worth her wage. Not related to a minimum wage, but again the concept relates (she earned above minimum wage). But a company names Chicken of sea is laying off 2000 employees (12% of its total employment) because of the recent minimum wage hike [4]. Good enough example? Minorities I never said the minimum wage was racist, but that it had unintended consequences to those demographic groups. As a minority I hope this doesn’t sound racist itself: on balance (not always—I would say for my age of 15 I am *fairly* productive) minorities are worth “less”. Generally they are poorer and are schooled less. They then have fewer skills. If they can’t get hired because they are not worth $7 an hour, sorry. If a wage increases above their worth (say their worth is $7, and in ABQ we raise it to 8/9 like recently) they will eventually get laid off unless their skill level improves. It is not racist, it is simply that they are disadvantaged and cannot get a job because of the mandated wage! If they had a $5 dollar/hour job for 1 year, they would be worth $9 the next. Essentially having a high minimum wage makes it impossible for them to catch up to their affluent cousins, which is not racist, its just life. 1. Neumark, David. William L. Wascher. Minimum wages, 2008. 2. http://www.epionline.org... 3. http://www.becker-posner-blog.com... 4. http://blogs.reuters.com...