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

The weakness in the neoclassical theories PRO posits lie in the lack of specificity of time frame. While it is true that an increase in minimum wage may temporarily decrease both hiring and productivity (the former case is far stronger than the latter, we'll get to that further on in) the use of the term "Overall" is misleading. In fact, I intend to prove that in the long term, better paid employees have greater spending power to patronize the businesses both for which they work and those that employ others in their vicinity. The result of this higher level of spending is that in the long term, businesses are able to sell more, hire more and produce more. Furthermore, PRO uses artificially high and artificially specific numbers in the examples given. Lastly, I will illustrate that the impact on an economy from minimum wage laws is too minimal to be counted as detrimental. It is true that dropping a bucket of water into the ocean my "empirically" add to the overall amount of water there, but if my opponent intends to claim victory on that scale alone, I would submit that PRO is indulging in the very semantic quibbling that was disavowed by us both in the first round. REBUTLE 1: THE NEOCLASSICAL THEORY The American Center for Progress as well as The Economist and Bloomburg news have all convened case-studies which directly undercut the Neoclassical wisdom on the subject of minimum wage impact. As if often true in the "dismal science" of Economics, what sounds good in theory often does not bear up beneath scrutiny in the real world. --------------------------------------------------------------------------- "A significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times. There are at least five different academic studies focusing on increases to the minimum wage"including increases ranging from 7 percent to 12.3 percent made during periods of high unemployment"that find an increase in the minimum wage has no significant effect on employment levels. The results are likely because the boost in demand and reduction in turnover provided by a minimum wage counteracts the higher wage costs. Similarly, a simple analysis of increases to the minimum wage on the state level, even during periods of state unemployment rates above 8 percent, shows that the minimum wage does not kill jobs. Indeed the states in our simple analysis had job growth slightly above the national average. [. .. ] All the studies came to the same conclusion"that raising the minimum wage had no effect on employment. " - . http://thinkprogress.org... -------------------------------------------------------------------------- " The Economist, November 2012: "Evidence is mounting that moderate minimum wages can do more good than harm. .. Britain"s small, regular changes [in the minimum wage] may be easier for firms to absorb than America"s infrequent but hefty minimum-wage increases. " Bloomberg News, April 2012: "[A] wave of new economic research is disproving those arguments about job losses and youth employment. Previous studies tended not to control for regional economic trends that were already affecting employment levels, such as a manufacturing-dependent state that was shedding jobs. The new research looks at micro-level employment patterns for a more accurate employment picture. The studies find minimum-wage increases even provide an economic boost, albeit a small one, as strapped workers immediately spend their raises. Let us hope that states lead the way on the minimum wage, and that they tie increases to the cost of living, making endless rounds of legislation unnecessary. Then let us hope that fresh research and improved lives built on hard work compel Congress to follow. " Perhaps the most glaring example of this is our own recent history. We saw a substantial minimum wage increase in 1990 which immediately proceeds some of the lowest rates of unemployment in our country's history. Or even consider the creation of the minimum wage itself in 1938. Did our country plunge from economic depression into even deeper depression? No. Even the harshest critics of New Deal policies can only weakly argue that the depression might have been prolonged, but there is no argument to suggest that employment (which was ever-growing during the span from 1938 into the 1950's) was even remotely impacted by the introduction of a minimum wage. REBUTLE 2: Productivity As I stated in my opening argument, the case for hiring being impacted by minimum wage may have some truth to it in the short term, but the notion that productivity takes a huge hit is simply laughable. As we sit now with official nation-wide unemployment around 10% and an unofficial total that may be as high as 25% (the disparity in the two numbers owing to discrepancies in how the official number leaves out many groups and does not take into account those who have simply given up) our productivity is FOUR TIMES what it was when unemployment was only 4%, as measured by GDP. . http://www.google.com... If you cannot form any link between productivity and employment at all, the notion that said productivity is somehow hurt by job losses driven by minimum wage cannot stand. The argument is utterly without merit. REBUTTAL 3: NUMBERS PRO contends that "If you are worth 10 dollars an hour it is unlikely a firm will pay you 20 dollars an hour. If you are worth three, the firm will not hire for 7 dollars an hour. If you are employed and the minimum wage is raised above your worth, expect to not last long in the labor market etc. .. ." The problem with these numbers is two fold. 1. They are too high. A minimum wage of Twenty Dollars an Hour is commensurate more with a distinct "Living Wage" That some states and countries have instituted. Even since its introduction in 1938, the minimum wage has always been meager. This is why with the tiny and incremental increases we've seen over the last 80+ years minimum wages have never been able to keep up with inflation or cost increases. While I may think that a living wage has merit, it is not what we're discussing here. 2. He draws odd conclusions from them. Typically even if they may cut back in hiring in the short term due to the impacts of a minimum wage increase, I would challenge PRO to find me strong examples of a company literally firing employees. While it is true this is often threatened and hands are wrung, historically firings and layoffs do not spike in the aftermath of a minimum increase, regardless of what overall employment numbers may look like. REBUTTAL 4: MINORITIES AND TEENS PRO contends that teens, minorities, and minorities teens feel the bite of minimum wage the worst. Not only is there strong evidence to suggest this is simply not the case, . http://www.epi.org... but it is an especially odd thing to shift what is in essence a racist burden of blame onto the minimum wage rather than the employers who are choosing to fire/let go minority employees to begin with. Regardless of what factors may make an employer let workers go, the choice to fire those with greater ethnic diversity first, is entirely on them. CONCLUSION: While minimum wages may, (largely through reactionary choices by employers) have a short-term impact on hiring and firing decisions, the overall benefits gained by having a minimum wage that increases WITH the overall GDP are a net benefit to an economy. My thanks for your patience.