Raising Minimum Wage Damages the Economy

In this round, I would like to point out that my opponent has made a very misleading claim regarding his studies. I do not know if it was intentionally misleading or due to a failure to actually check his sources – I suspect it was not intentional but instead was the result of citing a partisan Republican statement. In any case, I believe this inaccurate claim should reflect negatively on my opponent and cast doubt onto the validity his other claims. <<< REBUTTAL AGAINST PRO >>> 1. Rebuttal to :: Raising the minimum wage increases unemployment My opponent admits there are conflicting studies regarding the effects of minimum wage on employment, and suggests that a meta-analysis is required to discover the truth. He states that “[studies finding minimum wages having no effect] were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%.” This quote is wholly misleading and inaccurate. The quote, which comes from the Joint Economic Committee Republicans in 1995,[1] is referring to a study performed in 1981 by Brown, et al.[2] The Brown study could not have “exhaustively surveyed” the recent studies that have found the minimum wage has no effect on employment, simply because the Brown study was published in 1981, and the studies finding no effects on unemployment were published in 1990-2012. Despite my opponent’s inaccurate and misleading argument, I will not deny that – in addition to the recent studies I have cited showing that the minimum wage has no effect on employment – there are also older studies which appear to suggest that raising minimum wage slightly increases unemployment. There is good reason to believe that the recent studies demonstrating that minimum wage has no effect on employment are more compelling than the older studies. In 2010, Berkeley researchers found that previous approaches used to study the minimum wage were likely flawed, stating that “traditional approaches that do not account for local economic conditions tend to produce spurious negative effects due to spatial heterogeneities in employment trends that are unrelated to minimum wage policies.”[3] Moreover, a meta-analysis of 64 U.S. minimum wage studies found that “minimum wage effects literature is contaminated by publication selection bias… Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains.”[4] A second meta-analysis, conducted by Princeton researchers, found that previous data sets were too small to accurately demonstrate the effects of the minimum wage, and that as the data sets used grow larger, the effect of the minimum wage on unemployment diminishes.[5] Thus, when errors in experimental methodology and publication bias are taken into account, the older studies cited by my opponent are not compelling. Recent studies, which do not employ these traditional errors in methodology, find that there is no link between raising the minimum wage and unemployment and therefore provide a stronger argument for positive effects of minimum wage. 2. Rebuttal to :: Raising the minimum wage will increase welfare My opponent argues that raising the minimum wage will hurt the poor and increase welfare. He again cites the statement by the Joint Economic Committee Republicans to support his contention that the minimum wage increases welfare – the statement itself cites two studies, Leffler (1978) and Brandon (1995). Neither of these studies, however, control for individual characteristics – such as work experience and educational attainment, nor do they account for local market conditions – that could skew the effect of minimum wages on welfare participation. In 1999, John Hopkins University researchers controlled for the confounding factors that were not addressed in my opponent’s studies, and found that higher minimum wages actually reduce welfare participation.[6] The results found that a 50 cent raise to the minimum wage would lower welfare participation by 1.3%. <<< CON ARGUMENTS >>> 1. Raising the minimum wage acts as an economic stimulus and creates job growth By directly placing money into the hands of individuals that are most likely to immediately use that money, moderate increases to the minimum wage provide an instant economic stimulus that drives growth. [See previous round for my full argument and studies]. My opponent asks “[w]hat if minimum wage increases to $1 million dollars?” Absurd. Under a reasonable interpretation of this debate, I am only required to rebut the assertion that raising the minimum wage will damage the economy. I could, for example, support my argument by showing that moderate raises to the minimum wage are beneficial, i.e. do not harm the economy – which I believe I have been doing. My opponent reiterates his argument that raising the minimum wage increases unemployment and cites a 1983 study by Meyer and Wise. This study falls victim to the methodological problems that I pointed out earlier. Numerous studies, including a study my opponent cites earlier, Brown et. al, criticize the methodological assumptions of the Meyer study.[2][7] 2. Raising the minimum wage increases productivity and reduces costly employee turnover [Due to space, see argument from previous round]. 3. Raising the minimum wage reduces reliance on welfare There is a strong logical foundation and empirical evidence supporting that raising the minimum wage reduces reliance on welfare – i.e., the availability of higher wages will draw more people off of welfare. [See rebuttal argument from this round]. 4. Raising the minimum wage will increase living standards The real value of the federal minimum wage has fallen 30% since 1968. The United States currently has 47 million working poor – individuals whose income falls below the poverty line. As many as 23 million workers would benefit from a moderate increase in the minimum wage.[9] Increasing the minimum wage will put money into the hands of the individuals who need it most, thereby improving their buying power and living standards. <<< CONCLUSION >>> My opponent's primary argument is that raising the minimum wage will increase unemployment, but he has cited only older studies that have been shown to have methodological errors and were subject to publication bias. Moreover, he falsely asserted that meta-analysis supported his claim by citing a study that was published decades before the studies he claimed it was analyzing. I have provided contemporary studies and meta-analysis that show moderate raises to the minimum wage: (1) do not increase unemployment; (2) stimulate the economy and create job growth; (3) reduce reliance on welfare systems; (4) and improve buying power and therefore living standards of the working poor. SOURCES [1] http://www.jec.senate.gov... [2] Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981a. Effects of the Minimum Wage on Youth Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5, pp. 1-26. [3] Andrajit Dube, T. William Lester, and Michael Reich. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties". Review of Economics and Statistics, V. 92, N. 4 (Nov. 2010): 945-964. [4] Doucouliagos, Chris and Stanley, T. D., (2009), Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis, British Journal of Industrial Relations, 47, issue 2, p. 406-428. [5] Card, David and Alan B. Krueger (1995). "Time-Series Minimum-Wage Studies: A Meta-Analysis", American Economic Review, V. 85, N. 2 (May): 238-243. [6] http://www.ipr.northwestern.edu... [7] http://ideas.repec.org... [8] http://www.irle.berkeley.edu... [9] http://epi.3cdn.net...