Raising Minimum Wage

Although he hasn't stated it in this thread I'm assuming the position he is defending and I am attacking is the same as the previous one where I challanged him, where he states his "position is that I am against raising the minimum wage any higher than it already is" and I should show why it should be raised. Although he states here "There is historical evidence that raising minimum wage is detrimental to companies. " I'm assuming this isn't the basis of debate as his very first reflect doesn't reflect on the impact on companies but rather on society as a whole. Companies care about their profit margins (which he brings up seperately in point two), but in his first point he only raises the issues for employees. Companies don't have reason to care how many employees they have or what hours they work as long as it's profitable, so I think it's clear he's already looking at this from a wider perspective of society as a whole. Senshred's Claims Senshred puts forward a few claims, but does not support them with evidence. Instead he bases his claims on what he views as the outcome of companie raising the minimum wage. However his model of how he looks at the effects is simplistic and does not factor in most of of the effects of raising the minimum wage. For instance he only views the minimum wage increase as a cost on businesses but he does not factor in what happens to the extra money the people on minimum wage get. In his scenarios they might as well burn it. However if people have more money, then they are also spending more money. How do people spend money? They give it to companies in exchange for commodities. The money paid to the employees in wages comes back to the companies in purchases. Indeed, this is exactly what Henry Ford did voluntarily to stimulate demand for his own products. While people said he would be bankrupting himself, he succesfully expanded his business with the benefits accorded to paying his workers higher wages. [1]Indeed there are a host of factors for why the way minimum wage increases work not only minimises any cost but can benefit businesses. In his 2013 report Why Does the Minimum Wage Have No Discernible Effect on Employment? For the Center for Economic and Policy research, John Schmitt set out 11 potential channels which factor into why raising the minimum wage is not forcing businesses to cut employment or go bust as a result of minimum wage increases[1]. Indeed, one of the possible channels for this is by decreaseing hours, which is overall a positive rather than a negative as Senshred tries to claim:"If firms were to adjust entirely by cutting hours (that is, they used no other adjustment channel), a minimum-wage increase could still raise the living standard of minimum-wage workers, even in a competitive model of the labor market. Imagine, for example, that the minimum wage increased wages by 20 percent and lowered the number of hours worked by 10 percent. A part-time worker working, say 20 hours per week, would experience a 10 percent fall in hours to, 18 hours a week, but would be paid 20 percent more for each of these 18 hours worked, for a net increase in weekly pay of 8 percent. Even if the reduction in hours was so large that it exactly offset the increase in the hourly wage, minimum-wage workers would still be better off after the increase because they would be earning exactly what they made before, but would now be working fewer hours per week to earn it. "As Senshred's claims are not backed up by sources and his personal analysis of the economic situaiton is too basic to be relied upon and doesn't include a whole host of key factors, there is therefore no evidence or argument to support Senshred's claims. The RealityFor the last couple of decades as the effects of minimum wage have been intensely studied, the consensus has been that there is no scientifically significant evidence for the negative effects of typical minimum wage increases and indeed reason to think it will have an overall positive impact. In 2012 an analysis by the IMF, World Bank, OECD and ILO found that for G20 countries “a statutory minimum wage set at an appropriate level may raise labour force participation at the margin, without adversely affecting demand, thus having a net positive impact especially for workers weakly attached to the labour market”. [3]The 2013 study by Cooper and Hall found that "Using these same standard fiscal multipliers. .. we find that increasing the national minimum wage from $7.25 to $10.10 per hour by July 1, 2015, would result in a net increase in economic activity of approximately $32.6 billion over the phase-in period, and over that period would generate approximately 140,000 new jobs". Indeed, it is actually expected that minimum wages could and should be higher. Businesses and productivity as a whole have obviously grown over the decades since the most recent US Federal minimum wage was introduced. Why then have minimum wage workers not benefitted? As shown by this graph based on data collected by scientific studies of official data, productivity has increased massively since 1968 and if minimum wage workers were paid just been paid at the same rate equal to the increases in productivity, they would now be on $18 dollars per hour. hell, even if they just had the same average pay increase as normal workers, they'd still be on a lot higher than they are now. As shown, businesses are perfectly able to pay workers more. not only that but paying workers more would benefit the economy as a whole. Furthermore it would increase the money that goes towards the most needy and hardest off in our community, fulfilling one of our basic idea of fairness and how people should be compensated for work[5]There is no reason that the minimum wage should be held back at its current level. Even if someoen were blind to all the overwhelming evidence and the economic rationale behind it, it would be immoral not to increase minimum wage in line with the overall growth of the economy. As it is, once inflation is taken into account people on minimum wage getting are actually getting paid less each year. hell, they're paid less than people on minimum wage 50 years ago! [6][1] . http://goo.gl...[2] . http://goo.gl...[3] . http://goo.gl...[4] . http://goo.gl...[5] . http://goo.gl...;[6] . http://goo.gl...