The Minimum Wage Should Be Abolished

I made a number of contentions, two of which my opponent did not deal with. They were 1) that a minimum wage restricts a less skilled worker in his ability to compete with more skilled laborers and 2) price theory. 1) I resubmit that an employer, faced with the decision of hiring a relatively more skilled worker whose labor he values at $8.00/hr or the hiring of a relatively less skilled worker whose labor he values at $4.00/hr will, ceteris paribus, choose the skilled worker if a minimum wage prevents the less skilled worker from offering his labor for $4.00/hr. The minimum wage, in this situation, is a restriction on the low skilled worker's ability to remain competitive. Does my opponent deny this? 2) Discussing the price of labor, and government intrusions upon it, I thought it of the utmost importance to talk about supply and demand. I think my opponent should explicitly state his opinions on the effects of supply and demand on price, as well as the effects of price on quantity demanded. My opponent has responded: 1) to my claim that the simple effect of raising a price would be to reduce quantity demanded. His first paragraph seemed to misunderstand my contention, but the second was more on the mark. In it, he referred to his cited study but did nothing else. This is an unsatisfactory response for three reasons: A) the cited study is far too narrow in scope and methodologically unsound, B) its conclusion conflicts with data I provided but my opponent did not even mention the conflict nor attempt to resolve it in his favor and C)he gives no explanation for why the minimum wage should increase employment, especially when it flies in the face of what is overwhelmingly accepted in the economics community. (1) (2) A) The cited study merely looks at employment in two states, and only in the restaurant industry. Furthermore, it assumes ceteris paribus conditions and makes no attempt to control for other factors. (3) He also fails to show that the increase in employment was among low wage workers and not among already higher wage workers now crowding out the lower wage ones. C) A study by itself is not sufficient to disprove something like this. If it were, we could simply lob studies at each other and see who gets buried deeper. I can cite five studies that show the minimum wage reduces employment, or 14 that it reduces employment more among teenagers than adults, or seven that it reduces it most among black teenagers, or four that it hurts unskilled and low wage workers. (4) If my opponent wants to use his study, he should offer an explanation for its findings. My explanation is that other factors, not controlled for, corrupted the data. 2) to my contention that a low wage job is the first rung on an economic ladder, calling the assertion "ridiculous". He proceeds with such a distortion of my position that one hesitates even to call it a strawman. What I said was, "low wage jobs are often the first rung in a ladder to higher paying jobs, and if workers are kept off this first rung, or delayed in getting on it, their future earnings are expected to be negatively affected," and provided a citation. When my opponent says, "the employer won't need to move anyone up the ladder until another higher worker retires or dies. With such low hopes, those cashiers would quit before they enjoyed corporate status," is he saying that there are no steps between entry level job and corporate status? Is he saying that no low wage earner ever gets promoted? Is he saying that a worker who has come to work and proven himself reliable enjoys no advantage when a higher position opens up over a person who has not worked at all? Is he saying that no business ever expands, so that only death and retirement open up positions? Brozen (1969) and Smith and Vavrichek (1992) find that few workers are stuck in minimum wage positions. (4) 3) that there seem to be no exempt workers in the FLSA, having done a search for "non", saying, "my opponent has to explicitly quote his argument or find a better source". I can think of no better source for the FLSA than the actual act itself. If my opponent had done a search for "exempt", he would have found 19 matches, and under Section 213 he would have found what he seeks. Presumably, Congress found it easier to list the exemptions than to list the nonexemptions. Having established that there are exemptions, I ask my opponent to state whether he agrees that excluded workers move into exempt jobs. When he gives us his view of supply and demand, he can tell us whether this movement will reduce wages in that area, as Brozen (1962), Tauchen (1981) and Welch (1974) found. (4) 4) that he agrees with me on what the FLSA does not do, but likens the odds of employers taking advantage of these loopholes to him cutting up his family with knives, saying, "…my opponent has to provide tangible evidence to prove that his A) through E) problems mentioned really did anything…" This is a very peculiar thing to say, since he – and I use caps to highlight, not to shout – USED MY E) FOR ONE OF HIS OWN ARGUMENTS. At any rate, A)and B) have citations in this post; for C) look to McKenzie (1980) and Wessels (1980) (4); D) is just A) with hours apportioned differently, and E) we apparently both agree on but see differently. If an employer can get more productivity out of workers by giving them higher wages, one wonders why he does not do this anyway. Workers are free to agree to this without a minimum wage imposition. This call for a "work ethic" is interesting in a post where sweatshops are denounced. At any rate, it is not clear that workers are better off if they are worked harder for a higher wage; they may consume more in their leisure hours but be worse off in their working hours. Should they not be left alone to negotiate as they see fit? Does he believe that this trend of higher productivity with higher wages can go on forever, or is there a point where productivity maxes out? If there is no max, would my opponent agree to a minimum wage of $3,000,000,000.00/hr? If there is a max, does my opponent believe that all workers, in all industries in all states, are equally distant from it, such that a uniform minimum wage will throw no one over the productivity max? My opponent brings in new arguments (some of which I have already dealt with here). I would point out his claim that the alternative to minimum wage would be sweatshops. He gives no reason for this. How does he explain the rise in workers' wages in the 19th century in America, long before the minimum wage was enacted? (5) And how can a minimum wage prevent the "annihilat(ion) [of] the livelihood of the working class" in America when only 0.2% of its workers earn the minimum wage? (6) Finally, the claim that higher income families pay more of the price increase due to minimum wages in California is irrelevant; it does show that low income families pay some of it, which reduces their consumption, as I contend. Conclusion My opponent should fully respond to my Round 2 as well as better develop his ideas. He should also do more to defend what I consider a false dichotomy: either minimum wage or sweatshops. I have given a theory of labor prices and theoretically shown what this should mean for a minimum wage with what must now be considered copious citations. My opponent has yet to tell us how he believes prices work and what this means for his contentions and his comparatively sparse citations. (1). http://tinyurl.com... (2). Kearl, J. R., et al., "A Confusion of Economists?" American Economic Review 69 (1979): 28–37. (3). http://tinyurl.com... (4). http://tinyurl.com... (5). DiLorenzo, Thomas, How Capitalism Saved America (2004): 95-96. (6). http://tinyurl.com...