The Minimum Wage

Before going any further it should be noted by the judges that so far all of my opponent's arguments have involved perceived problems with introducing minimum wage laws or with increasing the minimum amount. All these arguments are essentially red herrings. Since Con acknowledges that we are addressing the status quo, where MW laws already exist in most civilised countries and since I am not arguing for increasing the minimum wage, none of these arguments even affect the resolution. I do however believe that the severely flawed assumptions they are based on need to be addressed, so I will of course continue to counter them. 1. With L-F's admission of the many variables affecting the marginal productivity of an employee his entire case falls apart. It is clear that businesses have other options besides laying off staff if they have to increase wages due to MW laws. Increases in efficiency can pretty much always be made in any operation and by increasing the workload and responsibility of workers accordingly, businesses will still be able to get value from their employees. There's nothing necessarily wrong with firing one worker who is not productive enough and replacing them with someone more productive either. Those companies with the defeatist attitude to lay off workers and reduce production in response to having to pay their staff a liveable wage don't deserve to stay in business. Con dismisses all the weight of evidence that higher wages increase productivity on a bizarre technicality. I'd like to know what the difference is between "higher wages increased productivity" and "when offered financial incentives for higher productivity, workers worked harder and were more productive". Wages are financial incentives that aren't given until work is done. My opponent has entirely ignored the argument that economic process theories show the value of higher wages as a motivator. This is a well studied area in theory and in practice and businesses can really benefit by investing more in their lowest tier of employees. [1] 2. L-F doesn't address the central point that at the lowest level of the job market, people are desperately competing for jobs and businesses don't have to compete to get staff to do unskilled jobs. This is an example of monopsonistic competition. He was indeed ignoring "factors such as technology and efficiency" in his first round. Just because it can be highly profitable to employ a lot of unskilled workers doesn't mean that other industries can't be just as profitable. For instance a company developing a new technological product may end up having much higher profits but will require greater long term investment for less initial return. Another business may be able to get quick profits employing kids to stitch garments for peanuts but be less sustainable and profitable long term. Different investors will want to invest in different kinds of ventures and thankfully, not all businessmen are unscrupulous enough to want to ruthlessly exploit their staff. L-F's response to the example of the Italian shoes is a wonderful demonstration of the entirely arbitrary nature of marginal productivity and the frankly farcical notion that its value is set by anyone other than the employer. It is the fashion house that decides that drawing a picture of a shoe is worth hundreds of thousands of pounds but actually making the damn thing is worth just ï¿½2 an hour. This employer could easily afford to triple the pay of their factory staff without significantly affecting the fortune paid to the designer, the quality of the few inches of cow hide used to make it or the price paid by the fools who buy these ludicrously inflated products in attempts to make others envy them. 3. Again Con attempts to dismiss the relevance of the evidence from Locke with the supposed semantic distinction between "financial incentives" and "higher wages". Remember here that the evidence is merely statistical reference for the basic economic process theory that L-F has declined to address. The fact is that in an area where MW is introduced, the wages of any workers who previously had lower wages will go up, this is what L-F has been arguing will affect businesses. Companies will be able to adjust the way they do business to make the most out of their better motivated staff and have far more incentive to do this than to lay off workers and decrease production. 4. Again here L-F tries to present marginal productivity as an inherent fixed value of an employee when he has already conceded that it is entirely dependent on the conditions set up and the value of the product assigned by the employer. The margins can always be re-drawn in a viable business model, like in the Italian shoe example above. If a self-employed individual is looking to start taking on employees then they better have enough capital or funds coming in to pay them a typical minimum wage (really not very much) otherwise they don't have a viable and sustainable enough business to be employing people, the same is true of large scale investors. 5. Strawman here, I never mentioned firing supervisory staff. I have maintained that there is generally no need to fire anybody but that thinking of reducing supervisory and managerial pay to more equable levels and cutting the costs of abstract investments such as marketing are good ways for employers to handle any wage increase they need to make to lower paid staff. Since "we're talking about the world as it currently is" all my opponent's arguments are entirely void as basic MW laws are already in place and I'm not arguing for increasing them or introducing new ones. 6. The invalidity of the premises as well as the other effects of MW discussed make L-F's conclusion entirely baseless, however much he repeats it. _____ It is Con who has a fundamental misunderstanding of US state v federal MW laws. He seems to think that state levels below the fed level are entirely meaningless and that every kind of work is subject to the federal law. However there are numerous exceptions to the federal minimum wage, from small businesses, to tipped staff, sub contracted employees etc. [2,3] So in states with no local wage laws like the ones with very high unemployment rates that I mentioned last round, there is no minimum wage for a lot of jobs. Con's counterpoint shows slightly higher rates of unemployment for states with the highest MW, but as I'm not arguing for a high level MW, this is a red herring. Con is correct in stating that the Card and Krueger study has been controversial and many economists sought to discredit it. However there are in fact many "serious" economists who continue to endorse this study [4,5] and argue in favour of MW. Polls show that economists are fairly evenly split on this issue. [6] Con closes his round with a collection of sources, none of which he actually refers to the content of. It's worth pointing out that there is always scope for having separate MW levels for younger people, but if he wants me to address any of this evidence directly then he should make clear arguments based on it. In the meantime, I can source bomb too. [7-10] Thank you. [1] http://business.in.com... [2] http://en.wikipedia.org... [3] http://en.wikipedia.org... [4] http://www.epi.org... [5] http://www2.gsb.columbia.edu... [6] http://en.wikipedia.org... [7] http://www.investmentsense.co.uk... [8] http://www.huffingtonpost.com... [9] http://www.ncccusa.org... [10] http://amforumbacklog.blogspot.com...