The U.S should abolish the Minimum Wage

D1) Theory My opponent claims my argument against the monospy model is like this: 1. Economists reject it 2. Therefore, it is wrong He then claims, with this logic, it is wrong to assume the model “is wrong on ALL issues.” This final bit I don’t even understand—some industries (like electricity companies) function are monopolies, but this is the exception rather than the rule. The argument was not that the monopsony model is always wrong; rather, it is that it is generally wrong and not applicable to the economy at large, especially low-wage industries that rely upon minimum wage workers. Also, the claim wasn’t simply a simple appeal to authority. The argument was economists generally throw out the model because monopsony is extremely rare and not applicable to low-wage markets in the United States. My opponent then claims “argument is purely theoretical.” Ignoring theory simply because it is “theoretical” is foolish. Philosophy, which is based on logic, is “theoretical,” yet we have relied on logic and philosophy throughout this debate in order to make our cases. Simply because something is “theoretical” does not make it wrong. In fact, theory is extremely important in economics. As economist George Schultz once said (in a form of a song to Milton Friedman), “A fact without a theory, Is like a ship without a sail, Is like a boat without a rudder, Is like a kite without a tail. A fact without a figure Is a tragic final act, But one thing worse, In this universe. Is a theory without a fact.” Theories are dependent on facts in order to demonstrate their veracity. But a fact without a theory—in this case, empirical studies backed up by the neoclassical and Keynesian models—are fairly strong. The simple fact that the monopsony model is very rarely applicable puts a whole in my opponent’s empirical response via the Card and Krueger study. It should also be noted that my opponent’s counterargument is entirely microeconomic. John’s firm might very well be able to function with a higher minimum wage, but that doesn’t mean it would have the same effects on a macroeconomic level nor does it mean a government mandated minimum is more efficient than the world before the mandate; in fact, it is very likely that the new wages actively harm John’s business. His reduced profits make it harder for him to hire future workers, and thus the argument still stands. Not only that, but the example also assumes there are no alternatives. With higher wages, things like automation—which beforehand were not economically competitive with labor at lower wages—become more attractive. This means minimum wages may force labor to become substitutes with automated technology. Even the example with John seems to mesh well with neoclassical theory! D2) Ah, Card and Krueger Card and Krueger is the classic pro-MW study. The study is essentially bogus, and I suspect Krugman’s support of the MW is more due to ideology than empirical facts—which is odd, as Krugman is usually a legitimate economist (despite the fact we often disagree). There are multiple flaws with the approach. First, as the study relies upon surveys, the study misses out on a lot of data. For example, the study will only obtain data from the survivors! As the brilliant economist Thomas Sowell has observed, “Imagine that an industry consists of ten firms, each hiring 1,000 workers before a minimum wage increase, for an industry total of 10,000 employees. If three of these firms go out of business between the first and second surveys, and only one new firm enters the industry, then only the seven firms that were in existence both ‘before’ and ‘after’ can be surveyed and their results reported. With fewer firms, employment per firm may increase, even if employment in the industry as a whole decreases.”[1] Second, phone survey data is notoriously unreliable and, even when accurate, the results are rarely precise. David Neumark and William Wascher, economists from UC Irvine and the Federal Reserve, respectively, reanalyzed the date using official payroll datasets. With this superior methodology, they found “a decline in employment in New Jersey fast food restaurants relative to the Pennsylvania control group.”[2] Therefore, the minimum wage hikes in New Jersey did not have a positive impact—they harmed workers they wished to help. The Employment Policies Institute found many other issues with the study, noting that the survey failed to define to the employers what part time work was and the time frame in question.[3] The study is so bad, EPI argued, that no meaningful conclusions can be drawn from the data. It should also be noted I did not base my argument on the brown consensus. I also cited two literature reviews by Neumark and Wascher—2006 and 2008—which were published well after the Card and Krueger studies. In fact, Neumark and Wascher only look at studies published since then, and still come to the same conclusion as Brown did two and a half decades before. The evidence is clear: minimum wage hikes reduce employment and harm workers. D3) Voting with feet My opponent completely misread my argument. Nowhere did I say minimum wages were in any way, shape, or form like communist China. All I said was if policies like those in China had caused people to “vote with their feet” because they had a better life elsewhere, it meant if low-wage workers vote with their feet due to minimum wage laws, it would be indicative on the overall effect minimum wages have on the poor. If minimum wages make workers flee their state to states with lower minimums, that would indicate they have “voted with their feet” and have decided lower minimums are better for them than higher ones. The argument is fairly simple. My opponent’s only response to the research here is this: “The fact that I have not seen any economist cite, or even comment on the study my opponent has referred to brings into question the reliability/validity of the study.” This makes absolutely no sense. The vast majority of economists do not comment on every single published study. In fact, the vast majority of the studies published in the American Economic Review—the most prestigious economic journal in North America—likely receive few (if any) comments. That does not mean the studies are meaningless, flawed, or unimportant. My opponent’s entire response is a cop-out—he has no response to the research. In other words, he essentially drops all of the information. With no information—or, for that matter, theory—opposing this argument, it essentially flows towards Pro by default. Low wage workers have decided minimum wage laws are so deleterious to their economic health that it is worth it to move away from their established home into states where the minimum wages are lower or nonexistent. That is significant, and it strongly suggests minimum wage laws hurt those they are meant to health: the poor, the downtrodden, and those who have little hope of rising up. Conclusion Minimum wage laws are well intentioned. My opponent—and those who support minimum wages—are genuinely nice people. They don’t want to deprive entire families of employment. They don’t want to deprive entire communities of wages. They don’t want to cause pain. But that’s exactly what their policies do. Don’t let feelings interfere with public policy; we need to look at the real world results of these policies. Unfortunately, the effects are more poverty, less employment, and less economic mobility. I hope the voters choose to vote for the motion to abolish mandatory unemployment—I mean minimum wage—laws. 1. http://cafehayek.com... 2. David Neumark and William Wascher, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment,” American Economic Review (2000): 1390. 3. https://www.epionline.org...