The Case For the Minimum Wage

http://www.debate.org...For the past 60 years, Americans workers have been protected by a minimum wage that helps make economic participation possible through work, and that prevents poverty. And throughout that entire history, year after year, decade after decade, opponents of the minimum wage have warned that the policy would (eventually… any minute now…) cause catastrophic job losses.Only it never did. Not in 60 years and counting.Since its inception in 1938, critics of worker rights in America have claimed that minimum wage laws would reduce the incentive to hire and invest, bankrupt business, and destroy our economy. Many of them have produced convincing statistics and studies to prove that the minimum wage would destroy the ability of millions of American workers to find a job.Only it never has.Since 1938, the American economy has become the envy of the world, with high levels of worker productivity and historically high levels of GDP growth. America is unquestionably home to one of the most successful economies the planet has ever produced.In this round, we will look at some of the criticisms that have been used against the minimum wage over the decades. Argument: The economic system is self-correcting. Businesses that make poor decisions will not survive. So laws are not needed to make them do the right thing. Society needs to ensure that they do not cause wider collateral damage as they suffer the consequences of their actions. It is often better, and cheaper, to prevent the damage from happening in the first place. http://www.debate.org... It is tempting to say “businesses that underpay their workers deserve to go bankrupt,” and dismiss the controls that are placed on their behavior as an example of society getting in the way of the entrepreneurial “cycle of life.” However, the public has good reasons to prevent economic collapse before it happens; it is a matter of simple self-defense. Poverty is very expensive for taxpayers and for law abiding businesses that do treat their workers fairly. Higher crime rates require increased spending for police. Additional costs are also often required to prevent starvation. Urban blight can chase away investment and lower property values, which reduces tax collections. All of these conditions should be prevented if possible. Employers will hire if they pay their workers a fair wage.There are so many problems with this myth that it is hard to know where to start. Where are all the mass layoffs? They just never happened. Consider the chart below. The minimum wage was implemented in 1938, in the midst of the Great Depression. The red bars show the levels of unemployment before 1938, and the blue bars show what happened after the first minimum wages were introduced. Notice how unemployment immediately begins to drop? While energy crises, financial meltdowns, and war have caused normal economic fluctuations, the minimum wage cannot be shown to have caused any mass job losses. Source: Bureau of Labor Statistics [1]http://www.debate.org... Moreover, employers can afford to pay their workers fairly. Consider the three companies that account for the largest number of minimum wage workers in America. All of these multi-billion dollar companies have seen record profits, and all of them can easily afford fair pay for the women and men who made these companies successful. http://www.debate.org... The additional costs in wages only represent a small portion of total operating expenses, and can easily be passed on to consumers. For example, if Congress were to enact a raise in the minimum wage to $9.80/hour, and the entire additional labor costs were passed on to consumers, the increased cost would be barely noticeable. In many cases, it would amount to less than an extra dime a day for the customer.[2] http://www.debate.org... The minimum wage does not mostly benefit teenagers in entry-level jobs. A recent study by the Economic Policy Institute shows that the vast majority, nearly two thirds of minimum wage workers are adults. A third of those are married, and over one quarter of them have children. [3] http://www.debate.org... Why doesn’t the minimum wage kill jobs?In an important study conducted by the Center for Economic and Policy Research, the minimum wage has “no discernable effect” on hiring. The report concluded,“The weight of the evidence points to little or no employment response to modest increases in the minimum wage. The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases. Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.”[4] In over 70 years, the minimum wage has yet to cause the widespread joblessness that critics have promised. Instead, it has provided critical purchasing power to low income consumers that otherwise might be shut out of the economy. [1] http://data.bls.gov... [2] http://phys.org... [3] http://www.epi.org... [4] http://www.cepr.net...