The Minimum Wage

Before I go any further, I’d like to point out to the judges that what Pro claimed at the beginning of his previous round is completely false. The resolution I am attempting to prove is that the minimum wage is, overall, a bad policy—evidence and arguments showing that the effects of introducing it or increasing have been negative are completely on topic, and not at all “red herrings.” My burden of proof is to show that the minimum wage is, overall, a bad policy, and Pro’s is to show that it is, overall, a good policy. It doesn’t matter at all what the status quo is—if the resolution was something about abolishing an existing minimum wage where it exists, or introducing one where it doesn’t, then it would, but that isn’t the resolution. 1. Here, Pro argues that businesses have other options besides firing workers after the introduction of a minimum wage, such as finding ways to increase efficiency. This, of course, begs the question of why these businesses wouldn’t have done these things to increase efficiency already. Pro says that my rebuttal to his evidence regarding the relationship between wages and productivity is a “bizarre technicality.” While I think it is perfectly clear what I meant, and obvious that what I said is no technicality, I will elaborate. Pro claimed that higher wages lead to more productivity. To quote him, “This is especially relevant to the issue of the minimum wage since better paid staff and those who feel their wages are fair are likely to be healthier, and feel more respected and more motivated, therefore being more productive. This is backed up by economic process theories of expectancy, equity and reinforcement. Edwin Locke studied this phenomena and found that higher wages increased productivity by an average of 30%” Reading this, it would seem that the evidence shows that first, wages were increased, and then, because workers were healthier, more respected, and motivated, productivity increased. But that isn’t what the evidence in his sources said at all. What it actually said is that when offered financial incentives for higher productivity, workers became more productive (that is, something along the lines of ‘if you produce 10% more you’ll get $1 more per hour in wages’). [1] This difference is not a mere “technicality,” it is extremely significant. If my opponent’s representation of the evidence was accurate, it would mean that we could introduce a minimum wage, then because workers would be paid more, and thus be healthier, more respected, and more motivated, they’d be more productive. But the evidence does not show that—it only shows that workers will be more productive if the financial incentives are tied to a prior increase in productivity, which, of course, a minimum wage does not do. 2. Pro argues that businesses don’t have to compete for unskilled labor, so that competition won’t raise wages they way it does in skilled labor markets. This, of course, begs the question of why that is. Such a situation simply doesn’t make any sense given Pro’s worldview—if businessmen want profits, and there’s this huge pool of unskilled labor available at low wages, they why don’t they simply hire them at those wages, and make a profit? The only way to explain the fact that this doesn’t happen is that there’s something standing between the businessmen and these workers—mainly, minimum wage laws. Pro then fails to understand the way prices are determined. He says that, “the fashion house that decides that drawing a picture of a shoe is worth hundreds of thousands of dollars, but actually making the damn thing is only worth $2 an hour.” This makes no sense. If it were really up to the fashion house, then why would they pay designers such a high amount, rather than keeping the money for themselves? The reason a design is worth hundreds of thousands of dollars is because of the forces of supply AND demand, not just one. Consumers are just willing to pay much more for well-designed shoes than for poorly designed ones, so they, not the fashion houses, are what make a shoe designers work valuable. 3. Again, refer to 1. (and the source itself [1], if you wish) for my explanation of why Pro’s analysis of his source is wrong. 4. Pro again tries to argue that the fact that the marginal productivity of workers isn’t fixed, and can depend on many variables, proves his point. But unless the minimum wage changes these variables, this is irrelevant. And it doesn’t—see 1. for why Pro’s own evidence fails to show what he thinks it does. 5. Perhaps reducing supervisory and managerial pay would be a good business decision—I don’t know. But it doesn’t matter, what matters is that employers do think that these supervisors are worth as much as they pay them (as reflected by the fact that they pay them that much, rather than less). Given this, there is no reason to think that employers would actually act the way Pro wishes them to act. 6. I must have misunderstood Pro’s argument here—I was responding to his statement that my argument is “entirely illogical,” which I read as ‘logically unsound,’ thinking he was saying that my conclusion did not logically follow from my premises, not that my premises were incorrect. Refer to 1-5 for why my premises are indeed correct. Empirical Evidence: Pro is correct that I did not realize that the federal minimum wage does not apply to “compan[ies] having revenue of less than $500,000 per year while not engaging in any interstate commerce.” [2] (Although he is wrong that it does not apply to tipped employees—hourly wages can be below minimum wage, but hourly wages plus tips must be at least minimum wage). [2] As I have no way of finding out how significant these types of employees are to the unskilled labor market in the US, this evidence remains inconclusive, Pro’s examples of several states with high unemployment rates with no context or control for other variables nonwithstanding. Card and Krueger: Here, Pro conveniently forgets to address my main criticism of the Card and Krueger study, which was not that serious economists don’t accept it, or that most economists don’t accept it (although I do think that anyone who takes their study seriously cannot call themselves a serious economist, that wasn’t the point of my argument). My main argument was that their study lacked statistical rigor—they relied on phone surveys to gather employment data, rather than looking at the full data set. [3] And when other economists studied the same data set Card and Krueger were studying, but used the actual payroll data, rather than surveys, they found that the minimum wage did increase unemployment in the area they studied. [4] While I did not go into much detail about the sources at the end of my previous round, I did not say “nothing” about them. I provided 6 academic studies from respected economic journals that all found that the minimum wage increased unemployment—compared to my opponent’s empirical evidence, which is a deeply flawed study (flaws which he failed to address at all, unless he plans on doing so in his final round), anecdotal evidence from a couple of states without any compounding variables controlled for, and a “source” bomb, consisting of 1) a short piece consisting of two people’s opinions on the subject, one saying there should be a higher minimum wage and one saying there shouldn’t, with no analysis or data on either side 2) a Huffington Post (lol) piece that also didn’t have any data, and 3+4) anecdotes about a few business owners that supported a higher minimum wage, again, with no supporting data or evidence. [1] http://bit.ly... [2] http://bit.ly... [3] http://bit.ly... [4] Neumark, David and William Wascher, "The Effect of New Jersey's Minimum Wage Increase on Fast-Food Employment: A Reevaluation Using Payroll Records." American Economic Review, Vol. 90, No. 5 (December), pp. 1362–96.