Notes/Explanation

Minimum Wage CP Answers

2AC — Minimum Wage CP

( ) Permute: Do Both. Inequality is a linear impact. “Double solvency” outweighs the net-benefit.

( ) Structural Violence DA — the counterplan increases poverty.

Salam 15 — Reihan Salam, Columnist at Slate, Executive Editor of The National Review, Fellow at the Institute of Politics at the University of Chicago, 2015 (“The Fight Against 15,” Slate, April 22^nd, Available Online at http://www.slate.com/articles/news_and_politics/politics/2015/04/the_fight_for_15_it_s_a_bad_idea_raising_the_minimum_wage_to_15_would_hurt.html, Accessed 07-19-2017)

Why beat your head against the wall when you can just go with the flow and embrace a very popular idea? I can think of only one good reason: that increasing the minimum wage so dramatically will damage the economic prospects of millions of vulnerable people. My view is that the labor market is changing in ways that make huge minimum wage hikes, like the one backed by the Fight for 15 movement, very dangerous.

First, let me stipulate that there is a lively, ongoing debate among serious, thoughtful people about the wisdom of more modest increases in the federal minimum wage. For years, scholars have been drawing on variation in minimum wage levels across states to determine whether minimum wage hikes reduce employment levels. Can we discern the effects of a minimum wage hike by, say, comparing two neighboring counties, one in which the minimum wage increased and the other in which it did not? Can we screen out all of the nonrandom differences between states and cities that might influence their local minimum wage laws? I’m skeptical, but many scholars, like University of Massachusetts–Amherst economist Arindrajit Dube, have tried to do just that. Dube and his collaborators have concluded that modest minimum wage hikes don’t appear to reduce employment levels. Other economists, like David Neumark and William Wascher, disagree.

But let’s say that Dube is right about modest minimum wage hikes. Does that settle the issue? Should we all join the Fight for 15? Not quite. There is a big difference between raising the federal minimum wage from its current $7.25 to $10.10 versus raising it to $15. (If you don’t believe me, just ask Thomas Piketty.) By definition, the federal minimum wage applies across the country, despite the fact that average wages and price levels vary considerably from place to place. One scholar who has been particularly thoughtful as to why this matters is Dube himself, who has argued against a one-size-fits-all approach to the minimum wage. In a paper for the Hamilton Project, Dube observed that “states as dissimilar as Massachusetts and Mississippi have different capacities to absorb a minimum wage of, say, $11.00 per hour, and a single minimum wage has to balance the needs of states at both ends of the spectrum.”

What does it mean for different states to have different capacities to absorb a higher minimum wage? Consider the contrast between Massachusetts, a high-cost, high-wage jurisdiction, and Mississippi, a low-cost, low-wage one. In Massachusetts, very few workers would be affected by an increase in the federal minimum wage to $10.10, as the Bay State already has a $9 minimum wage that is set to increase to $11 by 2017. But in Mississippi, as many as 28 percent of workers would be affected. In Massachusetts, wages are higher, and so are prices. Relatively few employers will have to spend substantially more on their workforce under a higher federal minimum wage, and relatively few will have to raise their prices to account for it. In Mississippi, by contrast, many employers will have to raise their wages, and it’s a safe bet that virtually all of the cost of this minimum wage hike will be passed on to consumers in the form of higher prices. You might think that, well, this isn’t a huge deal if it’s rich people who are paying these higher prices. But of course it will often be poor people who pay them, particularly in a poor state like Mississippi. This makes poor consumers worse off in a direct sense, in that they can purchase less with their earnings. And if consumers are at all sensitive to prices, at least some of them will choose to spend less on labor-intensive goods and services now that they are more expensive. That could reduce the number of minimum wage jobs available.

( ) Global Leadership DA — education is key to economic growth and competitiveness, military readiness, IP leadership, diplomacy, and national cohesion. Higher bottom-end wages don’t solve.

( ) Political Inequality DA — improving material conditions alone doesn’t equip people to fully participate in democracy.

Newman 13 — Anne Newman, Researcher at the University of California Center for Collaborative Research for an Equitable California—a multi-campus research program and initiative, holds a Ph.D. in the Philosophy of Education from Stanford University, 2013 (“Introduction,” Realizing Educational Rights: Advancing School Reform through Courts and Communities, Published by the University of Chicago Press, ISBN 9780226071749, p. 4)

I am motivated to develop a case for a right to education by several gaps in the relevant literature across disciplines. In recent years political philosophers and theorists have increasingly argued for a constellation of positive welfare rights to ensure citizens’ political equality, including rights to basic income, health care, housing, and employment.5 These arguments differ in their details but share a foundational premise: if we are serious about achieving political equality in a democracy, then we must recognize and meet democracy’s material preconditions. Giving citizens the right to vote is not enough, these arguments suggest, because hunger, homelessness, and poverty compromise, if not entirely undermine, the value of individuals’ political liberties. Yet this literature’s narrow focus on material goods, without any sustained consideration of education, rests on the dubious assumption that if citizens are decently housed, fed, and employed, they can participate in democracy on equal footing. This assumption fails to recognize the significant epistemic demands of democratic citizenship, and the importance of widespread, high-quality education to improve the conditions of democracy.

( ) International Law DA — higher wages won’t change international perception of U.S. human rights credibility and democracy promotion. Federal recognition of a right to education is key.

( ) No Inequality Solvency — a higher minimum wage won’t reduce inequality.

Ferro 15 — Shane Ferro, Business Reporter at The Huffington Post, 2015 (“Why Raising The Minimum Wage Probably Won’t Fix Income Inequality,” The Huffington Post, December 23^rd, Available Online at http://www.huffingtonpost.com/entry/minimum-wage-inequality_us_567af9dae4b06fa6887fc8dc, Accessed 07-19-2017)

Does raising the minimum wage decrease income inequality?

On its face, the answer seems like a fairly straightforward yes. If a huge chunk of people at the bottom of the income distribution are making more money, they are getting closer (however slightly) to those above them.

The issue is not quite that straightforward, though. A new paper finds that a declining minimum wage throughout the 1980s was likely not the primary reason that the income of poor people moved farther away from that of the wealthy.

That means raising the minimum wage is likely not the solution to reducing inequality, though it very well might be helpful to that bottom rung of workers. America could need a higher minimum wage for the poorest workers, while also needing a different — and likely much more difficult — solution to income inequality for everyone in the 99 percent.

The paper, published in The American Economic Journal: Applied Economics, finds that the effect of the minimum wage on income inequality is smaller than economists have thought in the past — which is not to say it has no effect. Specifically, the authors looked at vastly increased income inequality in the 1980s and asked whether a decreasing real minimum wage (meaning it was growing slower than inflation) helped increase that inequality.

The paper (you can read an ungated, earlier version here) says that the effect of a wage floor on income inequality is “economically consequential but substantially smaller than that reported” in previous economic literature.

Why is this important? Both income inequality and the minimum wage have become hot-button political issues in recent years, particularly since the rise of the Fight for $15 campaign and the release of Thomas Piketty’s tome Capital in the 21st Century. Democratic presidential hopefuls Hillary Clinton and Bernie Sanders (I-Vt) talk about income inequality as a major economic problem and advocate for raising the minimum wage as one possible solution for the issue.

The exact cause of income inequality is up for debate. But many people, including Piketty, think it has to do with the returns that the already wealthy see on their holdings, causing the rich to see more and more wealth every year, even as incomes don’t budge.

This paper provides some evidence for separating the two issues. It’s possible that those on the lowest rung on the income ladder deserve more, and we need to create a more equal income distribution for the rest of the 90 or so percent of wage earners in the U.S. But according to this research, those are mostly separate issues with separate solutions.

1AR — Structural Violence DA

Raising the minimum wage increases unemployment.

Holzer 15 — Harry J. Holzer, Visiting Fellow in Economic Studies at The Brookings Institution, Professor of Public Policy at Georgetown University, Institute Fellow at the American Institutes for Research, Senior Affiliate at the Urban Institute, Research Affiliate of the Institute for Research on Poverty at the University of Wisconsin-Madison, former Chief Economist for the U.S. Department of Labor, former Professor of Economics at Michigan State University, former Faculty Research Fellow of the National Bureau of Economic Research, holds a Ph.D. in Economics from Harvard University, 2015 (“A $15-hour minimum wage could harm America’s poorest workers,” Fortune, July 30^th, Available Online at http://fortune.com/2015/07/30/1223726-15-hour-minimum-wage-workers-fast-food/, Accessed 07-19-2017)

But I have much more serious worries about a $15 an hour minimum wage, which constitutes a wage increase of 50% to 100% in most places (even after adjusting for inflation). In cities like Seattle, with a relatively more educated workforce and dynamic labor market, it might be a gamble worth taking. But in other cities, such as L.A. and Washington, D.C. – with their large populations of less-educated workers, including unskilled immigrants – such increases are extremely risky.

In job markets where young or less-educated workers already have difficulty finding jobs and gaining important work experience, such mandates will likely make it much harder.

In a city like Washington DC where unemployment among those with a high school education or less is at a worrisome 15%, jobless rates will almost certainly rise. Many employers will be very reluctant to pay high wages to workers whose skills – including the ability to speak English, in the case of many immigrants – are so modest. A likely result would be not only increases in unemployment but also drops in formal labor force activity (where workers work or search for legal jobs) and perhaps some growth in undocumented work among immigrants.

It causes employers to automate and cut jobs.

Holzer 15 — Harry J. Holzer, Visiting Fellow in Economic Studies at The Brookings Institution, Professor of Public Policy at Georgetown University, Institute Fellow at the American Institutes for Research, Senior Affiliate at the Urban Institute, Research Affiliate of the Institute for Research on Poverty at the University of Wisconsin-Madison, former Chief Economist for the U.S. Department of Labor, former Professor of Economics at Michigan State University, former Faculty Research Fellow of the National Bureau of Economic Research, holds a Ph.D. in Economics from Harvard University, 2015 (“A $15-hour minimum wage could harm America’s poorest workers,” Fortune, July 30^th, Available Online at http://fortune.com/2015/07/30/1223726-15-hour-minimum-wage-workers-fast-food/, Accessed 07-19-2017)

Third, it might take time for employers of many low-skill workers to learn how to economize on their labor costs, but they will over time, since the incentives to do so are much larger – and that would be bad news for the very low-skill workers the higher minimum wage is designed to help. For instance, fast-food workers might be more easily replaced by robots. Hotels may reduce their tendency to automatically clean the rooms of their guests, and may charge extra for doing so. In the state of New York, fast-food franchises will probably be replaced by other kinds of restaurants and food services. Employers in these industries will also likely demand better education, skills and experience among those whom they hire.

1AR — No Inequality Solvency

A higher minimum wage doesn’t solve unemployment.

Lowrey 13 — Annie Lowrey, Economics Reporter for The New York Times, 2013 (“Supersize My Wage,” The New York Times, December 17^th, Available Online at http://www.nytimes.com/2013/12/22/magazine/supersize-my-wage.html, Accessed 07-19-2017)

Raising the minimum wage is hardly a panacea. For one, it does little for the millions of struggling families who have higher hourly wages or a salary. Second, the strongest division between those below the poverty line and those just above it is work itself. Raising the minimum wage does little to help the millions of Americans looking for a job.

No research supports counterplan solvency.

Holzer 15 — Harry J. Holzer, Visiting Fellow in Economic Studies at The Brookings Institution, Professor of Public Policy at Georgetown University, Institute Fellow at the American Institutes for Research, Senior Affiliate at the Urban Institute, Research Affiliate of the Institute for Research on Poverty at the University of Wisconsin-Madison, former Chief Economist for the U.S. Department of Labor, former Professor of Economics at Michigan State University, former Faculty Research Fellow of the National Bureau of Economic Research, holds a Ph.D. in Economics from Harvard University, 2015 (“A $15-hour minimum wage could harm America’s poorest workers,” Fortune, July 30^th, Available Online at http://fortune.com/2015/07/30/1223726-15-hour-minimum-wage-workers-fast-food/, Accessed 07-19-2017)

Three additional points reinforce these concerns for me. First, the increases up to $15 are much greater in magnitude than anything we have studied in the past; because of this, it’s hard to say if the previous research that found modest negative effects on employment would hold true, and a reasonable guess is that the effects now will be much more negative.