AT Minimum Wage CP - Michigan 7 2023 BFHGR

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2AC – Solvency – Minimum Wage Fails
Economic consensus ONLY exists on the question of minimum wage---empirics go AFF
Phelan 19 [John Phelan; John Phelan is an economist at the Center of the American Experiment and fellow of The Cobden Centre; 3/25/19; “5 Reasons Raising the Minimum Wage Is Bad Public Policy”; https://fee.org/articles/5-reasons-raising-the-minimum-wage-is-bad-public-policy/]
So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment. This is one reason why 72 percent of US-based economists oppose a federal minimum wage of $15.00 per hour. In 2015, the Employment Policies Institute surveyed 166 economists in the United States on the subject. They found: Nearly three-quarters of these US-based economists oppose a federal minimum wage of $15.00 per hour. The majority of surveyed economists believe a $15.00 per hour minimum wage will have negative effects on youth employment levels (83%), adult employment levels (52%), and the number of jobs available (76%). When economists were asked what effect a $15.00 per hour minimum wage will have on the skill level of entry-level positions, 8 out of 10 economists (80%) believe employers will hire entry-level positions with greater skills. When economists were asked what effect a $15.00 per hour minimum wage will have on small businesses with fewer than 50 employees, nearly 7 out of 10 economists (67%) believe it would make it harder for them to stay in business. A majority of surveyed economists (71%) believe that the Earned Income Tax Credit (EITC) is a very efficient way to address the income needs of poor families; only five percent believe a $15.00 per hour minimum wage would be very efficient. The economists surveyed are divided on the impact a $15.00 per hour minimum wage will have on poverty rates, as well as the impact it would have on the spending level for public programs such as the EITC, TANF, or others. At lower levels (under $11.00 per hour) of proposed federal minimum wages, economists are divided largely by self-identified party identification as to an acceptable rate with a majority of Republicans and Independents who responded favoring lower minimum wages ($7.50 per hour or less) and a plurality of Democrats who responded preferring a minimum wage between $10.00 and $10.50 per hour. According to Winston Churchill, if “you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” This does not apply to the $15 minimum wage. Evidence Empirically Points to Failure Another reason most economists oppose a $15 federal minimum wage is that the balance of empirical evidence suggests minimum wage hikes fail to achieve the policy goals they are intended to. In 2008, economists David Neumark and William L. Wascher surveyed two decades of research into the effects of minimum wage laws. They focused on five areas: the effects of minimum wages on employment, minimum wage effects on the distribution of wages and earnings, the effects of minimum wages on the distribution of incomes, the effects of minimum wages on skills, and the effects of minimum wages on prices and profits. Here is what they say about the policy’s impact on each: 1. Minimum wages reduce employment In other work (Neumark and Wascher 2007a), we review the entire recent body of literature on the employment effects of minimum wages, encompassing more than one hundred papers written since the early 1990s…In our lengthier review of employment effects, we conclude that, overall, about two-thirds of the hundred or so studies that we discuss yield relatively consistent (although by no means statistically significant) evidence of negative employment effects of minimum wages – while only eight give a relatively consistent indication of positive employment effects. In contrast, of the thirty-three studies we identify as providing the most reliable evidence, more than 80 percent point to negative employment effects. (p.38-39) 2. Minimum wage hikes reduce the earnings of low-paid workers …the evidence suggests that higher minimum wages tend, on average, to reduce the economic well-being of affected workers. Evidence regarding the effects on workers initially paid at or just above the minimum suggests that their labor income declines as a result of minimum wage increases, reflecting negative effects of minimum wages on employment and hours. (p.139) 3. Minimum wage hikes make some low paid workers better off at the expense of others In our view, the combined evidence is best summarized as indicating that an increase in the minimum wage largely results in a redistribution of income among low-income families, with some gaining and others losing as a result of diminished employment opportunities or reduced hours, and some likelihood that, on net, poor or low-income families are made worse off. (p.189) 4. Minimum wage hikes make young workers less skilled, lowering their future earnings With respect to schooling, the evidence is stronger, with most of the research for the United States pointing to negative effects…recent research that studies the question more indirectly finds that teens and youths exposed to higher minimum wages have lower wages and earnings when they are in their late twenties, consistent with reduced skill acquisition… (p. 223) 5. Minimum wage hikes make products and services more expensive ...the limited empirical evidence consistently indicates that increases in the minimum wage lead to increases in prices of goods and services produced with low-skilled labor…(p. 247-248)
2AC – Solvency – Inequality
Minimum wage increases are more regressive than sales taxes---lower-income families are “net-losers” because of raised prices
Thomas MaCurdy 15 (Professor of Economics and a Senior Fellow at the Hoover Institution at Stanford University), “How Effective Is the Minimum Wage at Supporting the Poor?,” April 2015, Journal of Political Economy Vol. 123, No. 2 pp. 497-545
Advocates of higher minimum wages often cite helping poor families as the primary motive for raising its value. They argue that families primarily supported by low-wage earnings will receive a substantial portion of the benefits and, moreover, that increasing minimum wages imposes very little public or social cost. Supporters contend that employment impacts experienced by low-wage workers are small, if any at all, and the pass-through of labor costs to prices induces negligible changes.
Using data from SIPP and CES for the year 1996, the exercise described in this paper simulates the distributional impacts of the rise in the federal minimum wage from $4.25 to $5.15 implemented in 1996–97; in 2010 dollars, this increase corresponds to a change from $5.91 to $7.00. Following the assumptions maintained by advocates, the simulation presumes ðiÞ that low-wage workers earned this higher wage with no change in their employment or any reduction in other forms of compensation, ðiiÞ that these higher labor costs were fully passed on to consumers through higher prices, and ðiiiÞ that consumers simply paid the extra amount for the goods produced by low-wage labor with no change in their quantities purchased. The cost of this increase is about $15 billion, which was nearly half the amount spent by the federal government on such antipoverty programs as the federal EITC, AFDC/TANF, or food stamp program. The analysis assesses the extent to which various categories of families benefit from higher earnings and the amounts that these groups pay more as consumers through higher prices. Combining these two sides yields a picture of who gains and who pays for minimum wage increases, including the net effects for families.
On the benefit distribution side, as other research has shown, the picture portrayed by this analysis sharply contradicts the view held by proponents of the minimum wage. Low-wage families are typically not low-income families. The increased earnings received by the poorest families are only marginally higher than those of the wealthiest. One in four families in the top fifth of the income distribution has a low-wage worker, which is the same share as in the bottom fifth. Virtually as much money goes to the highest-income families as to the lowest. While advocates compare the wage levels to the poverty threshold for a family to make the case for raising the minimum wage, less than $1 in $5 of the additional earnings goes to families with children that rely on lowwage earnings as their primary source of income. Moreover, as a pretax increase, 22 percent of the incremental earnings are taxed away as Social Security contributions and state and federal income taxes. The message of these findings is clear: raising wages wastefully targets the poor contrary to conventional wisdom.
Turning to who pays the costs of an increase in the federal minimum wage through higher prices, the analysis reveals that the richest fifth of families do pay a much larger share ðthree times moreÞ than those in the poorest fifth. This outcome reflects the fact that the wealthier families simply consume much more. However, when viewed as a percentage of expenditures, the picture looks far less appealing. Expressed as a percentage of families’ total nondurable consumption, the extra costs from higher prices are slightly above 0.5 percent for families at large. The picture worsens further when one considers costs as a percentage of the types of consumption normally included in the calculation of state sales taxes, which excludes a number of necessities such as food and health care. More important, the minimum wage costs as a share of “taxable” annual expenditures monotonically fall with families’ income. In other words, the costs imposed by the minimum wage are paid in a way that is more regressive than a sales tax.
On net, the minimum wage does redistribute income slightly in favor of lower-income families, with higher-income families paying more in increased prices than they benefit from the rise in their earnings. However, adverse impacts occur within income groups. Whereas fewer than one in four low-income families benefit from a minimum wage increase of the sort adopted in 1996, all low-income families pay for this increase through higher prices, rendering three in four low-income families as net losers. Meanwhile, many higher-income families are net winners.
Political support for the minimum wage largely depends on the apparent clarity of who benefits and the inability to trace who pays for the wage increase, irrespective of whether costs are paid through higher prices, lower profits, or cutbacks in jobs or employee benefits. As shown in this study, the benefits created by the minimum wage go to families essentially evenly distributed across the income distribution; and, when minimum wage increases are paid through higher prices, the induced rise in consumption costs mimics the imposition of a value-added or sales tax with a higher tax rate enacted on the goods and services purchased disproportionately by low-income families. Effectively, then, a minimum wage increase emulates imposition of a “national consumption tax” that is more regressive than a typical state sales tax, with its proceeds allocated to families unrelated to their income. Far more poor families suffer reductions in resources than those who gain, and as many rich families gain as poor families. These income transfer properties of the minimum wage reveal it to be an ineffectual antipoverty policy.
Minimum wage laws are ineffective at reducing poverty and inequality---less wealthy individuals would suffer more during recessions
Joseph Sabia 15 (Professor of Economics and Director of the Center for Health Economics & Policy Studies (CHEPS) at San Diego State University, PhD in economics from Cornell University), “Do minimum wages stimulate productivity and growth?,” 2015, Institute for the Study of Labor (IZA), https://doi.org/10.15185/izawol.221
A large number of recent studies explore the effects of minimum wage increases on poverty, the vast majority of which find little evidence that the minimum wage is an effective antipoverty tool [8]. An emerging literature also finds little evidence that minimum wages are effective at reducing consumption-based deprivation, or material hardship [9]. But could the poverty effects of minimum wages differ over the business cycle?
It is argued that many poor individuals do not work and, therefore, will not directly benefit from minimum wage increases. And many more poor individuals will be unemployed during recessions, which will further undermine the poverty-alleviating effects of minimum wages during downturns. In addition, many poor (or near poor) workers earn hourly wages greater than newly proposed minimum wage levels and hence will also not directly benefit from such increases; their poverty status is more often the result of low work hours or living in a large family. For example, nearly 50% of poor workers in the US earn wages above a proposed $10.10 minimum wage [10].
Finally, even among the relatively small number of poor individuals who are affected by minimum wage increases, adverse labor demand effects may undermine attempts to raise their net earnings. Studies focusing on these workers find that those in poor families who do not lose their jobs, or have their hours substantially reduced, see their earnings rise and their households lifted out of poverty. However, other near-poor workers experience minimum wage-induced job loss or hours reductions, causing earnings losses and increased poverty [8]. And if adverse employment effects are larger during recessions, minimum wage increases may have particularly adverse distributional consequences during economic downturns.
The literature on the poverty effects of minimum wages over the business cycle is even more nascent than that on employment effects over the business cycle. The one working paper that looked at this finds little consistent evidence that poverty effects of minimum wages differ over the business cycle [11]. The results of this paper suggest that increases in minimum wages are generally ineffective at reducing poverty during expansions and recessions.
If anything, minimum wage has a negative effect on less wealthy families---it’s not redistributive
(Rado) Teijo Redmer Baarda 22 (Research Assistant at Utrecht University), “Eat Your Cake and Have It Too? The Effect of the Minimum Wage on Employment and Family Income as Evidenced by Germany’s Federal Minimum Wage Implementation,” 2022, Utrecht University School Economics, https://studenttheses.uu.nl/bitstream/handle/20.500.12932/42201/Baarda,%20T.R.,%204484770.pdf?sequence=1
Finally, this research turns to estimating the minimum wages' distributional effects on household net incomes using the model from Equation (2). This part of the research aims to test whether the relative size of the minimum wage—measured using the same two-bite statistics—has a significant positive effect on the mean income earned by individuals located up to and including a particular percentile of the family income distribution. The results as seen in Table 4 include states from all three bite areas (Low, Med, and High). Due to potential issues regarding parallel trends when including the High bite states, the same model is also analyzed excluding those states and these results can be found in Table 5 in Appendix B. Based on our model, the minimum wage does not appear to decrease inequality by lifting the incomes of individuals located in the bottom half of the income distribution. Instead, it appears that the minimum wage's bite –measured both using the Fraction and Kaitz index—has a negative but insignificant effect on the mean household wage earned by people in this lower half of the family income distribution. Therefore, this research does not find evidence to reject the null hypothesis that there is no effect of the minimum wage on the mean family income of households located in the bottom 50% of the family income distribution.
Similar to the results described above for individuals located in the lower half of the family income distribution, it also appears that the size of the minimum wage's bite has a negative and statistically insignificant effect on the mean family income earned by individuals located in the bottom 20% of the family income distribution. Therefore, similar to the minimum wage’s effect on households located in the bottom half of the distribution, this research cannot reject the null hypothesis that there is no effect of the minimum wage on the mean family income of households located in the bottom 20% of the family income distribution. Furthermore, when applying the model from Equation (2) to the income earned by the bottom 10% of the household income distribution, this paper finds that the implementation of the minimum wage may have a negative short-run effect on the mean level of household income earned by this part of the income distribution: When measuring the bite of the regulation via the Kaitz index, it appears that a one percentage point increase in the fraction of minimum wage to the regional mean wage decreases income earned by the lowest decile decreased by 0.29%
Based on the results as seen above, there appears to be no evidence that the minimum wage has a positive short-term effect on the family income earned by the bottom 50, 20, or 10 percent of the income distribution. Therefore, this paper does not find empirical support for the main rationale of the legislation: In the short term, no evidence implementing a minimum wage will lead to improvements in income distribution by raising low-income families out of poverty. These results are in line with the results found by Neumark et al. (2006), who, based on data from Brazil, found no evidence that minimum wages compress income inequality by raising those located at the lower points of the distribution. Thus, this study is unable to conclude that the minimum wage is a good redistribution tool, at least in the short term.
A minimum wage increase would regressively impact low-income households---the most vulnerable workers get fired
Harry G. Hutchison 11 (Professor of Law at George Mason University School of Law), “WAGING WAR ON "UNEMPLOYABLES"? RACE, LOW-WAGE WORK, AND MINIMUM WAGES: THE NEW EVIDENCE,” Fall 2011, Hofstra Labor & Employment Law Journal 29, https://www.law.gmu.edu/assets/files/publications/working_papers/1128WagingWar.pdf
The authors allege that "it is doubtful whether there is any more important condition of individual and general well being than the possibility of obtaining an income sufficient to enable those who earn it [*57] to secure … the necessaries of life." 261 This thesis is both presumptive and credulous: presumptive because the authors' claim assumes facts not in evidence, 262 and credulous because they seem to have been misled by their own presumptions. The pertinent question becomes whether low wage beneficiaries of minimum wage regimes are actually poor or, alternatively put, whether they receive the benefits that minimum wage advocates allege. To answer such questions, it is important to appreciate that not every worker within a family needs to earn a sufficiently high wage in order to secure all of the necessaries of life since family members may cross-subsidize one another for a variety of reasons. 263 Contrary to Deakin and Wilkinson's supple claims, the legal and economics literature shows that most of the actual (as opposed to theoretical) beneficiaries of wage minimums in the United States do not live in low-income households, nor are they the primary breadwinners for their families. 264 Thus, it is easy to see why neoclassical economics "is hostile to minimum wage legislation and to labour standards more generally, seeing them as an unwarranted in

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