CP - Minimum Wage - Michigan 7 2023 BFHGR

Minimum Wage
1NC
1NC – Minimum Wage
The United States federal government should increase the Federal minimum wage to $15 an hour, require that the Federal minimum wage increase per year according to the Consumer Price Index, and repeal the separate minimum wage for tipped employees, workers with disabilities, and for other purposes.
Increased minimum wage raises the pay of 25% of workers---spills over to pay hierarchies and eliminates discriminatory practices
Center for American Progress 18 (independent, nonpartisan public policy research organization), “Blueprint for the 21st Century; A Plan for Better Jobs and Stronger Communities,” 05/14/2018, https://www.americanprogress.org/article/blueprint-21st-century/#:~:text=The%20Blueprint%20for%20the%2021st%20Century%2C%20or%20Jobs%20Blueprint%2C%20proposes,of%20bargaining%20power%20of%20those
Even with increased state action in recent years, too many working families are unable to secure a living wage on the job. In 2016, about 39 percent of employed workers lived in states that have not set minimum wages above the federal level. Black workers (49.8 percent) and workers without four-year college degrees (40.6 percent) are even more likely to live in these low minimum wage states.253 And while Arizona, California, Colorado, Maine, New York, and Washington state have approved future minimum wages above $12,254 other states have yet to enact laws to move their minimum wages above this threshold and closer toward a living wage.
Federal policymakers should right this wrong by immediately raising the pay of millions of workers, eliminating the discriminatory subminimum wages for tipped workers and workers with disabilities,255 and setting the federal minimum wage on a path to reach $12 per hour by 2020 and $15 per hour in 2024, indexed thereafter to the median wage.256
The Economic Policy Institute estimates that by 2024, these policies would directly raise the wages of 22.5 million workers—29 percent of American workers—who would, on average, receive a $5,100 annual raise.257 Minimum wage increases also tend to boost the pay of workers who make just above the new minimum wage, since employers tend to maintain internal pay hierarchies after minimum wage increases are implemented.258 This indirect effect would result in higher wages for 19 million workers whose employers would raise their hourly pay above $15.
A $15 minimum wage would be a huge benefit for workers currently struggling to support themselves and their families. Contrary to claims that often emerge in the minimum wage debate, this wage increase would affect vastly more workers than just teenagers—a full 90 percent of its beneficiaries are aged 20 or older. Nearly 1 in 4 prime-aged workers—those ages 25 to 54—would see their pay grow as a result of a $15 minimum wage in 2024. Workers with less than a college degree would be especially likely to see benefits from this minimum wage level: Nearly 4 in 10 of these workers would be affected compared to about 10 percent of workers with a bachelor’s degree or more.259
An increase in minimum wage solves productivity---changing thinking ensures future increases are more efficient
Levin-Waldman 14 [Oren Levin-Waldman; Professor of Public Policy at Metropolitan College of New York, USA. He is also Research Scholar at the Binzagr Institute for Sustainable Prosperity; 3/21/14; “The Minimum Wage is Really an Efficiency Wage”; https://www.usw.org/blog/2014/the-minimum-wage-is-really-an-efficiency-wage]
In other words, instead of thinking of the minimum wage as a social negative because of supposed employment effects, it is time to think of it more as the efficiency wage it could be intended to achieve greater productivity and prosperity. The idea of the minimum wage as an efficiency wage dates back to a famous essay by Sidney Webb in 1912, and is ironically recognized by the competitive market model. Webb argued that better paid workers would be able to better maintain themselves, and because that meant they would be eating better they would come to work with more energy and naturally work more efficiently. But higher wages would also improve their morale, as they would feel better about the work they were doing. This would lead them to put more effort into their jobs. Employers too would see that their workers were working harder and would seek to invest more into their improvement in order to justify the higher wage. Consequently, overall efficiency would improve, thereby leading to increases in productivity. The notion that a minimum wage improves efficiency is often referred to as the “Webb” effect. But it has found expression in the competitive market model, albeit in a slightly different, if not somewhat bizarre form. In a famous paper about 30 years ago, Nobel laureate Joseph Stiglitz — who more recently has been arguing about the dangers of rising income inequality — along with Carl Shapiro argued that the minimum wage can be an efficiency wage to the extent that employees earning higher wages will take steps to avoid shirking. Employees who receive higher wages have a stronger incentive to hold onto their jobs because the costs associated with job loss. Moreover, employers also derive benefit because the costs of higher wages are offset by savings in monitoring costs. Of course, the anti-shirking argument isn’t a whole lot different from the Webb effect. The former couches it in the standard economics language of incentives and disincentives, whereas the latter suggests that improved efficiency flows from improved morale. One is merely more easily quantified than the other. Still, the idea is the same. Higher wages lead to greater efficiency for the simple reason that better paid workers not only have greater incentive to put more effort into their work, but they have less incentive to pick up and leave. In other words, employers who pay higher wages don’t have to lay off workers or necessarily raise prices in order to prevent the increase from eating into profits. They can save money from reduced turnover, which only decreases the costs of recruitment and retraining. It would appear that amidst the national policy debate over whether to raise the minimum wage to $10.10 an hour as being pushed by Democrats in Congress and the President, some employers have come to recognize that there really is greater efficiency to be derived from higher wages. Consider that Cosco pays its workers an average of $20 an hour because it wants to keep its employees. The Gap recently announced that it would be raising its minimum wage to at least $9.00 an hour because it too doesn’t want to lose good employees. A spokesperson for the national chain actually said they were committed to investing in its workforce. The American Consumer Satisfaction Index recently reported that those stores with the lowest levels of consumer satisfaction were also not surprisingly among those paying the lowest wages. That alone should be a warning. One gets what one pays for. Consumers dissatisfied with the service they are getting will naturally go elsewhere. Paying a higher wage, then, is not as some on the right would derisively label a “feel-good” measure, but in the end is about the bottom line. We cannot continue to be a prosperous nation if we cling to the belief that efficiency is defined as greater output for less input, including labor costs. The market place is not simply a place to pursue our own selfish interests with total disregard for our neighbors. That is a gross misreading of Adam Smith. Rather, the market place is the way we achieve the most efficient organization of the greatest number of people for achieving a common purpose: prosperity. People forget that Smith was above all a moral philosopher. It would be nice if more low-wage employers on their own could come to recognize the greater efficiency in higher wages. As most still cling to the first part of the competitive market model, wages need to be increased through policy. Were a minimum of $10.10 to be adopted and then indexed to either the inflation rate or productivity increases, all future increases could then be planned for because they would be anticipated. This then would be less of a shock to the system, which again would only improve efficiency. It is time to recognize the efficiency benefits of the minimum wage.
2NC – Solvency
Solvency – Advocate
Transition to a 15-dollar minimum wage allows employers to maintain profitability without decreasing employment---analytical and empirical evidence
Robert Pollin & Jeannette Wicks-Lim 15 (professor of economics at the University of Massachusetts Amherst, founding co-director of its Political Economy Research Institute, and member of the Scientific Advisory Committee of the European Commission project on Financialization, Economy, Society, and Sustainable Development (FESSUD) & visiting professor at Marlboro College, in Marlboro, Vermont, research assistant for Economic Policy Institute, research associate for Monitoring the Future at the Institute for Social Research at the University of Michigan, Ann Arbor), “A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs ,” January 2015, Political Economy Research Institute 373, https://peri.umass.edu/publication/item/602-a-15-u-s-minimum-wage-how-the-fast-food-industry-could-adjust-without-shedding-jobs
In our scenario, the federal minimum wage rises from its current level (what we term the “Year 1” level) of $7.25 to $10.50 after one year, i.e. by Year 2. The federal minimum then rises to $15 after three more years, i.e. by Year 5. Therefore, the U.S. economy operates with an $10.50 minimum wage for three years, from Years 2 – 4, before rising to $15 per hour in Year 5.
The assumptions through which we develop this scenario are straightforward. That is, again, we begin by assuming that the fast-food industry experiences no employment losses over the full four-year adjustment period, from Years 2 – 5. We rather assume that employment growth proceeds at an average rate of one percent per year. This is a slower rate of employment growth than the two percent trend growth rate for the fast-food industry.8 But, as we discuss more below, we are also anticipating that the growth in sales volume (though not sales revenues) will also slow modestly due to the price increases that we assume the industry will enact as one of their adjustment mechanisms. In other words, employment growth will slow from the trend 2 percent rate to 1 percent through Years 2 – 5. This is because the growth in the total amount of food that the industry will sell will also slow modestly. In any case, after the four-year adjustment period to move the federal minimum to $15 per hour, employment growth should then return to its trend rate of around 2 percent.
According to the October 2014 IBIS World Industry Report that focuses on the U.S. fast-food industry, the profit rate in the fast-food industry for 2014 was 5 percent. IBIS is defining profitability here as profits as a share of total revenues. In our scenario, we assume that profits as a share sales revenues will be fixed at this 5 percent of sales ratio for all four years of our adjustment period. We also, again, assume that there are no other areas of the industry’s operations which experience reductions in their revenue levels.
At the same time, we do need to account for the fact that some components of fast food firms’ spending will rise as their sales volume rises. These include spending on inputs such as wholesale food products, utilities, and, franchise royalties paid by the franchisees. Based on IBIS’s 2014 report, these types of industry costs currently make up approximately 60 percent of sales revenue.9
There are three further key assumptions, as derived from our literature review above:
1) Cost savings from turnover reductions. Turnover reductions will generate cost savings for the fast-food firms that will amount to 20 percent of their wage bill increases.
2) Industry sales growth trend tied to overall economic growth. The fast-food industry’s underlying growth trend will continue to roughly match that of the overall economy, at around 2.5 percent per year. The actual rate of sales growth will be reduced modestly due to industry-wide price increases, but will still otherwise correlate closely with overall GDP growth.
3) Demand elasticity and price increases. We assume that the price elasticity of demand within the fast-food industry is -0.5. We also allow that overall prices within the fast-food industry will rise by 3 percent per year over Years 2 – 5. Given our -0.5 price elasticity assumption, the 3 percent annual price increase will break down into: 1) a 1.5 percent decline in sales revenue relative to what sales would be otherwise along a 2.5 percent annual sales growth trend; and 2) a 1.5 percent increase in revenues relative to what revenues would be otherwise for a given volume of sales.
In Tables 5 and 6, we now show how the fast-food industry could realistically adjust to a $15 minimum wage without resorting to either employment losses, reductions in their profit rate, or other forms of revenue redistribution within the industry. Specifically, Tables 5 and 6 show the effects of the full set of adjustments that the fastfood industry could make in response to the higher minimum wage levels, working from our assumptions with respect to turnover; the growth trend in industry sales; and the -0.5 price elasticity of demand combined with a 3 percent annual increase in prices.10
We begin in Table 5 with the adjustment process from Years 1 to 2, from the $7.25 to the $10.50 per hour federal minimum wage. As Table 5 shows, based on our full set of assumptions, the fast-food industry will face a $8.2 billion wage bill increase resulting from the rise to an $10.50 minimum wage. This overall wage bill increase is then absorbed through the combination of these three channels: 1) $1.5 billion in cost savings generated by reduced turnover; 2) $3.5 billion in increased revenues, assuming a 3 percent price increase and a -0.5 price elasticity of demand; and 3) a $6 billion revenue increase generated by the 2.5 percent underlying sales growth trend. Within this Year 2 adjustment framework, we also need to account for the increase in other costs from our assumed one percent growth in sales volume. As noted above, these other costs are equal to approximately 60 percent of the sale revenue given current prices. Thus, we assume that a one percent increase in sales volume will raise other costs by $1.4 billion (60 percent x 1.0 percent x $232 billion). As we see in row 7 of Table 5, an additional 0.5 billion will need to be allocated to firm profits in order to maintain the average industry profit rate at 5 percent of overall sales.
Table 6 then presents figures on the second phase of the adjustment process for the fast-food industry, in which the federal minimum wage rises from $10.50 per hour in Year 4 to $15 as of Year 5. In this case, we see that the overall wage bill will be $28.4 billion. This wage bill increase is then covered through these channels: 1) A $5.2 billion cost reduction generated by lower turnover; and 2) a $30 billion revenue increase in Year 5 relative to Year 2. This figure incorporates both a) three years of underlying sales growth at 2.5 percent; and b) three years of price increases at 3 percent per year, with a -0.5 percent price elasticity operating in all three years. In this case, $1.5 billion out of total revenues will need to be allocated for profits to maintain the industry profit rate at 5 percent of sales. Finally, we show in row 8 that $4.2 billion will go towards covering the cost increases fast food firms experience due to increased sales volume. As we see in row 9 of Table 6, after all of these adjustments are accounted for, the industry will still be able to retain $1.1 billion in revenues to be allocated for other purposes.
6. CONCLUSION
We have presented a simple, stylized scenario through which we show how the federal minimum wage in the U.S. could be raised within four years to $15 an hour without generating employment losses in the fast-food industry. We also show how this adjustment to a $15 minimum wage could be accomplished without fast-food business firms having to face a decline in profitability. The set of assumptions underlying this scenario are all realistic and derived from the existing relevant literature.
These results can help provide clarity on two sets of questions regarding the impact of minimum wage laws in the United States, one a purely analytic question and the other more geared to ongoing policy debates. From an analytic perspective, our illustrative exercises help to explain how it is the case that minimum wage increases can be implemented repeatedly without generating large-scale employment losses among low-wage workers. The key point that our scenario emphasizes—following from the literature we have discussed here—is that business firms do have other options available to them besides cutting their workforce. These other options, moreover, are likely to be more desirable under most circumstances, especially for firms that aspire to compete successfully and grow.
In terms of policy implications, our results offer a straightforward conclusion. Achieving a $15 federal minimum wage within the U.S., phased in over four years, should be seen as a realistic prospect. This specifically means that the intended consequence of the $15 minimum wage—to improve the living standards of low-wage workers in the U.S. and their families—can certainly prevail over the unintended consequence that low-wage workers and their families would suffer from widespread employment losses.
Raising the minimum wage results in a smooth transition and fiscal relief for families---consideration of part-time workers is key
Jennifer Romich & Heather D. Hill 18 (s associate professor of social welfare in the School of Social Work at the University of Washington and director of the West Coast Poverty Center & associate professor in the Daniel J. Evans School of Public Policy and Governance at the University of Washington), “Coupling a Federal Minimum Wage Hike with Public Investments to Make Work Pay and Reduce Poverty,” 2018, The Russell Sage Foundation Journal of the Social Sciences 4(3), pg. 22–43
We propose raising the federal minimum wage to $12 per hour, with a two-year phase-in, and to index it to inflation moving forward. As our simulations show, at this wage level, a full-time worker with a spouse and two children will earn enough to be above the poverty line (the same is true if both spouses work part-time hours that sum to full-time work). When combined with SNAP and federal tax credits net of payroll taxes, a half-time single worker with three or fewer children will be nonpoor as well. We believe that half-time work is an appropriate expectation for low-wage workers whose jobs disproportionately feature irregular and unpredictable hours (Tilly 1991; Lambert, Fugiel, and Henly 2014), particularly parents who must balance market work and family caregiving. Indeed, Luke Shaefer estimates that 36 percent of all part-time workers are primary earners for their families (2009).
Indexing the federal minimum wage to the cost of living is critical to its success. In fact, the decline in the real value of the minimum wage over time has greatly exacerbated concerns about disemployment. With a minimum wage designed to increase proportionally with changing costs or wages in this country, we would not face the need to increase the wage by such a large amount in future years. Several states have recently passed laws or voter initiatives that index the state minimum wage to inflation.
We recommend that the increase from $7.25 to $12 take effect over two years without mandated steps. This time and flexibility will maximize employers’ ability to make decisions about w

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