Let's look at it.
"Today we discussed the reasons behind the minimum wage, and how it affects the US economy. As someone interested in poverty reform, I have often thought of the minimum wage as an effective tool to provide more workers with a “living wage.” That is, by increasing the minimum wage more workers will be able to earn an income above the poverty line. However, it seems my inclination may have been short-sighted."
Walter Williams pointed out, in my all time favorite article; "The idea that minimum wage legislation is an anti-poverty tool is simply sheer nonsense. Were it an anti-poverty weapon, we might save loads of foreign aid expenditures simply by advising legislators in the world's poorest countries, such as Haiti, Bangladesh and Ethiopia, to legislate higher minimum wages."
"The two major arguments in favor of increasing minimum wages are that it 1) increases the take home pay and standard of living for the poorest workers and 2) does so while encouraging employees to work hard at their jobs (an argument often used against traditional welfare programs). Arguments against minimum wage laws cite a subsequent reduction in the number of available low-income jobs and lower profit margins for small businesses. The logic goes that if businesses have to pay higher wages, they’ll either hire fewer workers or increase prices for end consumers to offset their higher labor costs."
Does it make sense to anyone that a business will hire more employees when they cost more?
Another quote from Dr. Williams' article:
"The crucial question for any policy is not what are its intentions but what are its effects? One of its effects is readily seen by putting yourself in the place of an employer and asking: If I must pay $6.25 or $7.25 an hour to whomever I hire, does it make sense for me to hire a worker whose skills enable him to produce only $4.00 worth of value per hour? Most employers would view doing so as a losing economic proposition. Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers."
"Which group is right? Are minimum wage laws an effective way to reduce US poverty?
Economists are basically split 50/50 on the issue. Research conducted by Whaples in 2006 (also discussed in his audio lecture) found that while 37.7% of members of the American Economic Association supported an increase in the minimum wage, 46.8% were in favor of its elimination. Other research, most notably the work of Card and Krueger in 1992, have found increases in the minimum wage has little to no negative labor effect on workers (while obviously increasing employee incomes); in other words, business owners don’t hire fewer workers. Yet this research has come under much scrutiny recent years, and the debate continues to rage on."
Note: 50/50 = 38/47
As for noting that the minimum wage in this country has had little effect on employment, I will say that thanks to inflation and automation the productivity of poor workers is often worth more than what the minimum wage has bee. In this case, those in favor of minimum wages are right in that it has not kept up with the times. If it did keep up with the times it would uneconomical to hire many people at the minimum wage.
"The most damaging evidence I’ve found against raising the minimum wage is the fact that an increase in minimum wages only affects a small minority of poor families. Looking at Census data from 1996, researchers have found that poor families constitute only 20.9% of the minimum wage workforce, and only 11.7% of minimum wage workers are the only breadwinners in their families. In fact, a 2007 analysis by the Congressional Budget Office (CBO) found that raising the minimum wage from $5.15 to $7.25 (the current national minimum) would provide an additional $1.6 billion in wages to workers, but only 15% of those workers would be from poor families."
There is no mention here of the age of the workers who receive minimum wage.
From the Bureau of Labor Statistics: "Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 23 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over."
Half of people paid minimum wage are below 25 years old. These are the people who are just starting out in the workforce and therefore have limited job skills and experience. If the minimum wage is too high it will be difficult for these workers to get their first jobs and job experience.
From the Huffington Post, no less, "Youth Unemployment: More Than Seven in 10 US Teens Jobless In Summer."
With a minimum wage it is most difficult for inexperienced workers to get their first job.
"Given this background, I don’t feel comfortable speaking to whether raising the minimum wage is overall good or bad economic policy. However, it does seem clear to me – particularly because of point #2 above – that minimum wage laws are probably not the best way to provide assistance to poor people."
Even the link provided by my debate opponent is not in favor of minimum wages.
"Is there a better way to provide higher incomes to poor families? Yes. How? The Earned Income Tax Credit (EITC).
Originally enacted in 1975, the EITC is a refundable income tax credit designed to encourage low-income workers while offsetting the burden of US payroll taxes. Based on the number of dependent children in the family, claimants receive a several thousand dollar additional tax refund each year. And because this is a tax credit, as opposed to a deduction, claimants don’t have to itemize their deductions (a task not often done by individuals below the poverty line) and can receive a credit regardless of their income.
The EITC is a huge program, providing almost 21 million American families with over $36 billion in refunds in 2004. While there are certainly complaints about the program, most notably that it requires a large amount of taxpayer funding, it’s much more effective in targeting poor families than any minimum wage law (remember, only about 20% of minimum wage earners are from families below the poverty line). And while tax dollars are required, that same amount would likely have been hidden in increased costs of goods sold by business trying to maximize profits and offset rising labor costs. Those cost increases would ultimately be paid by consumers.
Other solutions to provide higher incomes to poor families are available and currently being pursued by the US today. However, few economists doubt the ability of the EITC to directly and efficiently provide poor Americans with income assistance, much more so than an increase to the minimum wage."
Rather than argue the merits of the EITC, lets look at the numbers.
According to the Congressional Budget Office (for 2011): the federal government spent $725 billion on Social Security, $275 billion on Medicaid, $480 billion on medicare, $545 billion and $646 billion on "Other" and "Nondefense" (these include "spending related to health", "income security", "unemployment compensation", and other non-poverty related items).
If we only look at the spending for Social Security, Medicare, and Medicaid, and forget the spending on unemployment, etc (because it is not separated from non poverty items in that source) the total spent was $1.48 trillion, in 2011, on "helping" the poor.
$1.48 trillion divided by 310 million (approximate U.S. population) = $4,800
The federal government spends about $4,800 in your name to reduce poverty.
For that amount, $1.48 trillion, we could give each poor American 49.1 million of them (notice how I used liberal MSNBC as a source) each a check for about $30,000. (Poverty, btw, last time I looked up the number for poverty per person it was around $11,000 per year.)
Let's summarize: the federal government spends enough on "helping" the poor that we could give each poor person a check for $30,000 each year, and yet we still have poor people.
Despite this, those on the left want to add our healthcare to the list of things controlled by the government; U.S. Code [of Laws] is 300,000 pages, and counting.
I will end this with a final quote from Dr. Tim's Moment of Clarity:
"And then look at the countries whose living standards are rising the fastest – China will suffice – and ask yourself: why there and why now? What changed to lift them out of abject poverty, starvation and oppression? The government changed, that’s what.
It rejected central planning and embraced free enterprise; and
the results have been nothing short of miraculous. Since 2000, the United States created roughly 6
million new businesses; the Chinese started an astonishing 43 million. The
shift from government enterprise to private enterprise in China has transformed the economy so that 70% of
China’s
output is now generated in the private sector.
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