A2 Poverty

Living wage decreases employment and hurts the economy because it causes
outsourcing.
Malia Litman states: Litman, Malia [Economic Activist] The Harsh Reality of Increasing Minimum Wage, The
Rebuttal to the Rogue 2013. HHS//KK

In 2011, 2,273,392

American jobs were outsourced to foreign countries.

reported that they were outsourcing.

35% of American companies

India was the first choice of American CEOs as their preferred country for

outsourcing. China was the second most favored country. The most often cited reason for outsourcing of American jobs is cost. A
whopping

44% of companies who outsource jobs to foreign countries report that

the main reason for outsourcing is to reduce or control costs .

By way of

comparison, a worker in China, making minimum wage, would earn less than
$8000.00 U.S. dollars per year. An American employer of employees working in China would
also save

the additional costs of Social Security, Medicare, Workers Comp Insurance,

and Unemployment taxes. Thus as the costs increase for employees hired in
America, the more incentive for American companies to outsource jobs.

While Americans

might suggest that employers who outsource jobs are un-American consumers and investors convey the reality of the global market
in which we live.

When consumers go to Wal-Mart, they dont typically select products

based upon the country where a desired product is manufactured. Instead they look
for the best price.

When choosing a company in which to invest, the primary motivating factor is profitability in the past,

rather than the consideration of what percentage of its work force is employed in this country.

It seems that the harsh

reality is that as long as there is an excess of unskilled workers looking for minimum
wage employment in America, raising minimum wage may simply drive more jobs
out of the country. Having a low paying job is better than having no job at all.
Living wage causes unemployment
Dustin Hawkins states: Hawkins, Dustin

[Political Scientist with an Emphasis on Conservative Politics]. Why

Conservatives Oppose Raising the Minimum Wage, The Unintended Consequences of forced Wage Increases 2013. HHS//KK

For starters, jobs become fewer.

Economics 101. Most

Make something more costly and you get less of it.

Welcome to

minimum wage jobs are not essential jobs (say, pushing buggies from a parking lot)

and making them more costly also makes them more expendable. Add to that
recent job-killer known as Obamacare

the

and pretty soon you wont have to worry about

minimum wage jobs because there will be very few left. Employers would rather pay
one excellent employee $16/hr with benefits rather than pay two inexperienced
entry-level workers $9 with benefits. The net result is fewer jobs as duties are
consolidated into fewer and fewer positions. The anti-business policies that started
in 2009 have proven this point as by 2013 there were 2 million fewer people working
than four years earlier, with the highest unemployment rates being in the young
adult/entry level age brackets.
Living wages hurts the economy because it wipes out gains in income.
Dustin Hawkins states: Hawkins, Dustin [Political Scientist with an Emphasis on Conservative

Politics]. Why
Conservatives Oppose Raising the Minimum Wage, The Unintended Consequences of forced Wage Increases 2013. HHS//KK

Not only would raising the minimum wage reduce the number of available jobs, but
it probably would fail to make life cheaper for these workers in the long run
anyway. Imagine that every retailer, small business, gas station, and fast food and pizza joint were forced
to increase the pay of their heavily teen, college-aged, part-time, and second-job workforce by 25%.
Do they just go oh okay and do nothing to make up for that? Of course they dont.
(likely not making their situations better) or

They

either reduce employee head count

increase the cost of their product or service. So while

you boost the minimum wage of these workers (even assuming they are the working poor) it doesnt
matter much because the price of every product they plan to purchase from other retailers,
fast food joints, and small business just

skyrocketed to pay for the pay increases. At the end of the

day, the value of the dollar is merely weakened and the ability to purchase more
goods becomes more expensive anyway.
[Alexander] Minimum wage causes job layoffs
Rachel Alexander writes: Alexander, Rachel. Seattle Set to Destroy Economy With Highest Minimum Wage in the
World. Townhall.com, May 2014. SR

if the minimum wage is increased

The unions stand to benefit immensely

. Most union contracts have a clause
that permit them to renegotiate contracts or increase wages when the minimum wage is raised. When was the last time you heard of a union losing a

businesses will lay off employees, find ways to automate

jobs or force employees to work harder. Fast-food digital kiosks are already
prevalent in Europe, where they were implemented in order to replace employees
due to increasingly oppressive taxes and regulations. The kiosks are beginning to
show up in the U.S., and can be expected to drastically increase in Seattle. Similarly, in the
past when there have been minimum wage hikes, grocery stores adapted by laying
off cashiers and setting up self-service checkout lanes.
renegotiation? When this law goes into effect, many

[Dorfman] A US increase in the minimum wage would barely help people below the
poverty line.
Jeffrey Dorfman write: Dorfman, Jeffrey. [Professor of Economics at the University of Geogia] The Minimum Wage is
An Expensive Way to Help The Poor. Real Clear Markets, February 2014. SR

[T]he main issue here is the inefficiency of the minimum wage as an

antipoverty tool. Proving this point will be easy as the White House was kind enough to provide all the relevant statistics. In
However,

this briefing, the White House stressed that "nearly half of the benefits [go] to households making under $35,000" and "only 12

[A] White House's own report we find[s]

that 22 percent of the households with workers who would get a raise under their
proposal already make $75,000 per year or more. We also find that while only 12 percent of
the affected workers are teenagers, 44 percent are unmarried people with no kids
and another 18% are married people with no kids. In all these cases, working full
time at the minimum wage would place these people above the poverty line before
any raise in the minimum wage.
percent of the beneficiaries are teenagers." Digging a little deeper into the

That leaves only 26 percent of the beneficiaries being households that contain kids.
Given the income statistics in the White House briefing, with only 46 percent making less than $35,000 and the amount it takes for a
family of four to be above poverty (about $25,000) it appears likely that

[F]ewer than 10 percent of the

affected households would be currently below the poverty line.

CBO]
Increasing
the
minimum
wage
hurts
employment.
The CBO writes: CONGRESSIONAL BUDGET OFFICE The Effects of a Minimum-Wage Increase on Employment
and Family Income FEBRUARY 2014
Accordingtoconventionaleconomicanalysis,

increasingtheminimumwagereducesemploymentin

twoways.First,higherwagesincreasethecosttoemployersofproducinggoodsand
services. Theemployerspasssomeofthoseincreasedcostsontoconsumersinthe
form of higher prices, and those higher prices, in turn, lead the consumers to
purchase fewer of the goods and services. The employers consequently produce

fewergoodsandservices,sotheyhirefewerworkers.Thatisknownasascaleeffect,
and it reduces employment among both lowwage workers and higherwage
workers. Second,aminimumwageincreaseraisesthecostoflowwageworkers
relativetootherinputsthatemployersusetoproducegoods and services, such as
machines,technology, andmoreproductivehigherwageworkers.Someemployersrespond
byreducingtheiruseoflowwageworkersandshiftingtowardthoseotherinputs.
Thatisknownasasubstitutioneffect,anditreducesemploymentamonglowwage
workersbutincreasesitamonghigherwageworkers.
[CBO]
Increasing
wages
to
10.10$
reduces
employment
The CBO writes: CONGRESSIONAL BUDGET OFFICE The Effects of a Minimum-Wage Increase on Employment and
Family Income FEBRUARY 2014

implementing the $10.10 option would reduce employment

by roughly 500,000 workers in the second half of 2016, relative to what would
happen under current law.10 That decrease would be the net result of two effects: a
slightly larger decrease in jobs for low-wage workers (because of their higher cost)
and an increase of a few tens of thousands of jobs for other workers (because of
greater demand for goods and services).11 By CBOs estimate, about 112 per- cent of the
33 million workers who otherwise would have earned less than $11.50 per hour
would be jobless either because they lost a job or because they could not find a job
as a result of the increase in the minimum wage. Those job losses among low-wage
workers would be concentrated among people who are projected to earn less than
$10.10 an hour under current law. Some workers who would otherwise have earned
between $10.10 and $11.50 per hour would also see an increase in their wages, which
would tend to reduce their employment as well, CBO estimates. However, some firms might hire more of
According to CBOs central estimate,

those workers as substitutes for the lower-paid workers whose wages had been increased. Those two factors would probably be
roughly offsetting, CBO anticipates, so the number of such workers who were employed would probably not change significantly.

[Luce] T/Living wages would result in job and increased city costs.
Stephanie Luce writes: Luce, Stephanie Living Wage Ordinances, Cry Wolf Project 2010 EE
Business groups have funded studies used to argue against the passage of living wage
minimum wage

laws,

generally

predicting large job loss and costs for the city.

proposed ordinance in Providence, RI,

approximately

[A] study

of a

funded by a coalition that included the Greater Providence

Chamber of Commerce, predicted that a living wage

increased wages[,]

For example,

and

and benefits,

ordinance

would cost firms $146 million in

firms would lose $30 million in profits, employers would cut

30,000 jobs, and the city would need to spend $18 million. Another study funded

by the Chamber in Los Angeles was conducted by Spectrum Economics Inc)*., a consultant group that has written economic studies
arguing against policies such as public health insurance, environmental regulation and prevailing wage laws. The authors

claimed that the

L.A. living wage ordinance would cost the city $130 million a year[.] (Merl 1996).

[Wilson] T/Empirically, increasing the minimum wage to a living wage doesnt

reducepovertylevelsandcreatesalossinemploymentopportunities.
1

Mark Wilson writes: Wilson, Mark [Head of Applied Economic Strategies LLC]. "The Negative Effects of Minimum
Wage" Political Analysis 2012.

Seventy years of empirical researchgenerallyfinds that the higher the minimum wage
increaseisrelativetothecompetitivewagelevel, the greater the loss in employment opportunities.
A decision to increase the minimum wage is not cost-free;someonehastopayforit,and the
research shows that low-skill youth pay for it by losing their jobs, while consumers
may

also pay for it with higher prices.Moreover, evidence from a large number of

academic studies shows that, even if there were no negative employment or other
affects, minimum wage increases dont reduce poverty levels. Only 11.3 percent of
the workers who would gain from a recent proposal to increase the mini- mum wage
to $9.50 an hour even live in poor households.
[Meer] T/Increase in wages leads to a decrease in employment
Jonathan Meer writes: Meer, Jonathan. Effects of the Minimum Wage on Employment Dynamic., December 2013, SR
We begin by [When] examining the effects of the minimum wage on the net job growth
rate in Row [1] of Table 2. [t]he results are fairly consistent[,]

across the columns for the three data sets:

there is a negative and statistically significant effect on job growth. They are also similar in
magnitude in each data set. Recall that the BDS is an annual panel whereas the QCEW and QWI are quarterly panels. Annualizing the
effects in Column (4) of Panels (B) and (C) which include state-specific time trends, region-by-time effects, and additional controls
to better compare them to Panel (A) yields effects on the growth rate of -0.0586 and -0.042 for the QCEW and QWI, respectively.
These are quite close to the effect of -0.0587 for the BDS. Because the outcome is defined as a growth rate, the result in Column (4) of
Panels (A) and (B) indicates that

a real minimum wage increase of ten percent reduces job

growth in the state by around 0.5 percentage points (during these years, the average state employment

growth rate was 2.0 percent annually). In

other words, a ten percent increase to the minimum wage

results in a reduction of approximately one-quarter of the net job growth rate. 20 Recall
also that we are examining the entire labor market.

To the extent that not all workers are affected by

increases in the minimum wage, the effect is likely to be more concentrated on these
portions of the wage distribution. Therefore, this result implies a large reduction in
the rate of net new positions created, one that may appear implausible on first
inspection. Keep in mind, as discussed earlier, that hourly earnings near the minimum wage are especially prevalent for newlyemployed workers indeed, 22.1% of these individuals are paid within one dollar (real 2011 values) of the prevailing minimum wage.