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Tuesday, April 16, 2013

Should the Minimum Wage Be Abolished?

It's been a few months since I've recommended an Intelligence Squared US debate, primarily because while the topics have been interesting, the debaters (at least in my opinion) haven't. Nevertheless, here's a good one: "Abolish the Minimum Wage." It pits well-meaning libertarians and social liberals against one another.  There's far more nuance to this debate than most people would like to admit. For example, although raising the minimum wage will benefit those who are and remain employed, it also raises the labor costs of companies, which could lead them to lay workers off, not hire as many workers as originally planned, or raise their prices (unless you believe that companies, out of the goodness of their hearts, will simply absorb the extra costs without doing anything -- of course, if that were the case, there wouldn't be any need for a minimum wage). Here's a description of the debate (from the Intelligence Squared website):
The first attempt at establishing a national minimum wage, a part of 1933’s sweeping National Industrial Recovery Act, was struck down by the Supreme Court in 1935. But in 1938, under the Fair Labor Standards Act, President Franklin D. Roosevelt signed into law a minimum hourly wage of 25 cents—$4.07 in today’s dollars. Three-quarters of a century later, we are still debating the merits of this cornerstone of the New Deal. Do we need government to ensure a decent paycheck, or would low-wage workers and the economy be better off without its intervention?
Like all Intelligence Squared debates, the audience votes both before and after the debate, and the team that changes the most minds wins, which means a team can win a debate without winning a majority of votes. For example, imagine if prior to the debate, 20% of the audience supported the motion being debated, 40% opposed it, and 40% were undecided. If after the debate, 45% of the audience support the motion, and 60% oppose it, then the team arguing on behalf of the motion will win because their share of the votes increased 25% points, while the other team's share increased only 20%.

In theory, this format should correct for the ideological biases of the crowd. However, I've noticed that prior to the debate a large percentage of the audience tends to say that they're undecided, and my sense is that a large percentage of these undecided voters are leaning a particular way, which makes it easier for the team that's arguing that side of the issue to win and why it's fairly easy to predict which side will win before the debate actually begins. That is, because the debates are held in NY, they tend to attract more people on the political left than the political right, and most of the time (not always), the politically "liberal" team wins. Nevertheless, regardless if you agree with the outcome, the debates themselves can be quite informative and fun to listen to. As always, you can listen to the debate at the Intelligence Squared website ("Abolish the Minimum Wage"), as well as access transcripts of the debate.  The debate can also be downloaded from iTunes.

Debating on behalf of the motion are Jason Dunn and Russell Roberts; arguing against are Jared Burnstein and Karen Kornbluh. Here are their biographies (from the Intelligence Squared US):

James A. Dorn is the vice president for academic affairs, editor of the Cato Journal, and director of Cato’s annual monetary conference. His research interests include trade and human rights, economic reform in China, and the future of money. From 1984 to 1990, he served on the White House Commission on Presidential Scholars. He has lectured in Estonia, Germany, Hong Kong, Russia, and Switzerland and has directed international conferences in London, Shanghai, Moscow, and Mexico City. Dorn has been a visiting scholar at the Central European University in Prague and at Fudan University in Shanghai and is currently professor of economics at Towson University in Maryland. He has edited 10 books and his articles have appeared in numerous publications. Dorn holds a Ph.D. in economics from the University of Virginia.

Russ Roberts is a research fellow at Stanford University's Hoover Institution. He is the host of EconTalk, a weekly hour-long award-winning podcast. His rap videos (created with filmmaker John Papola) on the ideas of Keynes and Hayek have been viewed over 6 million times on YouTube and subtitled in eleven languages. Roberts blogs (with Don Boudreaux) at Cafe Hayek. His latest web-based educational project is The Numbers Game where he discusses data and charts in annotated videos. Roberts is the author of three works of fiction that teach economic principles and lessons and numerous journal articles. Roberts was a professor of economics at George Mason University from 2003 to 2012. He has also taught at Washington University in St. Louis, the University of Rochester, Stanford University, and UCLA. His PhD is from the University of Chicago.

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, Bernstein was the chief economist and economic adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Bernstein’s areas of expertise include federal and state economic and fiscal policies, income inequality and mobility, trends in employment and earnings, international comparisons, and the analysis of financial and housing markets. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author of "Crunch: Why Do I Feel So Squeezed?" and is an on-air commentator for the cable stations CNBC and MSNBC and hosts

Karen Kornbluh recently stepped down as US Ambassador to the Organization for Economic Cooperation and Development where she negotiated international Internet policymaking principles, launched a new OECD gender initiative, and championed the OECD's transition from the "rich man's club" to a global policy network focused on working with developing countries and emerging economic powers. She previously served as policy director for then-Senator Barack Obama, as deputy chief of staff at the US Treasury Department, and in a number of roles at the Federal Communications Commission including assistant chief of the International Division and Director of Legislative and Intergovernmental Affairs. She has been awarded a number of fellowships including a visiting fellowship at the Center for American Progress and a Markle technology fellowship. She founded the Work and Family Program at the New America Foundation for publications including the New York Times, the Washington Post, the Atlantic Monthly, and the Harvard Journal of Law and Technology.

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