No I don't agree.
That extra money comes from somewhere.* Either it reduces profitability (which is unlikely to be the only direct result, but could be one of the results), which discourages investment, and thus reduces future production (and also results in the owners and investors spending less), or results in lower employment or less hours to keep the pay increase down (potentially even a net negative), or it results in higher prices which both erode the benefit of the higher wages, and can decrease sales.
In theory the feds could set a minimum wage near or at the market clearing wage for low end labor (which in practice they can't do, if there was one market clearing wage they would have to be lucky to hit it, but since different areas of the country are different, the market clearing wage is different in different places), in which case a minimum wage doesn't do that much (it increases wage for a few, decreases opportunity for those the bottom in terms of employability, probably increases prices by a very small, even tiny amount, but for most people, even most low skill/low employability workers, and the people who hire them, or patronize the businesses that hire them, it doesn't do much positive or negative. Alternatively they could set it well below the market clearing wage (which would mean it would have even less effect, perhaps only having any impact on people who's employability is at the bottom of the bottom. Or it could set the wage above the market clearing rate, in which case you likely get less employment, sometimes significantly less.
There is just about no way you would get more than a modest gain, and even that isn't likely. Modest net losses are the most likely result. High net losses are possible particularly if the minimum is really high, or a minimum is added or increased by a noticeably amount when the economy is really weak.
* - And if it is actually new money, say the fed "prints" enough extra to cover the extra wages, then you just inflate way the gains that some people would have gotten from the higher minimum wage. |
