[dwallin]

Your analysis overly simplifies the matter. For one, this assumes that there is a replacement solution available for the role the employee fills with a cost less than the cost of an employee. This is trivially falsifiable in the large majority of employment situations, if so you would see these solutions already being implemented in places with higher minimum wages. Businesses prefer making some amount $x over $0.

So what actually ends up happening in reality is, in order to not be forced to shutdown, the employer needs to increase the amount of per-employee revenue, which can happen in a number of ways:

- Raising prices (Easiest move, and even easier when labor costs increase for your competitors simultaneously)

- Negotiate lower supply costs (the threat of losing a big customer entirely can motivate a supplier to give up some percent of their profits)

- Increasing employee efficiency (improved processes, additional training, etc). Theoretically the company should have been doing these already but an existential threat is an even larger motivator than marginal profits. This could result in layoffs depending on how the efficiency is realized.

Really what ends up happening in reality is increased costs just get passed along. Yes, consumers probably end up spending more, but less in taxes are spent on benefits programs, making it a wash in overall cost to society. In fact, people who believe that government spending is inherently inefficient should theoretically love the idea of raising minimum wage as it allows us as a society to move resources from government spending into the free market.

[surement]

An employee that earns an employer $8 in revenue but gets paid $9 is a net loss of $1 to the employer. If x is -1 then $x is not better than $0.

If the employer could raise prices and still be in business, then they would already be doing it. Same thing with lowering costs. As for employee efficiency, yes, if you're forced to pay someone $9 then you will want to get at least $9 out of them. That means you won't hire anyone that's not experienced enough.

> Really what ends up happening in reality is increased costs just get passed along

Not if the employer wants to remain competitive. There are plenty of bigger companies with greater economies of scale that will happily run them out of business.

This isn't a nuanced problem. If you raise the price of something, demand drops. Whether the price in question is for things or labor is irrelevant.

[hansvm]

> This isn't a nuanced problem. If you raise the price of something, demand drops. Whether the price in question is for things or labor is irrelevant.

There's a little nuance.

Some anecdata: When I tried charging $0 to get my feet wet in consulting I had zero takers. Raising my hourly rate to $100 drastically improved my success rate (nothing else changed, I was still just some kid in high school with a knack for programming at the time).

The real world doesn't have perfect information and is more than happy to use imperfect signals to save time and effort (in any constant-bounded time that's provably required to hit any fixed desired epsilon of error). The price somebody is asking for is often enough a useful signal that demand need not be monotonic.