[propernoun]

Of course it does. You have a naive view of wages. You do not increase minimum wages and not have wage compression elsewhere in the workforce.

Increasing the minimum wage has the most dramatic impact on increasing the demand for goods because it impacts so many people. Increasing the maximum wage has little if any impact on broader demand for goods because it impacts so few. Unless your supply chain can keep up with the demand surge through raised wages, you will see inflation, which is our situation today.

You might naively assume the solution is to introduce price controls but the general outcome of that is the economy shifting transactions to barter-based, black markets, and non-denominated currency exchange, which causes more economic upheaval as GPD and tax revenues drop. There are many examples of this in the last 100 years, Venezuela being a recent one.

[MereInterest]

Thank you for the additional details, and that helps my understanding. That the key quantity to keep constant is the total demand, not merely the total distribution. Therefore, when working to reduce wealth disparities, an increase in the minimum wage must be coupled with a greater-than-proportional decrease in the maximum wage in order to avoid negative side effects.