Harbus

It must be nice to have a budget adherent to wasteful spending. I don't necessarily think that a raise in the minimun wage would enhance the material life of the lower class but it could certainly help us eat. The fact is that even a two person household working full time at minimun wage jobs can afford to pay the rent, but we can rarely afford to eat after the bills are sent in. I understand that it must be devastating to a business owner to have to cut into their profits and not but that second lexus next year, but I think if they tried one month living like this, they would have a better understanding of why this is so important to us.

These concerns were raised over ten years ago during the last minimum wage increase. Unemployment didn't skyrocket, in fact, unemployment numbers fell. Obviously there is a point at which an increase in baseline wages will adversely impact employment numbers. But given that the minimum wage is effectively at a 50 year low when you factor in inflation, I don't see how this proposed increase will result in a massive (or even marginal) spike in unemployment.

The Senate bill has a provision providing tax incentives for small business, which seems like an appropriate remedy for one of your scenarios.

As far as mutual funds and 401Ks are concerned with low wage jobs you are raising an example that is often more hypothetical than real. For large businesses the net result of the increase is likely to eat away at profit margins--on the margins.

Another scenario might be that the increased purchasing power of low-wage workers results in increased consumption of goods reducing the per unit cost (economies of scale), which means that the money will find its way back to business at the macro-level. (This part is pure speculation on my part--still the question remains: Why did unemployment end up FALLING in the period after the last wage increase? There may be some casual factors at work, or it may simply be that larger trends offset the wage increase in other ways.)