Kinda If we took an absolutely free, unregulated market, it might work something like this: A job needs doing that earns the business maybe $5/hour worked in revenue. The business will naturally want to maximise its profit for its shareholders, so will offer as little as it can get away with to its workers. A worker will demand as much as he can possibly get, so eventually will settle on a value for his services - say $2.50/hour. The worker will need to feed himself and clothe himself, which will set his spending power on basics such as food/shelter/warmth, which will inform the market as to the price point at which these products can settle, thus the rate they can afford to pay their own staff. The economy will then settle around a particular price point being the value of an unskilled worker's time. Unskilled workers really are interchangeable - as much as they're people, their only value to the company is to do simple tasks that literally anybody else could do. The bottom decile would be living precariously, hungry, cold, indebted and unwashed, as they have been for much of the last 5000 years of human history. In a happy turn of events, a left-leaning leader enters power and determines that conditions for the poorest are too severe (true), thus meaning they need more money. The left-leaning leader then determines that the worker shall be paid $8/hour as a minimum, regardless of status. Several events follow: First, the company now finds itself having to pay $8/hour for a role that's only worth $5/hour (actually, if you include overheads and taxes, it probably has to find $10/hour to break even). Second, all the people who were on better-than-minimum money (the $2.50 - $8 wage brackets) suddenly find themselves thrown back to minimum money. Third, the business operates first and foremost in the interests of its shareholders, who still want their cut. Therefore, the profit margin will be preserved. Fourth, the more skilled workers, with mobile, transferable skills must be protected to prevent them leaving to find better paid roles in other businesses, to prevent your business failing through loss of valuable skills. Fifth, to preserve profits for the shareholders without cutting salaries for the skilled and mobile workers, one of two things must happen: prices must rise, and costs must fall. - so prices rise generally - so the company looks to replace expensive workers with cheap machines, or cheaper workers in foreign lands Sixth, since prices must rise, the new basic cost of living rises from equivalent of $2.50/hour to equivalent of $8/hour. Meanwhile, unemployment has grown. Also, remember how all the people in the $2.50 - $8/hour bracket were thrown back onto minimum money? Their standard of living has actually declined. Meanwhile, the skilled and mobile workers use their mobility as a weapon and carve out a salary that works at the new price point. They benefit from rising asset prices far more than they're hurt by rising cost of basic goods, so it's actually in the middle-classes interest to support the minimum wage, as well as the actual rich. The problem with the minimum wage is that it takes one part of a socialist idea - wage control - without its complementary component - price control. If you drove up wages while banning consequent price rises, the company would be forced to pay for this by reductions in profit, senior and skilled salaries. Or fold. Implementing one without the other cannot and will not work. So lets look at the minimum wage's evil twin, which the UK absolutely adores, and me, as a middle-class voter obviously supports in full*: in-work benefits. Having seen the failure of the minimum wage to protect those workers who had been in the "better than minimum" bracket before the introduction of the minimum wage, the left-leaning government introduces a series of benefits to help mitigate their loss of living standard. So the low-paid worker can now obtain a refund on some of his tax, assistance with his housing costs, relief from child-raising costs and so forth. The low-paid worker is happy because he has a little more cash in his pocket. Woo yay. He's not half so happy as his employer, though, who doesn't have to consider raising his own rates of pay for better-than-minimum jobs, because the government is sponsoring his inadequate wages, while the worker himself has to spend the money, as significant savings cause his benefits to be cut. Cue further inflation, increased cost of basic goods, rising asset prices... my pension fund has never looked better! Fast forward 20 years from the introduction of the minimum wage, guess what? The bottom decile is still living precariously, hungry, cold, indebted and unwashed. Its effect, however, has been to systematically drag more people into the lowest income bracket, while transferring trillions of Pounds from potential earnings into asset values. Like I say, my pension fund has never looked better! * I'm not. I think they're an abomination.