But then I asked myself, however large or small the increase, where would the employers get the money to pay it? They wouldn’t likely move into smaller houses and give up their vacations. No, they would raise the prices of whatever goods or services their companies supply. In other words, increases in the minimum wage are paid for by the consumers in the form of higher prices. That means the cost of everything would go up until the new minimum wage wouldn’t buy any more than the old one, and this would lead to calls for another increase in the minimum wage.
That’s because our dollar is only a piece of paper whereas an hour of unskilled labor has actual value. The minimum wage now plays the role previously assigned to gold. It sets the value of the dollar.