A worker has a choice between working at an above minimum wage job or working at several minimum wage jobs at a lesser wage. The minimum wage goes up. Minimum wage jobs now pay the same rate. The worker now has a more freedom of movement within the labor pool with regards to wages. If the employer wants to keep the worker, something needs to be done to make the present job more attractive than the minimum wage jobs that are available. The end result is that the worker is either offered a wage increase or some other benefit to stay in the present position.

Of course, the above does assume that the average worker who is working near minimum wage is a rational agent in the economic sense of the term. That assumption may not hold.

But the other thing is that the 2% number, correct me if I'm wrong, only tells how many workers are working at minimum wage. It doesn't say how many workers are working at employers where the pay scales are defined by minimum wage + x which is a pretty common corporate policy for low skill jobs.

---

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]