However, from the perspective of an unskilled and inexperienced person who cannot provide adequate value to justify being paid the minimum wage, minimum wage laws are egregiously unfair. The minimum wage law says to that person, "you may not work for anybody, any time, under any circumstances since no rational business person can justify hiring you at the required wage".Ignoring the freedom aspect and the damage it does to at least some of the poor who would like to work but are unable to because of minimum wage laws, I think it's possible to make a case for minimum wage laws on practical grounds in at least certain hypothetical situations.
Consider the following hypothetical situation. Let's say the minimum wage is $10 per hour and everybody in the private sector makes the minimum wage. Let's say that there's a fixed tax of $90 per hour for every employee. Also, assume no profits and no other costs. The total cost to employers is therefore $100 per hour. Also assume that the only cost to the employers for producing their products is the $100 per hour for the wage and the tax.
Now let's say that the public sector employees are paid $900 per hour and their only activity is to dig holes and fill them back in and/or to manage the hole activity. There would thus be 1 government employee for every 10 private sector employees and the government employees would be paid 90 times the private sector employees for doing absolutely nothing useful.
In this hypothetical situation, raising the minimum wage from $10 to $20 per hour would be hugely stimulative. The private sector employees would have twice as much money to spend while the cost of labor would only rise 10% (from $100 per hour to $110 per hour) since the $90 per hour tax remains fixed and the price of products would also only need to rise 10%. The employees would be better off AND business would probably expand AND hire more employees.
In effect, in this situation, raising the minimum wage acts like a government spending cut and reduces the dead weight of the government relative to the productive economy. Instead of an 900% tax on productive wages, there would only be a 450% tax on productive wages which is effectively a very large tax cut. This would be hugely beneficial to everybody EXCEPT the government employees who essentially get a pay cut of 10%.
To the extent that reality overlaps partly with this hypothetical situation, a rise in the minimum wage could actually boost both wages and employment. The hypothetical situation can be generalized to high fixed costs per employee, either due to regulation, taxes, or general costs of doing business.
One of the things I find interesting about economic studies about the effect of minimum wage legislation is that over time, raising the minimum wage has less and less adverse impact. For example:
Until the mid-1990s, a strong consensus existed among economists, both conservative and liberal, that the minimum wage reduced employment, especially among younger and low-skill workers. In addition to the basic supply-demand intuition, there were a number of empirical studies that supported this view. For example, Gramlich (1976) found that many of the benefits went to higher income families, and in particular that teenagers were made worse off by the unemployment associated with the minimum wage.Then the infamous Card and Krueger (CK) "bombshell" struck:
In 1992, the minimum wage in New Jersey increased from $4.25 to $5.05 per hour (an 18.8% increase) while the adjacent state of Pennsylvania remained at $4.25. David Card and Alan Krueger gathered information on fast food restaurants in New Jersey and eastern Pennsylvania in an attempt to see what effect this increase had on employment within New Jersey. Basic economic theory would have implied that relative employment should have decreased in New Jersey. Card and Krueger surveyed employers before the April 1992 New Jersey increase, and again in November–December 1992, asking managers for data on the full-time equivalent staff level of their restaurants both times. Based on data from the employers' responses, the authors concluded that the increase in the minimum wage increased employment in the New Jersey restaurants.And while there was and is contentious debate about everything about CK, what is striking is that modern studies show little if any negative impact in direct contrast to studies from earlier last century.
My belief (I say this as someone who runs a business and has to constantly deal with overwhelming, stifling, and increasing regulation and taxes on all fronts), is that the increasingly onerous government impositions on business, especially small business and especially businesses that hire lower wage employees, acts pretty much like the drag of a government digging and filling in holes.
That's why the minimum wage did empirically have a significant negative impact decades ago, but doesn't make much difference (to a point) anymore. The government is dragging us down.