>The question is why hasn't that previous wage increase cause a long-term boom in economic activity? It has. The money multiplier of raising the minimum wage i

>The question is why hasn't that previous wage increase cause a long-term boom in economic activity? It has. The money multiplier of raising the minimum wage is higher than almost any other place you could put the money. Increasing debt levels also spurs economic activity but that can only go on so long. The story of the last 30 years is that debt levels were used to spur economic activity while wages were suppressed. Once debt levels reached a peak, it all ended. In 2008. >The answer is that eventually it gets priced in. It usually leads to a decline in profitability. Dividend income comes down. Share prices come down. Prices do not usually go up: http://www.nber.org/papers/w13996 http://www.nber.org/papers/w13996 The businesses that area threatened by an increase in the minimum wage always put up a big political fight. They simply wouldn't bother if they could just pass the cost on to the consumer.