Increased Minimum Wage Fantasy

OK, the latest buzz in the People's Republic of California is that raising the minimum wage will increase prosperity for those who are at the lowest tier of the economy.  While in theory this sounds great, a simple examination of the supply and demand curve will clearly demonstrate that there will likely be unintended consequences.

A simple understanding of economics is that labor is a commodity, for which the demand is largely driven by the cost.  As the cost of a given commodity increases, the demand for the same item will decrease.  The black dotted line effectively shows the effect of minimum wage as a means of cost control, setting an artificial minimum price.  As you can see, there is now a rather large delta between the demand of labor and the supply that will be available.  It doesn't take a rocket scientist to deduce the following unintended consequences:

• Demand for labor will decrease, resulting in stagnant or even more likely, increased unemployment.  This will be more evident in smaller businesses, which generally lack the financial resources to absorb a hit to their costs.
• Increased unemployment resulting from this will result in greater strain on public assistance programs, likely pushing the same folks who wanted increased minimum wage to call for higher taxes.  
• The above factors will likely contribute to decreased overall economic activity, lowering consumer confidence, and having an overall drag on the economic indicators.  This will now result in decreased performance to an already shaky stock market.  

The only positive I can see in this horrible scenario is that innovators in small business will likely come up with solutions that will make labor less of a factor (entrepreneurs always manage to do this, which is why they are successful in the first place).  This will result in a long-run decreased demand for labor overall in the economy.......So, when this takes place and the economy starts to show stresses as a result, you can thank the Democratic legislature, organized big labor such as the United Farm Workers (UFW), Service Employees International (SEIU), and anyone else who supported this complete and total nonsense.......

If I have said it once, I have said it a million times......if you wish to make more than the minimum wage, spend the time to increase your marketable skills.  Not everyone has the financial resources to attend college right after high school (I most certainly did not), but everyone who is willing has the opportunity to better their life through education.  I assure you that if you obtain a degree that is in a marketable skill, and then put those skills to work, you will not need the minimum wage increased.