Michigan Democrats have caught the living-wage bug and are pushing for a $10-minimum-wage ballot proposal; that news graced the breakfast table this morning. That meshes with the president's push against income inequality.
The problem with that can be illustrated by a convenience store that makes a pre-wage profit of $9/hour during the graveyard shift. If they pay a clerk/cashier $7.50 a hour to keep the store open, they've turned a $1.5/hour profit for the shift. Force the store to pay the clerk $10 an hour, and that turns into a (9-10) $1/hour loss, not counting the extra payroll taxes paid on the added $2.50 an hour in wages. Thus, the graveyard shift goes bye-bye and the night-shift clerk's wage went from $7.50 to $0, or at best $5/hr or so in unemployment checks.
We've afflicted the "comfortable" store-owner (some are, some aren't making that much and might be struggling themselves) with a (1.5*8) $12/day loss in profits and comforted the afflicted graveyarder with at least a ([7.5-5]*8) $20/day loss assuming the unemployment check above. The taxpayer loses the taxes in $9/hr of net income plus an extra $5/hour of unemployment comp checks.
For places that stay open, prices might rise some to partly make up for added labor costs. Liberals (and some conservatives) would be happy with less unemployment and more inflation (the old Phillips Curve in action) but the above scenario suggests more unemployment and more inflation.
That combo of high unemployment and high inflation got the nickname of "stagflation" during the late 70s, when the inflation caused by higher oil prices (and the Fed's tight money policies designed to counter the inflation that created loan-shark-level interest rates) slammed the economy into a nasty recession that cost Jimmy Carter a second term. That left economists of my youth scratching their heads, since they were used to seeing inflation being caused by added demand rather than added costs.
When inflation's demand driven, we get an inverse relationship between inflation and employment (high demand creates new jobs to make the stuf; then the increased demand for workers raise wages as well as the price of other inputs, which raise costs and creates inflation), which creates our "Phillips Curve" when graphed. When inflation's supply-price driven, we get a direct relationship, creating a constipated stagflation economy and having folks reach for Phillips milk of magnesia rather than the Phillips Curve.
From a business perspective, a higher minimum wage is a supply cost. While the added costs are given to US workers rather than Persian Gulf autocrats, it still would lend itself to stagflation. Some low-end workers will get raises, but others will get pink slips; tax revenue falls (barring a tax increase) and government expenditures rise, hurting everyone but the few folks who were making under the new minimum wage who got the increased pay rather than a layoff.
Pro-minimum-wage-hikers look at the help it will do to the low-end workers, often forgetting (or at least minimizing) the damage done to workers who get laid off and consumers facing higher prices and bigger deficits, not to mention the employers of more modest means who don't have a money tree out back to pay extra wages out of. Thus, living-wage mavens look to throw a stag party, not noting that it's short for stagflation.