You're argument assumes that all cost is labor which is obviously not true. The higher a percentage of cost that is labor, the better of most people are, since they work. To put it simply, if everyone in the service sector made double, prices wouldn't double. The only people who would suffer are people who make most of their money through capital gains. Even many of them would benefit to have a healthier economy, margins can be replaced by volume. You would also see a spike in prices for limited resources that many can't afford, but innovation usually solves that problem. If you want a good empirical data on this, see the institution of minimum wage. Contrary to the naysayers predictions, there was little inflation and overall, a better economy.