A higher minimum wage will most likely hurt the unnecessariat. One way to think of a $15 minimum wage is a prohibition on anyone who's labor is worth less than $15/hr from working. Not only will it make the current unecessariat's situation worse, it will likely expand it's ranks.
http://cepr.net/blogs/cepr-blog/studying-the-studies-on-the-...
I wouldn't advocate a jump straight to a $15 minimum wage because for sufficiently large MW jumps the elasticity has to start heading for -1 (and beyond -- that's just the break even point) and we only have good information for small changes. But for small changes the evidence is unambiguous. The traditional narrative taught in Econ 101 is an oversimplification.
It's not hard to figure out why: markets set the actual price of labor between the producer price (minimum people will work for) and consumer price (value to the employer) based on bargaining power. If employers are winning at the bargaining power game, wages will be close to the minimum. If employees are winning, wages will be close to the maximum. Only those earning wages already close to the maximum will be affected by a minimum wage increase. Since the unskilled labor market is flooded, approximately everyone is on the "minimum" side of the spectrum. Both theory and evidence say that small MW increases are boons to laborers under these conditions.
As machines advance and begin push humans out of the market, the maximum side of the spectrum will begin to drift downwards and impinge on all the people crunched up against the minimum side, squeezing them out of the market and into "unnecessariat" status. Minimum wage will become an ineffective tool at that point, just as you say. But we aren't there yet.
The cited blog is by the CEPR, a leftist/progressive think-tank, this doesn't make their conclusion wrong, however, my reading of the graph present on the blog looks more like there is a negative elasticity, with respect to the demand for labor at higher wages, indicated by the meta-study. The graph looks like it might be as large as -0.1, suggesting that doubling of the minimum wage could have a noticeable negative impact on employment. Not all studies show that happening, but a greater number do.
Also: GP makes an excellent point, which I should have thought of myself.
Another model is UBI and government as employer of last resort (or a equivalent strong labour movement). If there is an employer who can absorb all applicants at a minimum wage, then the market floor is pushed up.
Remember, a living wage is the minimum all-in cost of labour. If you're operating a business which cannot afford to pay a worker what they need to survive, you're not operating a business, you're operating a charity supported by your workforce (or social welfare systems).
If you can and fail to, you're simply pocketing profits from the public purse.
This is straight-up Adam Smith: "A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation."
Exactly. It's amazing to me that people claim there just isn't enough work. There is more than enough work -- there's always some way to make the world a better place. And in the USA there are fairly obvious things, from social services (in the broadest sense) to mundane upkeep to large infrastructure improvements.
The problem is that there isn't enough work that's motivated by profit motive in the near-term.
Likewise, if you are a working-age individual who is only capable of creating value at a rate less the minimum wage, you aren't looking for a job, you're looking for charity dressed up like a job. (That's fine as a social policy, but when that charity is expected to come private sources, it's a very unstable employer/employee relationship. The minute affordable automation comes along or the business revenues take a dip, such charity cases will be the first to be let go or have their hours cut, because they're fundamentally unprofitable in the normal condition.)
I'd also inquire as to:
1. Who or what the economy is supposed to be for, anyway.
2. What the situation is when it's not trivially possible to create increased value through exploitation of labour. That speaks to some problems with the production function.
3. The possibility of positive externalities and/or public goods (also of negative externalities and rent-seeking).
4. The relationships between wealth and political or negotiating power.
I'll give you a hint on that last. "Wealth, as Mr Hobbes says, is power." Smith again.
I am speaking on a micro-scale. Individual people with low skills and no capital. It's not at all clear to me that minimum wage laws and social safety nets with sharp claw-backs or cliffs (where money earned doesn't help at all or not much) help this class as a whole. Sure, minimum wage laws probably prop up many in the class who have jobs but harms those in the class who don't.
For me, I've run two small businesses and now am a happy employee. It's amazingly aggravating to deal with having employees and it's perfectly proper to me that my employer makes more profit on my labor than I take home. They should: they take all the risk that I'm a lemon employee and provide the structure whereby I can concentrate on where I can add vale and all the stuff I couldn't care less about (HR, Finance, Legal structure, IP, etc) they handle.
If I start a third company, it probably won't have any low-skill workers at all, certainly not if there's a min wage law that makes it uneconomical to hire them. On a micro scale, I'm deciding what's best for my company, not for the economy or for society.
Edit: I should also clarify that in my GP post that I was referring to the payment of minimum wage at a rate higher than the value creation as a form of "charity", not that all low-skilled work (paid at free market wages) is charity. One of the appealing aspects of most UBI proposals is the "U" in that they don't scale back benefits as punishment for gainful employment.
Also I think you can survive on minimum wage, but surviving just means not dying. A surviving wage would only have to be high enough to afford the worker a 9 squarefoot of decently heated dry room to sleep in, two sets of adequate but not nice or new clothing, a winter coat and sufficient caloric intake not to starve, as well as access to a place to urinate/deficate and, probably, the occasional shower. I don't think that is that costly, actually, but it is possible to survive at this level.
So personally I think we should aim a little bit higher than survival. I am not concerned with the differences between the poor and the rich - no person was ever fed because his neighbor is also poor, but with how the poorest are living.
He's adamantly clear that the survival wage criterion is an absolute minimum. He also lays out what the story is, for the economy as a whole when this isn't met (his prolonged discussion of China).
He addresses (mostly in chapter 10) additional considerations which raise the value of some work. Something technical workers and contractors would do well to read.
Smith discusses the matter of elements which had been considered luxuries but which are, by the custom of a nation, essentials. That would include, in most developed countries, electricity, running water, sewage, residential gas (possibly), phone and Internet service, a fixed postal address, reliable transportation, and the like.
What Smith doesn't mention (excusably) nor Robert Gordon (in The Rise and Fall of American Growth) somewhat less so, is Maslow's Hierarchy of Needs. You'll frequently see (including sadly here on HN) arguments that the existence or ownership of a cellphone or smartphone somehow indicates someone isn't poor. While Gordon does* correctly point out that predictability and reliability of income is crucial to a middle-class existence, he fails to note that Maslow's pyramid cannot be built from the top down. Providing for safety and security, food, clothing, and shelter are the minimum.
I've explored Smith and Maslow more at my subreddit / Lair of the Id, you might enjoy reading articles there: https://dredmorbius.reddit.com