The potential ramifications of increases in the minimum wage have been addressed and described in both economic and political terms. In terms of economics, proponents believe a minimum wage increase leads to a corresponding increase in actual consumer purchasing, thereby stimulating the economy. Opponents, on the other hand, contend that increases could lead to layoffs and labor automation.
However, addressing the political dimension and the potential ramifications of a wage increase more specifically, there are several observations that can be made.
First, an increase in the minimum wage accompanies a relative increase in the power of workers versus employers. If the increase is tied to a level that eliminates poverty among the gainfully employed, termination is no longer a disciplinary incentive, since the "paycheck to paycheck" phenomenon would ostensibly disappear. In a widely cited article from 1943, economist Michal Kalecki observed a similar issue arising out of full employment:
under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.
The political ramification, therefore, in this argument is of a fundamental shift in the social dynamics between employees and bosses.
Second, there is a belief that a sizable increase in the minimum wage would lead to youth dis-employment (or the redundancy of formerly employed youth). In other words, minimum-wage jobs previously held by persons under the age of eighteen would now be sought by adults. A large number of unemployed youth would lead to malaise and generally ill societal effects, such as crime. This has been the subject of several papers, including a 2013 one by Boston College researchers and a 2017 one out of the University of California at Santa Barbara.
Evidence for the effect that a minimum wage increase has on public order is varied. Some of it is suggestive that, indeed, increases in the minimum wage may be tied to increases in crime due to a greater number of idle youth. Other evidence suggests that a low minimum wage itself may exacerbate crime, as impoverished workers seek to augment their earnings through illegal enterprises such as theft, prostitution, drug dealing, and so forth.
A final political ramification of changes to the minimum wage is tied closely to the economics of wage adjustment. Namely, if—as some have suggested—increases in minimum wage lead to corresponding increases in consumer costs as companies pass on their heightened expenses, there may be a backlash effect at the voting booth as middle-income earners see their real wages decrease due to price inflation caused by increases in the wages of lower-income earners.