Why can't companies pay better wages? Because that's the wrong solution to the wrong problem. Fundamentally, this is a question of economics. You have an oversupply of labor, particularly in lower skilled positions. Increasing the market price of labor can not and will not ever solve that problem. It is an economic impossibility.
Before we can solve the problem, we must first understand what exactly the problem is. In western countries, we have several issues going on. Wealth is concentrating in the hands of the already wealthy. Productivity gains are outstripping both the demand for labor and the demand for goods, or so we suppose for the sake of argument.
The traditional response to this situation is an increasing demand for socialism or communism, which, frankly, does not work. Subsidizing the poor has the perverse effect of making them poorer by limiting their access to work. Central planning is inefficient and ineffective. Top down communism does not work. However, Austrian economics suggests that bottom up communism should work. What I suggest is a multi-part approach. Scrap the current income tax system and welfare system. Switch to a flat tax with a prebate. This provides a subsidy to the poor, but without the welfare trap. Next, replace Social Security with personal investment accounts. Accounts should have the following characteristics: no set retirement age, principle can not be withdrawn, but dividends are paid out. Account should be funded equally. This decreases the pressure for an individual to work. And, of course, an inheritance tax, with an individual lifetime deduction limit. (i.e., you aren't taxed on the first $500k you inherit, after that, it's a 20% tax)
Now, some people are going to make bad decisions with their investment account, and there's not much you can do about that. However, when reconciled against alternative scenarios, the benefits should be vastly superior.
I should write a book on this.