If some segment of the population suddenly has twice as much income, and maybe 5x as much disposable income, that's going to put upward price pressure on lots of goods and services.
Not when you're talking about the bottom tier of wage earners. Their salary would have to increase by way more than a factor of 2 before they would even start to compete for non-low-end housing. Here are some examples of Bay Area jobs and what they pay:
- CA Minimum wage: $10/hr
- Legal secretary: $21.03/hr
- Assistant Manager: $22.46/hr
- Kindergarten teacher: $30.74/hr
- Entry-level software engineer: $38.46/hr
- General Manager: $38.89/hr
- Santa Clara County median salary: $44.95/hr
- Median software engineer salary: $52.10/hr
For instance, the people who are living with 3 roommates each making minimum wage now decide to get a bigger place, or just have 1 other roommate (maybe a GF/BF). Suddenly demand for housing goes up. The people who used to compete for low rent places in crappy neighborhoods are now competing for medium rent places in decent neighborhoods. Now the manager, who lives in a decent neighborhood, faces a rent increase and wants a higher salary. Did your 4.3% include that?
IMO, the 4.3% number cannot possibly be based in reality. About a quarter of the cost of even a fast food joint's income goes towards labor costs (and even more for other restaurants). If labor costs doubled, you'd expect a minimum of a 25% increase in the cost of the burgers, and that's before you factor in the cost of the labor throughout the rest of the supply chain (raising the cattle, etc.). Now I realize that not all of your labor costs will double, so that's an overestimate, but 4.3% is an absolutely laughable underestimate. I'd guess that 15% is probably closer to the mark, but it could be slightly higher.
I think people who think the minimum wage doesn't have a big impact are missing this key idea. It's all relative, and it's not just about direct costs. It's about, if I make 4x minimum wage right now, and suddenly I'm only making 2x minimum wage, that hurts me in many small ways that add up. Maybe these poor people start having more kids, and my kids' school gets crowded, and there's a bond referendum to build a bunch of new schools and hire teachers, and my property taxes go up. Maybe poor people stop taking the bus or walking to work and buy cars, and now there's more traffic, and the city/county/state need to add lanes to a bunch of roads, and there's a tax increase to pay for it. Now I'm being affected even if I don't eat fast food.
Statistically speaking, people who make more money tend to get better education, and this results in having fewer kids, not more. So at least over the long haul, that first "maybe" is pretty unlikely. The second issue (traffic) is a concern, but:
- Jobs in poor neighborhoods will pay more, and there will be more of them, because the poor will have more money to spend.
- Minimum wage workers who choose to keep working in the nicer neighborhoods will be able to afford to live closer to where they work.
So those folks will be traveling shorter distances to work, which should largely balance out the higher number of cars.