This is something that is quite nuanced that isn't apparent until you really look into the numbers.

When something happens that universally makes the labor costs go up, and you expect for many businesses to go into the black, what you will instead see is that the very worst company goes out business and all of the others will put pressure on their land owner for lower rents pointing out that they are next. The landowner wants their land to be used and not be earning nothing for years, so they will lower rents. For a restaurant, if everyone is in the same boat, is agnostic to labor costs.

Higher labor costs makes real estate prices go down. Automation makes real estate prices go up. With interest rates going down bringing real estate up, we have plenty of space to rise minimum wage to balance.

> Higher labor costs makes real estate prices go down.

Well, it might by your argument make commercial rents, and thus commercial prices, go down. But it also means more money chasing the median residential unit (whether rent or purchase), so it should increase residential prices. Absent zoning constraints, that would seem to encourage shifting from commercial to residential land use

Yep, completely agree.

But notice how this argument is based around the margins. When labor goes up, rents go down and food costs go up slightly. Someone who used to just barely be able buy fast-food from McDonalds will suddenly not be able to, and instead be forced to buy more from the grocery store. But there might be two customers that would have otherwise bought food at Five Guys who now buy from McDonalds.

You might see a shift from commercial to residential, or you might see a shift to 4+1 mixed. The town might buy the space and put in a park. You might put in a high-rise. Anything could happen based on the situation.

Whenever the argument of raising the minimum wage comes up, we always hear these stats that 50% of businesses will go in the black, and we will destroy the economy. It's much more subtle than that. The effect that we see is tiny tiny percentages that are overwhelmed by other factors.

No, higher minimum wage shouldn't increase the labor cost "universally". Most of the cost increase would be felt by those employers who actually paid wages below the new limit. Which isn't even that great a portion of the economy.

There might be some effect diffusing upwards, but I doubt it.

Right, which is why I clarified each time I said that. Software costs don't go up as they don't rely on minimum wage labor. For restaurants, that almost universally rely on the cheapest labor, this is the case. If Burger King and McDonalds both have higher labor costs, both put pressure on their land owner, and both don't end up caring.

> Its also worth noting that practically no businesses close when minimum wages have been increased in the past.

The problem got pushed somewhere, but where?

Very rarely does the owner of the business just eat the cost except in the very short term. If the business doesn't close usually one of two things happen:

(1) there are fewer hours available because books need to be balanced. Some workers that are able to keep their hours do better at the expense of those whose hours are cut. Basically this ends up being a wealth transfer between some hourly workers and others.

(2) prices eventually go up and cause localized increases in prices. Within two to three years you end up with the situation where that new higher minimum wage has about the same purchasing power locally as the previous minimum wage had.