It would do the opposite. Investments with low to no labor costs would see increased investment as the returns are protected against rising labor costs.
High labor costs also incentivize automation of low level tasks traditional performed by low wage labor. Anybody who’s used a self checkout kiosk knows how that works.
This is not an argument to keeping people underpaid.
Think of it as the owner has a percentage of revenue. So prices go up, they make more even if most of it is given as wages. Obviously, firms want to raise prices but are limited by the market because of competition. If everyone must raise prices then the competition element is removed.
Eventually inflation catches up and we are back here again.
To be fair the real issue is the wealth gap.
More money in the hands of poorer people means more money circulation and demand.
Money in rich people’s hands means more investment.
Currently far more is in the hands of rich people so we have incredible amounts of investment dry powder waiting to be deployed, and riskier and less healthy ideas being funded.
Optimum consumption and investment is the ideal way forward, and everyone gets a bigger pie (except the environment)
You would reduce income inequality. People who earn money from labour would now earn more vs. people who earn money from capital gains. It would also incentivise investing into production companies rather than passive investments like real estate.