But that would create the moral hazard of paying people not to work and the entire economy would grind to a halt! Just like how restaurant owners have to start paying closer to a living wage now.

Don't you mean restaurant customers now have to pay higher prices.

Sure. Wages are just one cost component. An example restaurant spends 32% of revenue on staff, 32% on food, 32% on overhead. The owner takes a 4% profit. Industry wages inflate by N%. There's not a one to one relationship between wages for dishwashers and hosts and the menu prices. The owner is free to make their own trade offs between holding the line on wage increases, passing through the cost, automating/reducing labor intensity, taking less profit, trying to negotiate no price increase from their vendors, etc.