> This is not obvious. Increasing the income of the almost-bottom could act as a stimulus which drives down unemployment. It is possible that this effect is greater than the unemployment caused by the minimum wage directly.
You're essentially arguing the butterfly effect. It could also be the exact opposite, if the employees use the money to pay down debts when the employers would have spent it on new consumption. Or various completely arbitrary outcomes that are always possible whenever making any change to a complex system.
But the real flaw in the stimulus theory is that it assumes the conclusion. If the net loss from people losing their jobs to begin with is more than the net wage gain to the people who kept their jobs to begin with then there is no extra money to create a stimulus to recover from that situation. If it isn't then you didn't need the stimulus effect to come out ahead regardless. (Though you're still even better off with a UBI.)
You're essentially arguing the butterfly effect. It could also be the exact opposite, if the employees use the money to pay down debts when the employers would have spent it on new consumption. Or various completely arbitrary outcomes that are always possible whenever making any change to a complex system.
But the real flaw in the stimulus theory is that it assumes the conclusion. If the net loss from people losing their jobs to begin with is more than the net wage gain to the people who kept their jobs to begin with then there is no extra money to create a stimulus to recover from that situation. If it isn't then you didn't need the stimulus effect to come out ahead regardless. (Though you're still even better off with a UBI.)