There is growing evidence that raising the minimum wage is good for the economy, pulls people out of poverty and doesn't reduce employment for low wage workers. Even some small business groups have now come out for a higher minimum wage. One such group, Business for a Fair Minimum Wage whose website describes this group as "A national network of business owners and executives who believe a fair minimum wage makes good business sense", lists among its members such popular businesses as Costco and Ben and Jerry's. Is this a modern, hipper version of Henry Ford's five dollar a day raise for auto workers nearly a century ago? Well as Milton Friedman (it was actually him, not Nixon) famously declared, "We are all Keynesians, now!"
It is very clear that the current recovery, which is fairly impressive given the depths of The Great Recession, can use a boost from an increase in the real wages of those struggling well below the national median income. This means a big increase in the minimum wage which not only raises the wages of the lowest paid workers but whose "knock on effect" also bumps up the wage levels of those just above the minimum. Investment is driven by consumer demand, not tax cuts for the rich or even lower interest rates (except to the extent that they boost spending). This means...higher wages!
In capitalism's very mature stage of history, income, wealth and output concentrate more and more. In the business world the proverbial big fish eat the little fish and small businesses lose their markets to bigger ones that are busy consolidating the economy, particularly in the down phase of the cycle. All this shifts income upward where it is saved rather than spent slowing the economy's overall growth trajectory. Thus, profitable outlets for investment decline with every upturn and, as Marx once noted, the main obstacle to the expansion of the capitalist system is...capital itself! A temporary way out of the crisis and a means of stabilizing the system is higher income for labor which means government set labor standards and the restoration of union rights. This is something which capitalists strongly resist and as anyone whose been paying attention knows it is they who are winning the class war. But the tide may be turning, if only slightly, in favor of labor.
The more cynical progressives might view this boost to the higher minimum wage struggle from a sector of the business community as a political attempt at cooptation; the more enlightened wing of the capitalist class joins the movement in order to influence it and set some parameters around its orientation, demands and general direction. This is probably true almost by definition and it is clear that such efforts, though enlightened and welcome, are an attempt to continue control of the political system first by recognizing the need for reform (which historically the more reactionary forces never have been able to do) and secondly by favorably influencing the path that reform takes.
That having been said, it is best to remember that politics is the "art of the possible" which is often more than we think. Raising the minimum wage is highly possible not least of all because some sectors of big business now support it, mostly those that depend overwhelmingly on the US domestic market for their earnings. At one time almost all US companies did so as well which is exactly the reason they ultimately, though grudgingly, tolerated unions so long as they remained politically more conservative than their counterparts in other countries. Furthermore, back in the 1930s when the Wagner Act legalized Unions, stabilizing the capital/labor relationship was also the main task in stabilizing the American political system (as progressives always note, "FDR actually saved the capitalist system"). But during the post WWII expansion, it was the substantial pent up demand for goods and services, sustained by higher union wages, that led to the rapid three decade long expansion of the US economy. Restoring high middle class income should be part of the progressive agenda.
One thing that makes it so difficult today is that over the past twenty years, more and more US transnational firms earn more and more of their sales revenue abroad. One report I recall from 2011 by Rick Newman in USA Today put it this way;
Globalization has also been an enormous boon for some of the biggest names in corporate America, along with investors who own the stocks and even some of the people who work for those companies. Big U.S. firms—often called "multinationals," for good reason—have increasingly followed global growth, with about 40 percent of profit for firms listed in the S&P 500 stock index now coming from overseas. Foreign exposure allows U.S.-based companies to capitalize on rapid growth in emerging markets like China, India, and Latin America, and earn much stronger profits than if they were totally dependent on the struggling U.S. economy. That's one reason the stock market has generally been strong over the last two years, despite lackluster growth in the big economies of the United States and Europe. "The S&P 500 is not U.S. GDP," says David Bianco, head of U.S. equity strategy for Bank of America Merrill Lynch. "The S&P 500 continues to outgrow the U.S. economy. Earnings power is decoupled from U.S. GDP." That decoupling is why he and many other analysts expect the S&P 500 to resume its upward momentum later this year, despite a slowdown in the U.S. and European economies. It's true that some U.S. multinationals hire cheap foreign workers instead of Americans, and keep certain profits overseas to avoid paying U.S. taxes on them. But they also sell their goods and services in global markets that would be dominated by foreign competitors if the American firms weren't there.
Newman studied fifteen firms many of which got half or more of the sales revenue from overseas markets. This trend took off in earnest as the US economy slowed way down after the 1990s expansion and firms were looking for more profitable markets in which to sell their goods and services. One report from Business Insider in October 2014 quoted a Goldman Sachs analysis that claimed that, "Foreign sales accounted for 33% of aggregate revenue for the S&P 500 in 2013..." That fully one third of US transnational corporate sales are derived outside the US is unprecedented. And it is likely that the figure would be higher if not for the slow down in the European economies and the strong dollar causing losses for US firms that convert foreign earnings back to dollars when they're repatriated.
It is clear that the decreased relevance of the domestic US economy to US corporate profitability has made it easier for big business to remain a political obstacle to higher earners for US workers. An interesting report by the US Commerce Department's Bureau of Economic Analysis cites these trends for 2011; "Sales by U.S. parent companies increased 9.4 percent in 2011 to $10,696 billion. Sales by their majority-owned foreign affiliates increased 15.8 percent to $5,985 billion." Though most sales of big corporations are still domestic, sales by the foreign affiliates of US parent companies have been growing at a much faster rate! This means that the decreasing relevance of the US economy to big business is hurting American labor's struggle for a bigger minimum wage making it easier for big business to resist change. Six trillion dollars (the level of sales by US foreign affiliates, not exports!) was roughly 40% of the US GDP in 2011! It was also the case that employment growth overseas in US foreign affiliates was much higher than job creation at home by those same corporations. True, this means they're not paying most of the US wage bill, but the key is that they're not relying on the growth of US middle class income for most of their sales revenue either! This is something that has yet to be considered in the discussion.
It is very obvious that globalization has allowed more and more US companies to remain indifferent to conditions in the US economy allowing the growing forces of reaction to block change for working families and the beleaguered US middle class. Massive public investment will increase middle class income by trillions over time making the US market as profitable as global markets. This leads to more employment and sales in the US market as US working class income grows. The issue is still effective demand. But we need to get the ball rolling with a massive public investment program for full employment. Job creating investment in highly advanced capitalist countries like the US responds to growing local demand, not tax cuts, low interest rates or...low wages.