What is the economic purpose of increasing the minimum wage?

Question

It is generally accepted among economists that minimum wage warps the equilibrium point between the supply and demand of labor by instituting a price floor and increases unemployment for unskilled laborers (while increasing the wage for the individuals who continue to work). However, I have noticed that politicians continue to advocate an increase in the minimum wage. Politics and political maneuvering aside, is there an economic reason as to why a higher minimum wage would benefit the economy?

Answer 1

I would not say it is generally accepted because it depends on the specifics of the labor market in question.  In the case of monopsony or monopsony-like labor markets, where employers have market power over laborers, a minimum wage will not increase unemployment, rather just shift economic rents back to labor (and in the theoretical pure case, actually increase employment as the marginal cost curve changes).  More and more economists (certainly not all) will argue that a minimum wage does not cause unemployments precisely because employers have market power over labor. As an example of minimum wages not increasing unemployment, see the Sept 6, 2018 article “The New Wave of Local Minimum Wage Policies: Evidence from Six Cities” from the IRLE (Institute for Research on Labor and Employment).