Originally Posted by kane

The overall theory is that if McDonald's paid $20/hr other fast food places and low wage places like Walmart would be forced to do the same. Then since those people would be making more money they would have a higher standard of living and those of them that are currently also collecting some kind of government aid like food stamps, housing assistance, health insurance, daycare help etc would no longer need it or need as much of it. This would lower the government's costs and thus lower taxes. In the end you might have to pay a small amount more for the things you buy, but the tax savings would more than offset it.

The problem with the theory is that the government never really lowers taxes. They would just find other ways to spend that money so we would end up at the same tax rate while also paying more for many goods and services. This would then leave us with only the hope that these overall higher wages made for a better economy where everyone made more money and were better off, but I have yet to see any real evidence that this would actually happen.

In the end, sure, these places could pay a lot more (I read a few years ago that Walmart could double most of their employees pay and only have to raise their prices by about 1.5%-2% to cover the cost), but it doesn't appear that these thing really have a large, overall benefit to the economy as a whole.