system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: why raising the minimum wage ≠ a consequential rise in the cost of living.

I've searched ELI5 and have almost found the answer to my question, but usually it ended up linking to studies (which I love reading) without really explaining why.

Could someone ELI5?
gpt
The argument that a rise in the minimum wage *would* cause a rise in the cost of living rests on two assumptions:

* minimum wage employees make up a substantial portion of the workforce.

* paying minimum wage employees is a significant portion of the costs faced by most companies.

These two assumptions are, simply put, not true. There are about 3 million people (out of about 150 million workers) in the US making minimum wage. Furthermore, only about half of most businesses costs are wrapped up in paying wages. The cost increase of a minimum wage hike is simply not large enough to have a meaningful effect on cost of living.