We have actual experience of minimum wage increases, and considerable evidence that they do not, in fact, keep the ratio the same. Yes, they do drive some inflation, so the benefit isn&#x27;t as great as one would expect considering price levels before the policy, but inflation due to the change in minimum wage does not eat up the benefit at the level of the minimum wage.<p>Why this should be the case is fairly easy to understand; Minimum wage increases neither create new money nor increase the cost of all inputs (or even all labor) by the ratio between the new minimum wage and the old one, so what they do effectively is compress the gap between the incomes of those making the minimum wage and people higher on the income distribution. As such, the amount of money chasing consumer goods increases (because, while the money supply doesn&#x27;t increase, more money goes to those with a higher propensity to consume) by less, in total, than the ratio of the new to old wage. But those making minimum wage both before and after have their <i>personal</i> income increase by the full ratio.