Final answer:
Increases in minimum wage could lead to higher costs for businesses and potentially higher prices for consumers, yet higher wages may increase consumer spending and demand, possibly offsetting price increases. Wage 'stickiness' and its wider economic impact also play a role in this complex issue.
Step-by-step explanation:
The relationship between minimum wage and the price of goods and services is a complex issue with differing economic theories and empirical evidence. On one hand, an increase in minimum wage can lead to higher costs for businesses, particularly in the service, retail, and food industries, which could result in higher prices for consumers. However, there are also arguments suggesting that higher wages lead to increased consumer spending, which in turn boosts demand for goods and services, potentially offsetting some of the increases in prices due to increased productivity and reduced turnover.
It is also noteworthy that wages tend to be 'sticky', meaning they do not easily adjust downward due to minimum wage laws and can also be resistant to upward movement without competitive pressures. Furthermore, the impact of minimum wage increases on the broader economy, such as its effects on the Consumer Price Index, and in turn on real wages, adds additional layers of complexity to the discussion.