How could self-respecting economists suggest that an increase in the minimum wage might encourage job growth and hiring? Well, first of all, there’s what economist Michael Reich calls “income effect”: People on the minimum wage tend to spend everything they earn. Increases in the minimum wage thus flow back into the economy (again, like the tide flowing upstream), generating increased demand, which in turn increases hiring and investment. It is a basic principle of capitalism that when workers have more money, businesses have more customers, and when businesses have more customers, they hire more workers. - www.pbs.org