And of course, someone does indeed have to pay for higher labor costs — either employers (in the form of reduced profits) or customers (in the form of higher prices).

By most accounts, that wasn’t Henry Ford’s experience. Someone has to pay for one employer raising wages, but if they all do, the demand curve shifts as money flows to hands with different spending patterns. The result may be lower average cost of goods sold, as volume makes up for the labor component. This becomes increasingly true as labor becomes less important a factor of production.

The minimum wage should be understood by policymakers — whether or not it is so understood by voters — as a way to optimize the production and distribution of goods and services, the purpose for the entire legal infrastructure of commerce. There is no clear understanding of what “optimize” means, but reducing poverty is one political goal that could be considered an element in the calculus.

The effect of wages on demand and of demand on average cost are historically contingent variables. No simple rule applies. No particular policy always has a positive or negative effect knowable a priori, and whereas it is important to learn from history, it is equally important not to be blinded by it.