Quite simply a price floor is a policy that is instituted in order to protect the value of a good, however it only guarantees the price remains that low, it doesn't guarantee the good to be supplied. As the demand for labor increases, the supply will not grow as the market has no ability to adapt in the form of lower wages, causing inevitable unemployment, which leads to poverty and a host of other social problems.
A minimum wage forces companies to pay their workers a certain amount of money. Some workers are inexperienced and aren't worth that amount yet, so the company has to turn them down. This eliminates the ability for inexperienced workers to gain experience and skill in order to become worth more. If it weren't for the minimum wage, the company could have hired that person at a lower wage and let him/her gain skills and get promotions and eventually earn more.
A binding price floor in economics is a price which is above the equilibrium price, which in itself is allocatively efficient and socially optimal (despite what leftists may argue). However, when the price floor is implemented, more people may be willing to work (Quantity Supplied goes up) but firms will Demand less labor, meaning there is a surplus of labor that remains unemployed.
And to argue against the "race-to-the-bottom" argument, one should realize that there exists few monopsonies in the first world, and therefore it is a competitive market. If a firm was to lower their wages, there would be less labor supplied to them when there are higher wage opportunities, and therefore when looking at the labor market it would instead be more likely that a "race-to-the-top" would happen instead! A firm that can afford to hire more unskilled workers at higher wages (although being inefficient on the margin) could draw away labor from other firms, although it is still unlikely it is certainly more logical that it would occur than a "race-to-the-bottom."
Fair Labor Standards Act of 1938 established the first minimum wage of .25 cents per hour. It was part of Roosevelt’s "New Deal" program. During the depression, with high unemployment and the need for jobs drove wages down to a point people were working for pennies a day. The act protected workers from exploitation. In addition the act eliminated child labor and established workplace safety statutes.
In cities like Seattle, LA, and San Fran all have a $15 minimum wage, and several others have slightly lower minimum wages. Unemployment hasn't increased in these places, and cities there are actually doing much better than the national average. For example, a restaurant owner in Seatac complained that he would have to shut down if Seattle raised the minimum wage to $15/hr, but in fact after the wage increase, he opened another restaurant. It's completely unproven that a lower, or a nonexistent minimum wage leads to more economic growth.
Look at countries where people are paid a dollar a week; the other aspects of their quality of life are horrible. They can't afford to buy themselves food every day/meal of the day. Therefore, they are forced to work copious amounts, which has a profoundly negative effect on their health. No one should be able to be exploited for economic gain. People already aren't paid living wages, why should we make it even harder for people to survive?
I believe in the rights of employers as well as those of employees but business, as lovely as it is, can become often corrupt and greedy. The removal of a minimum wage, for the modern world, almost feels like a third world concept. Once it is removed employers looking out for their own hides, (As I don't blame them), would try to pay as little as possible for unskilled work and even skilled work for that matter. If you would like to believe that employers would like to pay a fair wage for some altruist motive, then you are pretty naive. The events of outsourcing immediately disproves that as business owners are trying their best to find the best deal on employees. Not saying business is bad, (I want to be a business major), but this is one of the reasons it must be controlled with law. Yes, it is true that there is less positions available for work but competition is what drives economies. I know being in the modern first-world, students everywhere are being told college is no option, but a must-do for financial success and yes this attitude is attributed to the minimum wage and outsourcing but this attitude is healthy in that it encourages people to obtain skills one way or another, (Course college is so expensive now, but thats another debate). Finally, minumum is healthy for the economy and otherwise would enhance poverty. As I stated before business owners are looking for the cheapest work and would pay as little as possible to get it. Not only does this have to do with the cheap pay of employees but if workers in a first-world country don't demand the work for the pay, well then they will just outsource even more, where the standard of living is lower. Also, giving employees more money encourages more spending, pumping money into the economy, (cars, housing, entertainment, yadda yadda yadda). In which obviously a good economy helps business operate better. While an individual business would feel much of an impact, it is a better policy on the whole sum on businesses in society itself because of these reasons.
Minimum (and maximum) wages should exist. If not, it is a race to the bottom trying to compete with abhorrent work conditions and pay of the third world. Trade treaties should require govt enact laws within 3 month trial period of trade treaty (which can be terminated if not done) to give CPI based minimum wage and maximum wages for all, even the CEO and presidents. Barring this, the ratio pay tax (RPT) should be implemented to greatly discourage income disparities between the janitors and CEOs. It would apply to contractors hired for more than a day or so, and to franchises.