But the cost of those higher wages is higher prices of the products they produce.
I agree that higher wages would create an inflationary pressure. However, that inflationary pressure would be offset or at least partially offset by deflationary pressures. First, the fed seeks an inflation goal of between 2-3% (like it or not, right or wrong), so asssumably any inflation up to the top end of that range would be offset by the fed (not engaging in inflationary actions). Secondly, any increase in demand would cause an increase in production, which would result in a cost savings per unit produced due to economy of scale (each additional unit produced is produced at a lower cost), so economy of scale would tend to offset some or all of the wage push inflation. Third, companies still have to compete, those who desire a larger market share will be unlikely to increase prices, thus even those companies that don't desire to increase market share will be somewhat price increase constrained as they still have to remain competitively priced.
You cannot have a nationwide very large increase in wages with zero increase in productivity without also having a substantial jump in prices.
You are correct that we probably can't increase min wage to the $15 that some people are suggesting, not in a single year, but history has indicated that smaller increases in minimum wage do not lead to any increases in the inflation rate. Probably because of the above stated reasons. I'll go with historic reality. Several links have been posted that indicate we would see a 3-4% price increase in industries that are heavily reliant on low wage labor, and something like 0.2-.04% overall inflationary pressure - which is within the federal reserve's target range, so effectively there would be no increase in the inflation rate over what the fed creates anyway.
Higher wages would most certainly be an incentive for companies to find ways to increase productivity. Possibly through technology, possibly simply from running a tighter ship. But regardless, we don't actually have to have an increase in productivity (productivity = units produced per work hour), all we need is an increase in PRODUCTION to have a bigger pie. The larger the pie, the bigger the slice that we can ALL have.
So let's say that companies don't have an increase in productivity (which is unlikely, but just pretend for a second, your the one who brought the issue up), but they do experience an increase in demand, and thus they have to hire more workers. Now people who would have otherwise been sitting on the couch watching TV and living off the welfare, are producing goods and services that would have otherwise not been produced - our pie is now bigger, thus higher wages can be justified because there is simply more stuff available, we can all have more.
And since foreign manufactured goods are not similarly affected, their price advantage will just grow. Like smartphones; soon, none will be manufactured in America (only one is now) and so those people that can now afford a nicer smartphone will just be sending more money overseas. The same with many/most other products.
Yes, it's possible that we may lose a few jobs (very few) to overseas competition, but we are going to lose that anyway - eventually. Wages are rising overseas (also) and manufacturing is slowly coming back to the US, but in the long run, manufacturing jobs are going to be fewer due to automation. Even China is now losing manufacturing jobs because they are automating. Regardless, few manufacturing jobs in the US use minimum wage labor - most manufacturing jobs in the US pay substantially more than minimum wage. Also most min wage jobs in the US CAN NOT be outsourced to China. Think about it, can we outsource the people who collect buggies in the parking lot of Walmart to someone in China? Can we outsource burger flipping at the McDonalds in your home town so someone in China?
Now think about this, we will either have wage push inflation, as employers pass on the cost of higher labor to the consumer, or we will lose jobs. We can't actually do both. If companies can just jack up prices to recoup the cost of higher labor, then why would they need to lay people off or to outsource to China? And if we can just outsource low wage jobs to China, then why would there be any inflation? It's HIGHLY unlikely that we would see significant job loss AND inflation. Pick one or the other for your anti-minimum wage argument, but not both - the arguments are almost mutually exclusive.
Are you challenging the competence and/or impartiality of the CBO?
Are you not? I mean honestly, tell me the last time that they got ANYTHING right? When the CBO claimed that Obamacare was going to reduce the deficit, did you REALLY believe that?