Because the minimum wage is an unfunded mandate by the Government. They are in essence setting a bottom floor in the labor market. And by doing so they skew costs upward. and thus then business charges more to cover the costs and we are back to square one.
The market is like a body of water, it seeks its own level. Ego you can't raise the water on only one side of the bathtub.
I think having a bottom is not a bad thing. Although I am against salary caps except in bailed out banks.