You might be suspicious that raising the anchor set by the minimum wage will not have this general effect. After all, employers are pretty savvy. They know about what the labor market has to offer. They know how much they can raise their prices without suffering. Surely these factors will influence wage-setting rather than an externally imposed anchor. If you think this, you underestimate the power of anchors. They have effects even among extremely sophisticated people.
Consider two examples. In one, experienced real estate agents with thorough knowledge of the local area were given packets of material describing a house that was coming onto the market. They were asked to estimate what the house would sell for. Among the many bits of information they were given was a statement of what the seller’s asking price would be. Different real estate agents were given identical packets of information, except for the proposed asking price, which varied among packets. All the agents insisted that when they were valuing properties, the asking price had no influence on their judgment. Nonetheless, the higher the proposed asking price in the packet of information, the higher the real estate agent’s estimate of what it would sell for.
In the other example, groups of experienced jurists were given a description of a criminal case (a real case, with identifying details changed) and asked to estimate the sentence that would be handed down, which could be a maximum of one year. Some of the jurists were told that a newspaper article about the case had estimated a sentence of nine months; others were told that the newspaper article estimated a sentence of three months. The jurists given the first piece of information estimated significantly longer sentences than the jurists given the second piece. Indeed, the same effects occurred if, instead of a news report, the experimenters rolled a pair of rigged dice in front of the jurists that summed to either nine or three before asking them to estimate the sentence.