From employer's perspective minimum wage, in most cases, is simply an overpayment. There wouldn't be any point for minimum wage if it was not an overpayment.
The work done by minimum wage workers can potentially be worth a lot less than the cost of employing them, thus the value of work performed by other workers need to balance this gap. Workers earning above minimum wage need to make up for those earning minimum wage and whose work is worth less than that, so that the employer still makes a profit.
Let's consider a simple scenario.
Before minimum wage
Suppose we don't have a minimum wage regulations and the following scenario happens.
We have two workers, one skilled, one unskilled. The difference in their work efficiency is x2, that is work of the skilled worker is worth twice as much as the work of unskilled. The workers are rewarded accordingly to their work performance, so gross salary of the more efficient one is twice as big as the unskilled worker's salary.
Now, minimum wage gets introduced.
The initial value of minimum wage is set to 150% of unskilled worker's salary.
Clearly, unskilled worker's work is not worth that much, so at least one of two things must happen now:
- Skilled worker needs to agree to be paid less or
- If no skilled worker with x2 efficiency agrees to be paid less then the skilled worker will be replaced with even more skilled worker whose efficiency is higher than x2, so that the employer can maintain the same profit margin.
Yes, I have made a lot of assumptions along the way but still this could be a likely explanation why minimum wage causes drop in the salary of higher paid workers.
Upon receiving the feedback for this answer I am adding references to sources that back up my arguments.
enacting a higher minimum wage clearly benefi ts low-skilled workers.
By contrast, if one’s initial premise is that there are alternative
means to produce a product, and employers will seek the least-cost
method of doing so, then raising the minimum wage will cause employers
to seek substitutes such as automation or relocation overseas, thereby
reducing the amount of workers they hire.
Demand for workers falls, clearly.
The Road to Serfdom with the Intellectuals and Socialism F. Hayek, p.15
Legislative bodies have the power to legislate a wage increase, but
unfortunately, they have not found a way to legislate a worker
productivity increase. Further, while Congress can legislate the price
of a labor transaction, it cannot require that the transaction
actually be made. To the extent that the minimum wage law raises
the pay level to that which may exceed the productivity of some
workers, employers will predictably make adjustments in their use of
labor. Such an adjustment will produce gains for some workers at the
expense of other workers. Those workers who retain their jobs and
receive a higher wage clearly gain. The adverse effects are borne by
those workers who are lost disadvantaged in terms of marketable
skills, who lose their jobs and their income or who are not hired in
the first place.
Again, demand for workers drops, thus by supply-demand law we expect salaries to drop.
Youth and minority unemployment, Dr. Walter E. Williams, p.7