It was a robust, populist speech, and it triggered an inevitable retaliation on the right. “Mr. Obama wants to raise the minimum wage to please his union backers,” harrumphed a Wall Street Journal commentator. Jennifer Rubin of the Washington Post decried the idea as just more government wealth transfer, and she countered that rather than raising wages, “One way to lessen income inequality would be to stop transferring wealth from young to old.”

There is growing income inequality in the United States, which has accelerated in the past few decades. Wages for labor have flattened while capital has flourished. As Goldman Sachs chief executive officer Lloyd Blankfein recently remarked, “This country does a great job of creating wealth, but not a great of distributing it.” And he would know. The top 10 percent of earners in the United States have gone from constituting a third of all income in the U.S. in the 1970s to half today. The top 1 percent accounts for 20 percent of the nation’s wealth.

Meanwhile, the minimum wage of $7.25 an hour is actually much less than it appears, relative to the past. In 1996, the minimum wage was $4.75 an hour. Today’s $7.25 is only a few cents above that, when adjusted for inflation, and both minimum wages were significantly below the equivalent wage in the 1950s, 1960s, and 1970s. Today’s lower minimum wage has contributed to the rise in inequality over the past thirty years.

What’s not clear, however, is whether mandating a higher wage will do anything to change that. Nearly 20 states have a higher minimum wage than the federal rate. That means that the federal law has little effect in wide swaths of the country. What’s more, according to the Bureau of Labor Statistics, only 5 percent of all workers are paid at or less than the current minimum wage. Thus, increasing it will make precious little difference in most people’s lives.

Even an increase to $10, which is what Obama and others have proposed, would leave a family of two that depends on it with less than a living wage. Various programs, ranging from food stamps to the earned income tax credit to Medicaid, exist to close that gap. The proposed increase would only marginally improve the lives of minimum wage earners.

The oft-repeated warning that businesses will hire fewer workers or reduce wages is also unclear. Yes, businesses have already begun to cut hours in order to avoid paying workers various benefits, including healthcare. Under a higher minimum wage, a significant number of companies would likely trim payrolls in order to maintain profits.

Yet such actions are both short-sighted and inimical to collective prosperity. They are short-sighted because you can’t build a vibrant service- and consumer-oriented society with fewer and fewer people earning enough income to pay for the goods and services they need and want. They are inimical to collective prosperity because a dynamic society depends on a compact, often unwritten, that the proverbial deck will not be so unevenly stacked. That is not just true in a democratic society. In China today, one of the primary issues is the widespread revulsion against the corruption and enrichment of the elite. American companies may be profit engines, but they have a responsibility to the communities in which they operate.