Imagine you're an enterprising, privately operated F1 pit crew. You shop your company around to teams, which hire you to be their crew. The teams promise you $10,000 per race because you have built a reputation for being fast, and there are 20 races a year. You have gathered a team of 10 crack race-car mechanics, and you agree to pay them each $16,000 a year each (equivalent to ~$800/race). This leaves $40,000/year, some of which you use to buy the uniforms and replace equipment. The rest goes into your pocket. This is a part time thing for all of your pit guys, since they only need to be there for some practice and the race-days - not a 9-5 type of job.

Now, somebody decrees that nobody should be paid less than $20,000 a year, because anything less wouldn't be enough to live on. This argument doesn't really hold for your mechanics, but they're subject to the rule just like everybody else. You increase all of their wages as required by law.

Now what do you do? The economics don't make sense anymore. You're getting the money from the team, then giving it directly to the crew. There's no money left to properly service the equipment, so it starts coming out of your own pocket. The F1 teams won't budge - the prize winnings for each race have stayed the same, so they're still going to pay you the same amount. Your SO is starting to wonder why you're now _paying_ money to spend your own time working. You consider telling the team that you're going to shut down the team, but they urge you to re-consider, because this is a source of income for them and they've built a rapport. With great hesitation, you ultimately convince yourself that you might be able to get away with 9 crew-members if you drop one of the less essential crew functions. You tell him the bad news, and now you've opened up $20,000 to plug the money leak.

But when you get to the next race, you discover that the guy you let go was absolutely essential. The windshield scrubber job may have seemed less important than the guys removing the wheels, but the driver can't see after he leaves the pit, and gets into a crash. A total disaster.

After this incident, you find that teams are much less interested in hiring you for races. You fail to book a race for any team the next month, and after that you have to accept a lower race fee to convince one of the needier teams to hire you. Now you're making even less money relative to the salaries you've promised the crew members, but they are still owed their salary. By the end of the year, $100,000 of your own money in the hole, you give it up. One of the other crew members tries to take over the business in your stead, but he doesn't have any contacts with the team leadership, so he struggles to make the same contracts. Plus, he doesn't have any way to buy the equipment he would need to keep running - you took back all of your drills and jacks, since it was yours after all and you needed to sell it just to keep from being _two_-hundred thousand in the hole.

That's how it works. Some businesses just need a lot of hands at a low price. If you can't get that, then the business eventually won't make sense. You can try to limp with fewer employees, but what's going to happen is that the quality of your product/service will fall, or you'll just do less business overall.