That’s one argument against, but it’s not proven true anywhere it’s been tested. Shoppers at Walmart have a price point they expect. They can only raise prices so much before sales begin to falter, and their labor costs are not the most significant cost in their stores. Think about how few Walmart employees you see in their massive stores. Real estate, fixtures, even the utility bills are going to outpace the labor increases. Plus, the additional costs are typically offset by the additional sales that happen because everyone has a little more disposable income.

Chain stores and restaurants charge roughly the same amounts regardless of the local labor rates. Things that do affect local prices are the things that affect unit costs, like tariffs, taxes, and transport costs.

You are completely correct that corporations will use any excuse to raise prices, but they’re going to raise prices as high as the market will bear regardless. That’s not a reason to depress demand by keeping wages too low to survive.