> Cost of labor goes up, and now the business owner no longer has any profit, and it is earned by the masseuses.
This assumes the incremental cost of labor has eaten up all the profit, which is rarely the case. When it does happen and increases in prices are not supported, the viability of this business model is suspect. Basically, the market does not value the “middleman” business owner that does nothing more than rent space to a masseuse. Are they really even a masseuse business or are they an office space rental company?
> When it does happen and increases in prices are not supported, the viability of this business model is suspect.
I think you and the parent poster are agreeing here. Clearly there are degrees to which profit can be reduced, but if a business isn't growing its own profits at the same time as rising labor costs, then at a certain point the business will be just breaking even. Past that point, there is no alternative besides raising prices or shuttering the business.
This is the OP's point about certain businesses maybe not being viable, but society being worse for it. For instance, maybe hotels in all but the busiest cities aren't supported by the market at higher labor costs. Good in terms of workers not being paid peanuts, but bad for anyone trying to drive across the country (and society as a whole).
This assumes the incremental cost of labor has eaten up all the profit, which is rarely the case. When it does happen and increases in prices are not supported, the viability of this business model is suspect. Basically, the market does not value the “middleman” business owner that does nothing more than rent space to a masseuse. Are they really even a masseuse business or are they an office space rental company?