There’s a reason folks around here routinely point to quick service restaurants like Chick-fil-a and In-N-Out as examples of how higher pay can be part of successful business. These places “compete” with McDonald’s, Burger King, etc. though they pay, on average, much higher wages. The result isn’t just higher revenue per store, but also: greater quality (perceived), greater customer satisfaction, higher customer loyalty/return, lower employee churn, less spent on recruitment/hiring/training, less spent on marketing, less need for discounts/promotions, and overall better business.
It’s sort of both—people should earn more responsibly (and more pay) as they increase their skill. But the “entry level” can’t stay the same while the cost of everything else increases. If consumers demand low prices AND high-quality customer service, wages will go up.
Employment is a relationship. The employer owes the employee a fair wage for the work done. If the employer doesn’t treat the employee well, they’re not just disrespecting the employee, they’re also disrespecting the customer.