The problem with your argument here is that you're attributing a slow down in the economy in general to the effect of minimum wages. I've certainly not seen any research that would be able to pin a down turn in our economy on our "high" minimum wages.Ben's point is that high wages hurt small businesses more than large ones because of economies of scale. If wages represent 80% of your expenses then higher wages are going to affect you more than if wages represent 20% of your expenses.
The main reason for the cut to penalty rates is because it was having the effect of seeing small businesses choosing to close when they were in effect. But some people in this thread will swear that employment rose elsewhere when that happened I guess.
There are many factors that can cause a down turn; risks in the global economy are among those, a government blindly pursuing a budget surplus is another and tax cuts that did absolutely nothing to stimulate consumption don't help either.
Yes small businesses struggle when an economy slow downs because consumers spend less. Will cutting wages help? Maybe in the very short term, but it's likely to cause more harm to small business than good. Those who are most likely to spend their money in a small business have less money to spend because their wages have been cut, thus hurting small business further.
A downturn caused small businesses to struggle and close, not minimum wages.
Salim kinda beat me to it but yeah