A $5 minimum wage is essentially a ban on the lowest-skilled workers, and negative residual effects abound.
Study economics & history to observe the actual results of these programs.
A $3.50/hr market rate for labor is a great example of when the free market does not work. The market will find its equillibrium—but there’s no promise that that equillibrium will be an acceptable one. Suppose we have grossly more labor than we have work (and the cost of moving elsewhere is prohibitively high). Ten people want a job picking tomatoes. It will take only five people working full time to do it. So five get work, the other five starve. We would expect the market value of labor to be less than subsistence because starving slowly is, for most, preferable than starving quickly. The market has found its equillibrium—but it’s the equillibrium that gives all the money to the guy who owns the tomatoes and leaves the others hungry. The balance isn’t maintainable. All ten laborers will revolt.
The traditional reaction to these circumstances is to hire a few of the laborers at a higher price to be a police force. Of course, now we’ve introduced inefficiency by creating market conditions that incentivize crime. Thus, a minimum wage is more effective.
It could be objected that starving people will do a crappy job picking tomatoes, so the employer has an incentive to pay at least a subsistence wage. This is true. However, the employer only needs to pay enough to keep his laborers fed. Since he has a ready supply of alternative labor, he can easily let one go and pick up another.
A minimum wage should allow somebody earning it enough that they can pay their own way if they’re fiscally responsible. This means both day to day expenses plus enough extra to cover unexpected but predictable things like illness. A good measure of those expenses is, of course, the cost of health insurance.