I've always thought that was the problem with tax credits it just means that employers can pay less. If there weren't tax credits people would leave for other jobs and therefore employers would have to pay a better rate to retain them. I think they were probably introduced with good intentions but their introduction passed me by.
In truth though it is a double whammy.......the people on tax credits are as you say mainly on the minimum wage or thereabouts...........and who do they work for mostly? People who care for others (care agency work) mainly paid for indirectly by the government. Nhs porters and cleaners and other workers. ( Not doctors or nurses ) not forgetting other government sponsored workers. All on or very near the minimum wage. To my mind it doesn't make sense although I understand why these people need help. The government dictate the amount they will pay for this care etc then wonder why people in the industry need tax credits.