The Costs to Fast-Food Restaurants of a Minimum Wage Increase to $10.50 per Hour

Jeannette Wicks-Lim and Robert Pollin

Research Briefs from Political Economy Research Institute, University of Massachusetts at Amherst

Abstract: As fast-food workers join picket lines around the country, media outlets are questioning how much a minimum wage increase would cost businesses, fast-food restaurants in particular. Jeannette Wicks-Lim and Robert Pollin examine the potential impact of a proposal to raise the federal minimum wage, concluding that the proposed hike to $10.50 would impose only modest costs, and could meaningfully improve living standards for low-wage workers while avoiding the unintended consequence of reducing employment. They explain how they arrived at their key finding: the average fast-food establishment could fully cover the costs from the $10.50 minimum by raising prices 2.7 percent.

Date: 2013
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