Report: Jobs Lost, Food Prices Rise If NY Adopts $15/hr Minimum Wage

We know, we know … file this one under ‘D’ for ‘Duh.’

Should activists who think flipping burgers equates to $15/hr get their way on minimum wage hikes, the fast food industry as a whole will see job losses and increased food costs of about 22%.

Members of Governor Cuomo’s wage board all agreed there would be negative effects to the state’s economy.


The cost of a Big Mac likely will increase in New York if the state decides to raise the minimum wage for fast-food workers to $15 an hour or more.

In Seattle, where the minimum wage for all workers is being increased to $15 an hour, $5 footlongs at Subway are no more, said Matt Haller, of the International Franchise Association. They are $6 or more, he said.

Haller said studies show that menu prices would increase about 22 percent with a $15 an hour wage.

Members of a New York wage board weighing the increase all agreed that some of the economic ripple created by the raise would not be positive: Jobs would be lost at the margins and the price of food would rise at the McDonald’s, Burger King and other chains targeted by the increase.

Another report from Crain’s indicates that the mere mention of a $15 minimum wage “triggers panic among New York City restaurateurs.”

One owner of the BLT restaurant chain said it’s “enough to send a restaurant from being profitable to losing money.”

Small-business owners have long warned that minimum wage hikes will suppress job creation, will lead to fewer hours for current employees, and will result in an increase in costs for consumers.

Academic studies confirm the accuracy of this criticism of minimum wage hikes. In 1995, University of California-Irvine economics professor David Neumark and Federal Reserve governor William Wascher analyzed payroll records of fast-food restaurants in New Jersey counties and neighboring counties across the state line with Pennsylvania, to determine what, if any, effect New Jersey’s 1994 minimum-wage increase had on entry-level employment trends.

They found confirmation of the common wisdom that increasing the cost of entry-level labor results in increased unemployment and forces entry-level workers—often, the young or ethnic minorities—to seek employment in other geographic areas with fewer market distortions.

This ad from EPI also shows the predictable consequence of a $15 minimum wage for fast-food restaurants: Touch-screen ordering systems that replace employees.

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