Politics

Big Mac Would Cost Only 17 Cents More If Minimum Wage Was Raised To $15, Study Finds

| by Sean Kelly

According to a new study, raising the minimum wage to $15 per hour for fast food workers would mean a 4 percent rise in prices.

The study, conducted by researchers at Purdue University’s School of Hospitality and Tourism Management, showed that a long-debated wage hike for fast food workers would be possible if a Big Mac at McDonald’s cost just 17 cents more, or if all customers paid just 30 cents extra each time they ate at a fast food restaurant.

“It would vary a bit, depending on where you live, but that gives you a sense,” Richard Ghiselli, head of Purdue’s School of Hospitality and Tourism Management, said, according to the Washington Post.

Ghiselli got his results by compiling data from the National Restaurant Association, as well as Deloitte & Touche. He used the data to estimate how much fast food companies would need to boost sales if their minimum wage was raised to various amounts.

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If the industry maintains its current 6.3 percent profit margin, Ghiselli found, raising the minimum wage to $15 per hour would mean a 4.3 percent increase in prices.

“If we were talking about the price of gas, that would probably be headline news, but people have a very different reaction to food,” he said. “A four percent increase in the price of fast food doesn't bother people as much."

Ghiselli found, however, that the four percent increase would not apply to everyone. Anywhere fast food workers make less than the average industry-wide pay, which is roughly $10.64 an hour, would see a higher price hike. 

“Someone in Lafayette, Indiana, where I live and we do pay $7.25, is going to be affected a lot more,” he said. “And so are prices consumers will have to pay."

Sources: Washington Post, MarketWatch

Photo credit: Annette Bernhardt/Flickr, rob_rob2001/Flickr