Study finds that Fast Food Restaurants can raise their hourly wages to $15 without hardship

[n2doc]

Researchers from the University of Massachusetts Political Economy Research Institute (PERI) have released a working paper verifying the ability of American fast food restaurants to more than double the minimum wage of their lowest paid workers to $15 an hour over a four-year period without causing the widespread employment losses and decline in profits often cited by critics of such increases.


Using data gathered from previous studies and U.S. Economic Census reports, economists Robert Pollin and Jeannette Wicks-Lim have found that at the standard rate of industry sales growth the savings from a decrease in workforce turnover added to revenue generated from moderate annual 3 percent price increases could support a two-stage increase in the minimum wage from its current level of $7.25, first to $10.50 and then to $15 three years later.

Published on the PERI website, the working paper, "A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs," describes how this increase in wages can be accomplished without generating employment losses within the industry and without these businesses facing a decline in profitability.

"We conclude that the fast-food industry could indeed absorb the increase in its overall wage bill without resorting to cuts in their employment levels at any point over the four-year adjustment period," explain Pollin, Distinguished Professor of Economics at UMass Amherst and Co-director of PERI, and Wicks-Lim, a PERI research assistant professor. "The fast-food industry could fully absorb these wage bill increases through a combination of turnover reductions, trend increases in sales growth and modest annual price increases over the four-year period. We also show that fast-food firms would not need to lower their average profit rate during this adjustment period. Nor would the fast food firms need to reallocate funds generated by revenues away from any other area of their overall operations, such as marketing."

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http://www.sciencedaily.com/releases/2015/01/150120155027.htm

[el_bryanto]

1. Here is a link to the paper referenced

A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs . It's 22 pages with some tables at the back. Pretty interesting, although somewhat technical.

Bryant

[1StrongBlackMan]

4. But what about the poor ...

franchise owner that took all the (statistically government backed) risk?!!!?

[raging moderate]

2. I have been quietly handing 50 - 80 cents to fast food workers.

Then I tell them I hope they get a raise soon.
As far as I am concerned, this is about what the fast food SHOULD be costing, and I don't want to pay less than a fair price for what I get. God forbid that I should take unfair advantage of these hardworking young people and the children who so often depend on them.

[seabeyond]

3. having worked all ends of both small business and corporations, of course they can.

over the years we have heard it is not possible as it continually happens, without being felt.

also, and this is important.

the fast foods were paying around ten, just to get employees in the lower 2000's and wit the financial crisis used that to lower all wages, across the board, with a lot of unemployeed desperate people.

[BoWanZi]

5. Just wondering, does the end result include the fast food getting more expensive?

[Dawgs]

7. The idea that prices will go up is a right wing talking point that's been debunked many times.

The fact of the matter is that in almost every case where the minimum wage has been raised the economy has not gotten worse.

[progressoid]

6. How about janitors and customer service and all the others getting paid shit.

[Dawgs]

8. What about them?

If they make less than $15, they will get a raise. If they don't then this report doesn't address that particular problem.

[progressoid]

9. Yeah, I know.

I just didn't want the rest of us proles to be left out of the debate.

[Omaha Steve]

10. K&R!

[cbdo2007]

11. Yep, and put the mom and pop burger shops right out of business.

Everyone knows major burger chains can pull this off, but this would pretty much decimate many local restaurants and small businesses. My buddy owns a local pizza place with 3 locations and there's no logical way for him to run the numbers and find the ability to pay most of his workers more than $10-$12 per hour. He barely makes more than that himself but loves his job.