Would a wage hike lead to pricier burgers?

Published 5:00 am Thursday, August 29, 2013

Fast-food workers and their supporters are calling for a $15-an-hour minimum wage as they prepare to picket in nationwide protests today.

That raises the question: If they’re successful, will burger prices soar?

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Expert opinion is mixed. The current federal minimum wage is $7.25 an hour. More than doubling that level would be an unprecedented leap.

Sylvia Allegretto, a labor economist and co-chair of the Center on Wage and Employment Dynamics at the University of California-Berkeley, said it’s unclear whether a minimum wage bump would have enough of a ripple effect to affect consumer wallets.

“Many people have assumed that if you increase the minimum wage by X percent, the meal costs will increase by the same percent, and that’s simply not true,” she said. “There are so many other factors at work.”

The price patrons pay for a burger also reflects, for example, the cost of fuel used to deliver the meat from farm to processing center to eatery, Allegretto said. Fluctuations in the price of raw ingredients such as beef and wheat also play a part.

Michael Saltsman, research director of the Employment Policies Institute, added that menu prices aren’t set in a vacuum. Restaurants are wary of charging more for their food, especially if dealing with the price-sensitive customers who most often frequent quick-service establishments. But if employee costs rise, “they can’t just absorb the hit either,” Saltsman said.

Many fast-food restaurants are franchisees of major brands such as McDonald’s and are on the hook for hefty franchise fees. Such eateries, along with small independent brands, tend to have extremely thin margins.

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