Recently, several media outlets have claimed that raising fast-food workers’ salaries would raise the price of a Big Mac by only 68 cents. This figure represented only a 17 percent rise in prices; if it sounds too good to be true, it is. However, other research shows that the actual effects of paying workers a living wage, while higher than 68 cents, are not as bad as corporations make out.
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For less than twice what the current menu charges, McDonald’s could double its pay and offer workers a living wage. That’s a good deal.
There have been a number of fast food worker strikes around the country in the past few months. Some of the demands include a living wage and benefits such as paid sick leave. It is impossible to support oneself on minimum wage, and many fast food workers have families. Gone are the days when fast food establishments were manned by the kid next door saving money for college.
The Columbia Journalism Review points out the errors in the claim that 68 cents would fix all our problems, but it goes on to state that in McDonald’s franchises, an overall 25 percent rise in prices would enable franchise employees to enjoy double their current, minimum wage pay. Franchises make up 80 percent of McDonald’s restaurants. That means that if the dollar menu became the $1.25 menu, workers in McDonald’s franchises could enjoy a living wage. The 25 percent rise would also increase the cost of a Big Mac by one dollar.
Of course, these numbers seem to assume that the rise in prices wouldn’t hurt sales, but it is quite possible that they would, at least at first. On the other hand, when workers make enough money to live, then the demand for good and services goes up because — surprise! — people can afford to pay for goods and services.
Think Progress discusses research on how employers respond to increases in employee pay, especially mandated increases such as a rising minimum wage. One thing employers do in response to having to pay workers more is increase their prices. But even when they do so, they do not go out of business as a result.
If McDonald’s raises prices to pay people more, then they will not go out of business, either.
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