The fast food industry would lose neither jobs nor profits even if the minimum wage rose from its current $7.25 an hour to $15 over a period of four years, a new report from the University of Massachusetts, Amherst says.
The working paper from the Political Economy Research Institute says $33 billion annual cost in higher wages and payroll taxes could be offset by factors including savings from lower turnover -- more than $5 billion a year -- as well as a roughly 3 percent annual increase in prices, assuming an annual 2.5 percent growth of the U.S. fast food market. "Wages in this country… have been really stagnant and not making any headway over the past 30 years," said Jeannette Wicks-Lim, an assistant research professor at PERI and co-author of the paper.
“Business firms do have other options available to them besides cutting their workforce,” says the paper, which comes as President Barack Obama used the State of the Union speech on Tuesday to renew his challenge for Congress to raise the minimum wage.
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-- Martha C. White