Does raising the minimum wage increase inflation? By Investopedia Updated January 25, —
Owners and managers are dealing with rising costs, while workers are paying ever higher rents and costs of living.
The law considers the size of the employer, whether the employees are tipped, and if the employer pays towards medical benefits. Now that the law has started to take effect, there are two new studies that show completely opposite results.
As is common in studies of the minimum wage, the research focused purely on restaurant jobs, but then applies its conclusions to all hourly jobs in other sectors. In the case of this study, the data from Seattle was compared to a composite set of counties from across the US that did not raise their minimum wage.
An interesting detail was that wages increased markedly in counter service restaurants, in contrast to full service restaurants. The assumption is full service restaurants where able to offset the higher minimum wages by using the tip credit built into the law. The University of Washington study was conducted with two important differences from the Berkeley study.
First, they looked at all industries and not just restaurants, and second, they constructed their synthetic control only from counties in Washington state.
Neither study has been peer reviewed, but both have critics. Important to us, and you, is whether these conclusions can be applied to restaurants. While the Berkeley study only focuses on restaurant workers, the Washington study took a broader view by including all lower-wage workers.
In doing so they make their conclusion harder to apply to restaurants specifically. This means on the issue of minimum wage the jury is still out. Unemployment is at a historic low while diners are eating out more than ever before. In this business environment, the restaurants that succeed will be the ones who hire the best staff — and keep them happy.
Jack Hott has more than 20 years experience in the hospitality industry.Mar 18, · Wendy’s has three options to offset the rising costs. changes in locations like Seattle and New York that have higher minimum wages. working hours were reduced as a result .
Some cities mandate higher minimum wages.
Seattle's minimum wages will range from $11 to $ depending on the size of company and benefit offerings. Higher minimum wages will force some businesses to cut staff, while others might close entirely. If you still have a job after that, sure, you'll make more money.
If you don't, well, finding a job.
Even after dropping in and barely rising in , the price of gas has increased over 70 percent since January , a higher rate than the increase in the overall CPI.
Utilities, gas, prescription drugs, cable, and tobacco prices all buoy everyday prices as measured by the EPI.
While one may argue that California has a higher cost of living than most other places in the United States, justifying a minimum wage higher than the historical median, one might also acknowledge that many of the benefits offered minimum wage earners today were not available until relatively recently. Some low-income families benefit from higher wages, but many more low-income families are hurt by higher prices. Overall minimum-wage effects are more regressive than sales-tax increases. A “$ option” would increase the federal minimum wage from its current rate of $ per hour to $ per hour in three steps—in , , and After reaching $ in , the minimum wage would be adjusted annually for inflation as measured by the consumer price index.
Jul 27, · A number of researchers have found that modestly higher minimum wages can raise incomes for low-wage workers without reducing the number of jobs in an area.
A higher minimum wage could result in an increase of the high school dropout rate. Prices might be increased to offset higher labor costs. For small companies, already stressed owner/operators might take on more responsibility.