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$15 wage would hike menu prices 4.3%, study finds

Increasing the wages of quick-service-restaurant employees to $15 an hour, the threshold sought by unions and some lawmakers, would force their employers to raise menu prices by 4.3 percent, according to a new study by Purdue University. 

The research also revealed that tax benefits included in the Affordable Care Act would likely spare quick-service restaurants with fewer than 25 full-time employees from having to raise prices to pay for employees’ health insurance.

A third objective of the study was determining what effect a minimum wage of $22 an hour—the average pay of all Americans working in the private sector—would have on QSRs’ menu prices. It concluded that fast-food restaurants would have to raise what they charge by 25 percent.

"People often hypothesize that if you raise pay and offer benefits, turnover will go down,” said Richard Ghiselli, professor and head of Purdue’s School of Hospitality and Tourism Management. “I don't think we answered the question of whether that reduces turnover, but the study showed that if you raise pay and offer health insurance, prices will go up."

New York is expected to mandate a $15 wage at the order of the governor, and the Service Employees International Union is collecting signatures to put a $15-wage initiative on California’s next ballot. Los Angeles, Seattle and other local jurisdictions have already started raising their hourly pay floor to $15. 

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