R&I – TxPAT **
On November 29, 2012, dozens of fast-food workers assembled at a McDonald’s in midtown Manhattan to demand better pay. Their demonstration kicked off a massive wave of protests for a $15 minimum wage. Since then, cities and states around the nation have taken action. And now, the federal government, led by President Biden and a Democratic-controlled Congress, has begun to consider making the $15 minimum wage national.
McDonald’s is one of the nations’ biggest employers of low-wage workers. As such, it was kind of the perfect place to launch what was, in retrospect, the beginning of an historic labor movement. A new study by economists Orley Ashenfelter and Štěpán Jurajda suggests McDonald’s is also kind of the perfect place to test the effects of the minimum wage increases that workers have been fighting for.
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Not surprisingly, Ashenfelter and Jurajda find that McDonald’s restaurants raise their wages after a city or state raises its minimum wage. More surprisingly, they find that a substantial fraction of restaurants preserve their pay premiums for workers who were previously earning more than the minimum wage. That is, if a worker was making a dollar more than the old minimum wage level, many McDonald’s will make sure those workers will continue to make a dollar more than the new minimum wage. Ashenfelter says they don’t have hard evidence for why this is, but he believes it’s because certain restaurants want to offer wages slightly higher than the legal minimum as a way to reduce turnover.
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They found that when the minimum wage goes up, the price of a Big Mac goes up, too. Ashenfelter says the evidence on increased food prices suggests that basically all of the “increase of labor costs gets passed right on to the customers.” But because low-wage workers are also usually customers at low-wage establishments, this suggests that any pay raise resulting from a minimum wage increase might not be as great in reality as it looks on paper.
FoundingFrog
Article URL : https://www.npr.org/sections/money/2021/02/16/967333964/what-mcdonalds-shows-about-the-minimum-wage