On Thursday, May 15, fast food workers in 150 US cities and in 33 countries are going on strike. In the US, they are calling for a minimum wage of $15 per hour and to be able to form unions without retaliation.
Currently, the median pay for the fast food workers across the country is just over $9 an hour, or about $18,500 a year. That’s roughly $4,500 lower than Census Bureau’s poverty income threshold level of $23,000 for a family of four.
Frankie Tisdale, a 26-year-old worker from a KFC in Brooklyn said he will join the strike with fellow workers next week.
Tisdale lives in his father’s house in Brooklyn with his girlfriend and two young children. He earns $8 an hour and works between 14 and 23 hours a week.
With less than $200 a week, he sometimes has to choose between buying food for the family and taking his kids’ clothes for a wash to the laundromat. He said it’s too expensive to eat at the KFC where he works so he never does. “Everything costs more. Why can’t my pay go up?” Tisdale says.
Currently there is a proposal to raise the minimum wage to just $10.10 per hour, up from its current federal level of $7.25 per hour but of course it is being opposed by the Republican party.
What would be the effect on prices of even this inadequate rise? According to a study by economists at the University of Massachusetts, “assuming all else equal, the average fast-food restaurant could fully cover the costs of a $10.50 minimum wage by raising their prices 2.7 percent. This is equivalent to increasing the price of a $4.50 Big Mac to $4.60.”
The ‘all else equal’ caveat usually does not hold up in reality. Others argue that fast food prices may not go up at all, even if the minimum wage were raised to $15 per hour, because prices are set by the competition and by what the market will bear, and manufacturers often can find ways to absorb at least some of the rise in costs.
It is hard to predict the effect on prices of changes in any given input because of adjustments that may be made else in the system to accommodate. But the net result is usually less than the rise calculated due to direct effects on the cost of production.