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Study Shows $15 Fast Food Wages Would Result in 4.3 Percent Price Hike

That burger and fries could soon cost you more.

Spencer Platt/Getty Images

A $15 minimum wage hike would certainly have a positive effect on the lives of fast food workers, but what could it mean for everyone else? A new study by Purdue University says such a wage increase would lead to a "4.3 percent increase in prices" for fast food restaurants.

The study by the university's School of Hospitality and Tourism Management supports a recent independent analysis by an investor group which claimed a minimum wage hike would "eat into restaurants' profits," with casual dining chains being hit the hardest.

The effect is already being seen in some cities: In San Francisco, which recently raised its minimum wage by 14 percent to $12.25, the city's Chipotles have answered by raising their prices an average of 10.5 percent. Seattle and Los Angeles have also recently approved minimum wage increases to $15 an hour, meaning more fast food price hikes may not be far behind.

While higher wages could result in higher prices, the same apparently can't be said for offering workers health insurance: The study also showed that "due to current tax credits in the Affordable Care Act, [offering healthcare benefits would have] a minimal effect on prices at limited-service restaurants with fewer than 25 full-time employees."

Purdue professor Richard Ghiselli points out, "The other way to look at this if you don't want to raise the prices is to examine the impact on product size." Instead of — or perhaps, in addition to — raising menu prices, restaurants might also consider shrinking the sizes of their burgers and fries.

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