The topic of retail employee wages has gotten more attention lately with workers at fast food restaurants picketing in major cities across the country and Walmart threatening to scrap plans to open stores in Washington, D.C. should a living wage bill go into effect there.
Those supportive of the chains can point to several reasons why paying workers higher wages is a bad idea, but none hold greater sway than the argument it would increase prices to consumers, thereby putting companies at a competitive disadvantage. But just what would raising wages to $12 or even $15 an hour mean to prices?
In the case of Walmart, the most widely cited study comes from the University of California, Berkeley Center for Labor Research and Education. It estimated that if the chain passed along 100 percent of the increase associated with starting all its workers out at $12, it would increase the average shopping basket by 46 cents per trip or $12.49 a year for a consumer who spends $1,187 a year at Walmart. With a pricing advantage of between eight and 27 percent in food, for example, Walmart would still have a sizable competitive edge.
Another argument against raising wages — and therefore prices — for Walmart is that it would disproportionately hurt poorer consumers. The UCal Berkeley research addresses prior research studies which support this thesis and finds that more people in poverty would be helped by higher wages than hurt by costs that are passed along.
To muddy the waters, a so-called researcher at the University of Kansas released numbers this week showing that McDonald's would only have to increase the price of a Big Mac by 68 cents if it doubled wages from $7.50 an hour to $15. As it turned out, Arnobio Morelix, an undergrad at the school, made some significant errors in his calculations, causing publications and websites to post retractions.
In the place of Mr. Morelix's numbers come some from the Employment Policies Institute, a research organization that focuses on issues related to entry-level employment. According to the group, the price of a Big Mac would increase $1.28 if McDonald's paid $15 an hour to start.
Dean Baker, co-director of the Center for Economic and Policy Research and blogger for The Huffington Post, said doubling fast food workers starting wages would cost jobs. On the plus side, however, he said the extremely high turnover rates at McDonald's and elsewhere would be reduced significantly.
- Will Walmart Bail on Washington Over the 'Living Wage' Bill? - RetailWire
- Living Wage Policies and Big-Box Retail - University of California, Berkeley Center for Labor Research and Education
- Fast Food Workers Kick-Off Nationwide Strikes in NYC in Support of Higher Pay, Unions - brandchannel
- Errors in McDonald's Wage Analysis - The Huffington Post
- About Us - Employment Policies Institute