Minimum wage hikes impact a work in progress

[TexasTowelie]

2. For a fast-food restaurant I believe that for each $1 increase in the minimum wage

it takes about 50 cents for each unit sold. For a restaurant there is going to be a crew of 4 to 6 people working at each shift (cook, cashier, manager, extra counter help, cleaner). So for that extra $1 per hour in increased wages, the business will likely pay about $5. In addition to the extra money paid directly in wages there are also additional overhead costs paid by the business for payroll related expenses such as workers compensation premiums and payroll taxes so add another $1 per hour to the direct costs so the business will pay $6 per hour. That expense increase will be paid whether or not any product is sold so a restaurant will also have to consider prep time before opening and cleaning time after closing.

Take that $6/hour and divide it by 50 cents and it will require 12 units of whatever to be sold. If a business decides to increase their prices by only 5 cents then it will require that 120 units be sold. If you have ever been stuck at a drive-through line, do you believe they actually sale 120 units per hour and do it constantly?

These are very rough numbers of course, but it gives a better idea of how the wage increase will be passed along to customers. That trip through the drive-through lane will probably cost a dollar more each time the minimum wage is raised a dollar. For people that eat out frequently it could easily mean $30-$50 per month more spent on food.

Finally, I've only looked at a small portion of the overall economy which is the food sector, it does not include other expenses such as paying for transportation or for other services they receive from other businesses that have minimum wage increases.

While I believe that people should be paid a living wage, it should also be noted that the people hit the hardest by inflationary wage increases are those with fixed incomes or no income. Minimum wage increases sound great if you are able to work for the money and also able to control your expenses (which sounds easier than it is), but with about 3 our of 8 people not working because they are retired, disabled, caring for children or unwilling, it makes it more difficult to get by.