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Sunday, September 7, 2014

The minimum wage and the Danish Big Mac

Today's post was shared by Steven Greenhouse and comes from

The Los Angeles Times drops into the debate over whether or how much prices would have to rise at fast-food restaurants for their employees to get $15 an hour.

Actually, this is the first time I’ve seen the question of whether prices would rise treated seriously. Even the bad-math types we’ve seen in the last few weeks have always assumed some price increases.

But the LAT runs with this dumb-question headline:

Would a higher minimum wage mean pricier burgers?Writing about the burgeoning protests by low-wage workers for a $15 an hour wage, the paper writes this:

That raises the question: If they’re successful, will burger prices soar?

Expert opinion is mixed. The current federal minimum wage is $7.25 an hour. More than doubling that level would be an unprecedented leap.

Sylvia Allegretto, a labor economist and co-chair of the Center on Wage and Employment Dynamics at UC Berkeley, said it’s unclear whether a minimum wage bump would have enough of a ripple effect to affect consumer wallets.

“Many people have assumed that if you increase the minimum wage by X percent, the meal costs will increase by the same percent, and that’s simply not true,” she said. “There are so many other factors at work.”

No, expert opinion is not mixed on whether doubling minimum wages would “affect consumer wallets,” even if the LAT found one academic to sort of say so. If labor costs doubled suddenly, restaurant owners would have to...

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