Minimum wage hikes could lead to $15 Big Macs, 25 states don’t care

Twenty-five states are boosting their minimum wages in 2024, with California leading the way with a bump to $16 for all employees. But fast-food workers in California enjoy a special carve out — effective April 1, 2024, employees at most fast-food chains with more than 60 locations will make $20 an hour.

At the same time, Pizza Hut is laying off more than 1,200 delivery drivers in California, according to Fox News.

For many Americans who have been fed the fantasy of Keynesian economics, they don’t quite grasp that as wages go up so too do prices, which Brandon Arnold of the National Taxpayers Union explained in an appearance on the network. He also said to expect reduced employment because small businesses can’t sustain the impact for long.

“As they start to see these labor costs increase, they may not lay people off immediately. But when times get tough, they’re gonna have to make changes,” Arnold said. “They’re either gonna have to raise prices, start to reduce those labor costs or a combination of both. And that’s not fair to those employees that are getting laid off, nor is it fair to the customers that are all of the sudden paying 12, $15 for a Big Mac.

He said small businesses “take it on the chin” when minimum wage laws are passed and warned that an increase on a national basis would be “an absolute disaster.”

“So, you’re gonna see [a] 10, 12, 15% reduction in the number of jobs available,” Arnold explained. “All of those people would much rather be working for 8, 9, $10 an hour than to be on the unemployment line.”

For what it’s worth, Statista has a Big Mac index that tracks global pricing for the burger and the average cost in the U.S. is $5.58. The most expensive Big Mac in the world is in Switzerland, at $7.73 U.S. dollars.

McDonald’s and Chipotle have already announced that prices will go up in California when the new law takes effect, according to ABC 7.

“Most certainly there is going to have to be some price increase,” Pepperdine University economics professor David Smith told the affiliate, before adding, “Some estimates suggest that we could have up to 50,000 jobs lost in the state of California.”

David Neumark, the Chancellor’s Professor at the University of California, Irvine, warned that higher prices are not the only fallout here.

“You might have longer lines, you might have dirtier restaurants, there is even a study from Seattle when they raised the minimum wage hygiene violations increased, but consumer prices is also one potential route,” the professor said.

Tom Tillison


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