The decision by states in half the country to hike their minimum wage could send the price of fast-food staples like a McDonald’s Big Mac soaring to $15 in those states, according to an economic analyst.
Brandon Arnold, executive vice president of the fiscally conservative think tank the National Taxpayers Union, pointed to California’s decision to mandate that employees at fast food restaurants be paid at least $20 an hour as a troubling sign.
Companies are “either gonna have to raise prices, start to reduce those labor costs or a combination of both,” Arnold told Fox News on Monday.
“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.”
California’s $20-an-hour minimum wage for fast food workers goes into effect in April. McDonald’s and Chipotle both announced that they would be hiking the prices of menu items at Golden State locations beginning this year.
“As [employers] start to see these labor costs increase, they may not lay people off immediately,” Arnold told Fox News in comments first cited by Mediaite.
“But when times get tough, they’re gonna have to make changes.”
The Post has sought comment from McDonald’s.
Last week, Pizza Hut said it would lay off more than 1,200 delivery drivers in California ahead of the new state law kicking in.
Arnold predicted a “10, 12, 15% reduction in the number of jobs available” in the fast-food industry.
Arnold said that fast food workers “would much rather be working for $8,$9, $10 an hour than to be on the unemployment line.”
Last January, McDonald’s head of US operations warned that California’s minimum wage hike for fast food workers will make it “all but impossible to run small business restaurants.”
“California keeps looking for ways to raise prices, drive away more businesses and destroy growth through bad policy and bad politics,” Joe Erlinger, the president of McDonald’s USA, wrote in an open letter.
Lawmakers in 25 states and Washington, DC, passed legislation which raised the minimum wage. In 22 of those states, the laws went into effect on Monday.
Minimum wage hikes in Nevada and some parts of Oregon will go into effect on July 1, while Florida’s new minimum wage increase will be applied on Sept. 30.
The minimum wage in New York City, Long Island and Westchester County ticked $1 higher on Monday — from $15 to $16.
In the remainder of New York State, the new minimum wage is $15, up from $14.20.
Additional Reporting by Shannon Thaler