![]() A previous study found that for every 10 percent increase in the minimum wage, turnover drops by 2.2 percent, and a $15 wage would come with $5.2 billion in savings for the fast food industry. In 2013, the turnover rate for franchises was 93 percent, and it can cost $4,700 per worker who leaves. I don’t think we answered the question of whether that reduces turnover,” Richard Ghiselli, professor and head of the School of Hospitality and Tourism Management, said in a press release. “People often hypothesize that if you raise pay and offer benefits, turnover will go down. ![]() The study notes that it doesn’t take into account the costs of turnover or any savings gained from higher wages. The price increases would be a good deal larger if the minimum wage were raised to $22 an hour, or average private sector pay: the authors found they would increase by 25 percent, raising the price of a Big Mac by about a dollar. The study from Purdue University’s School of Hospitality and Tourism Management also found that in order to compensate for the higher cost of employee compensation at limited-service restaurants, or those without table service or tipping, if they decided to change food sizes rather than prices, the Big Mac would shrink somewhere between 12 and 70 percent. ![]() That would mean a McDonald’s Big Mac, which currently goes for $3.99, would cost about 17 cents more, or $4.16. If the minimum wage were increased to $15 an hour, prices at fast food restaurants would rise by an estimated 4.3 percent, according to a new study.
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