Opponents of raising the federal minimum wage often argue that, while the increase in wages may benefit low-wage workers, it will also increase the cost of food and other basic goods, thus hurting the very people the minimum wage increase is intended to help.
In this report, we examine this argument by providing a detailed analysis of the potential increase in food prices of new legislation proposed by Rep. George Miller (D-CA) in the House of Representatives and Senator Tom Harkin (D-IA) in the Senate that would increase the minimum wage to $9.80 over a three-year period in $0.85 increments, as well as increase the tipped minimum wage, which currently stands at $2.13, in similar increments until it reaches 70% of the full federal minimum, now known as the Fair Minimum Wage Act.
In our analysis, we take a conservative approach, making a number of assumptions that likely overstate the ultimate impact on consumer prices. Nonetheless, we find that while the Miller/Harkin bill would provide a 33% wage increase for regular minimum wage workers and would more than double the wages of tipped workers over the same period, retail grocery store food prices would only increase by an average of less than half a percent over the three-year phase-in of the new minimum wage, and restaurant food prices would increase by less than one percent per year. This increased cost of food, both away and at home, would amount to about 10 cents more per day on average for American households over the three-year period.
Download the full report here.
This report was made possible by The Food Labor Research Center at the University of California, Berkeley and The Food Chain Workers Alliance & ROC United.
Research and Writing: Chris Benner, Associate Professor, Center for Regional Change, University of California, Davis; Saru Jayaraman, Director, Food Labor Research Center, University of California, Berkeley