How much more would you pay for food, to raise minimum wage?
Seems to me raising the minimum wage is a hot topic in the US. Linked to that is the current debate about restaurants having difficulty hiring - supposedly because workers would rather stay home and collect benefits.
Now, one argument against raising the minimum wage is that it would increase food cost, thus reducing business and eventually killing the restaurant.
But let’s look at the numbers. Labour makes up 20-30% of the cost of running a food business. Since (as I understand the custom is to tip 15%) that works out to a potential increase in salary by 45-75% if tips were incorporated into the bill.
The math is something like this, assuming labour is 20% of the bill:
MW x 1/5 = 15%
The price of food would not change materially for an increase of up to 75% of wages. Eliminate tipping and restaurants could theoretically raise hourly wages up to $12.70 (from $7.25) tomorrow. The barriers of course would be psychological — while the amount paid is the same, the feeling of being charged more would still deter people.
Of course as salary goes up the percentage that wages form of food costs will rise. So the math is rudimentary and really as a starting point for discussion.
What are your thoughts?
On a side note, in Singapore we have no minimum wage. so it’s not really any better. It’s a debate here as well, with a proportion of people living hand to mouth in a very expensive city.
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