TIME Economy

Here’s Where a $15 Minimum Wage Would Buy the Most Stuff

Fast Food Workers Gather To Watch State's Wage Board Decision On Minimum Wage Raise
Spencer Platt—Getty Images Labor leaders, workers and activists attend a rally for a $15 minimum hourly wage on July 22, 2015 in New York City.

Sorry, New York and Hawaii

A $15 per hour minimum wage has become the common chorus for disgruntled low-wage workers across the nation, but what that pay rate means for workers’ purchasing power isn’t universal. Just how much $15 per hour is worth depends on where you live.

The Pew Research Center released analysis Monday of the real value of $15 per hour by metropolitan area. The study used regional price parities developed by the Bureau of Economic Analysis to measure the difference in local price levels of goods and services across the country, relative to the overall national price level.

Taking RPPs into account for the nation’s 381 metropolitan statistical areas, Pew found that in urban areas like New York City and Honolulu, Hawaii, $15 is worth a whole lot less—$12.26 and $12.24, respectively—than in smaller cities, where the cost of living is cheaper.

The city where $15 will can buy you the most is Beckley, West Virginia. With the lowest RPP of any metro area in the nation, $15 per hour will have purchasing power of $19.23.

Screen Shot 2015-08-03 at 11.49.50 AM

Interestingly enough, Allentown, Pennsylvania has a RRP of exactly 100—the national average—so it’s the only metro area in the nation where $15 per hour will actually buy you $15 worth of stuff.

This analysis is notable since a wave of $15 per hour minimum wages is sweeping the country, most recently passing through New York, where the state’s wage board is enacting a $15 minimum wage for fast food workers. Americans generally support higher wages, but—as Pew’s data shows—wide disparities in local living costs create practical complications.

TIME Fast Food

Here’s What a $15 Per Hour Wage Means For Fast Food Prices

Fast-Food Strikes in 50 U.S. Cities Seeking $15 Per Hour
Bloomberg—Bloomberg via Getty Images Here’s What a $15 Per Hour Wage Means For Fast Food Prices

A new study shows how it could affect consumer costs

As New York State moved closer to approving a $15 per hour wage for fast food workers last week, there was speculation about what such a hike would mean for consumers. A new study provides this answer: prices will increase ever so slightly.

Researchers at Purdue University’s School of Hospitality and Tourism Management found that raising pay for fast food restaurant workers to $15 an hour—the minimum wage that cities like Seattle and San Francisco have already adopted—would result in an estimated 4.3% increase in prices at those restaurants. That means the price of a $3.99 Big Mac would jump to $4.16. The study also found that offering health care benefits to fast food workers at restaurants with fewer than 25 full-time employees would have a minimal effect on prices because of current tax credits in the Affordable Care Act.

The study also examined the potential price fallout of a $22 per hour wage—the pay rate of the average American in the private sector, according to Bureau of Labor Statistics. That hike would cause a 25% increase in prices, the study says.

The Purdue researchers relied on data from the National Restaurant Association for the study and examined information from Healthcare.gov to determine the price impact of offering health-care insurance.

“There were no surprises. We thought prices would go up. We just wanted to know how much they would go up if you raise pay and offer health insurance,” said Richard Ghiselli, professor and head of the School of Hospitality and Tourism Management in the study release. “The other way to look at this if you don’t want to raise the prices is to examine the impact on product size. As expected, a hamburger would be much smaller.”

TIME Innovation

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The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

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The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Minimum Wage

Dunkin’ Donuts CEO Slams $15 Minimum Wage

Inside A Dunkin' Donuts Store As Group Plans German Expansion
Bloomberg—Getty Images

He says the increase could hurt small businesses.

Dunkin’ Brand CEO Nigel Travis isn’t happy with New York’s recommendation that fast food workers make a minimum wage of over $15 per hour.

In an interview with CNN, Travis expressed his concern over the news and discussed the implications for the industry. “It’s going to affect small businesses and franchises,” he said. “I don’t want to sound threatening about that,” noting that Dunkin’ Donuts would unlikely lay off employees because of the increase. He did, however, say that it could affect the company from hiring workers in the future.

Instead, Travis said that fast food workers should make something along the lines of $12, according to CNN. The minimum wage in New York is currently $8.75 per hour.

“A debate needs to take place about how to tackle income inequality,” he said in the interview.

There may, however, be job losses associated with the boosted pay, Fortune notes. And there could be higher prices for shoppers.

TIME Economy

Here’s Every City in America Getting a $15 Minimum Wage

As New York is set to raise fast food workers' pay

When dozens of New York fast food workers walked off the job in 2013 demanding minimum pay of $15 per hour, their campaign seemed like a longshot. But two years, several nationwide strikes and new rules laws later, a $15 minimum wage is becoming a reality for millions of workers across the United States.

The workers’ campaign, known as Fast Food Forward and backed by the Service Employees International Union, has slowly gained momentum through a series of increasingly large one-day strikes targeting fast food chains like McDonald’s, Wendy’s and Burger King. At first, the effects of the strikes seemed small, with individual restaurant owners conceding to minuscule wage increases for some of their workers. But even as businesspeople were doing their best to ignore the movement, politicians were paying close attention.

Over the last two years, several cities and now the entire state of New York either have or are in the process of enacting a $15 minimum wage for various workers. Here’s a look at the cities that have enacted huge pay increases, and the ones that could still be to come.

New York

How it Happened: A wage board appointed by Gov. Andrew Cuomo presented a recommendation Wednesday to increase the minimum wage for fast food workers to $15 per hour across the state, up from the current $8.75. Cuomo has enthusiastically backed the initiative.

The Plan: In New York City, the minimum wage will increase to $10.50 by the end of this year, then increase incrementally each year to reach $15 by 2018. In the rest of the state, the increments will be smaller and $15 will be reached by 2021. The wage increases apply only to fast food chains with at least 30 locations in the U.S.

The Effect: None yet, since the measure still must be approved by the state’s labor commissioner. Experts predict other types of businesses that employ low-wage workers, like retailers or landscapers, will have to increase wages to compete with fast food restaurants.

Seattle

How it Happened: Mayor Ed Murray made increasing the minimum wage one of his first priorities when taking office at the start of 2014. In May of that year, he put forth a proposal to increase the city’s minimum wage from Washington state’s rate of $9.32 to to $15 over several years. The city council approved the measure a month later.

The Plan: Workers at large businesses with 500 or more U.S. employees will see their wages hit $15 per her hour by 2017. Workers at businesses with fewer than 500 U.S. employees will reach that rate by 2021. After the hikes, large businesses will have to keep increasing wages to keep pace with inflation.

The Effects So Far: The first stage of Seattle’s plan went into effect in April 2015, with large businesses raising their minimum wage to $11 per hour and small businesses’ wages rising to $10. So far, the effects are largely anecdotal. Some local restaurants have raised prices from 4 to 21%. In nearby SeaTac, where the minimum wage for some workers jumped to $15 per hour last year, there hasn’t been any measurable economic fallout.

San Francisco

How it Happened: City residents voted by a large majority to raise the city’s minimum wage from $10.74 to $15 last November.

The Plan: Wages have already jumped to $12.25, and will increase to $15 by 2018. After that, the minimum wage will increase every year at a rate tied to the consumer price index.

The Effects So Far: This year’s wage increase boosted the pay for as many as 86,000 workers, most of whom were women and minorities, according to one estimate. However, at least one local bookstore said it would close due to the increased costs.

Los Angeles

How it Happened: The Los Angeles city council voted in May to increase the local minimum wage to $15 by 2020, up from the current $9. This week the Los Angeles County Board of Supervisors also voted to increase the minimum wage to $15 for people working in unincorporated parts of the county.

The Plan: Workers will earn $10.50 per hour starting next year, with incremental increases until they make $15 in 2020. The hikes are delayed by a year for workers at businesses with 25 or fewer employees. After reaching $15, annual minimum wage increases will be tied to the consumer price index.

The Effects So Far: Because many cities in L.A. County, like Pasadena and Long Beach, haven’t yet committed to matching the county’s wage increase, prices for goods and services at stores very close to one another could become highly skewed.

Washington, D.C.

How it Might Happen: Residents of the nation’s capital will vote next year on whether to increase the minimum wage to $15 from the current $10.50.

The Plan: The minimum wage would increase to $15 per hour by 2020 and would afterward be tied to increases in the consumer price index.

TIME Labor

New York Moves to Raise Minimum Wage for Fast Food Workers to $15 an Hour

Gov. Andrew Cuomo has made raising the minimum wage a personal mission

On behalf of New York Gov. Andrew Cuomo, a special panel—the Fast Food Wage Board—recommended that the state’s minimum wage for employees of fast-food chain restaurants be increased to $15 an hour. The previous minimum wage—enacted on December 31, 2014—for fast-food workers in New York City was $8.75 per hour; the new minimum wage represents a 70% increase.

Under the board’s recommendation, the wage would take effect first in New York City by 2018, then be expanded to the rest of the state. The decision will circumvent the state’s legislature and move straight to the New York state labor commissioner, where it is likely to be approved.

The decision follows that of other large cities that have moved to increase their minimum wages, such as Seattle, San Francisco, and Los Angeles. On Tuesday, the University of California moved to raise its hourly minimum wage to $15 per hour, affecting 3,200 of its 195,000 employees.

Cuomo has long advocated for the minimum wage hike, writing in an op-ed in The New York Times in May that “nowhere is the income gap more extreme and obnoxious than in the fast-food industry.”

MONEY Workplace

New York’s $15 Minimum Wage for Fast Food Workers Is The Latest Industry-Specific Hike

Protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg
Victor J. Blue—© 2015 Bloomberg Finance LP Protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015.

Minimum wages that target just one economic sector: they’re all the rage.

The ongoing push for higher wages in the United States has been piecemeal—state by state, city by city. On Wednesday, the New York State wage board took that incrementalism to the next level, recommending a new $15 per hour minimum wage just for the state’s fast food workers at restaurants with more than 30 locations.

While a final decision is pending (and likely to be a yes vote by the state labor commissioner), the board’s move brings the fast food worker protests full circle. Employees of fast food restaurants first walked off the job in New York City in November 2012 to demand higher wages, specifically $15 per hour. That single demonstration grew into coordinated strikes across the nation and ultimately reached a global scale. The wage board’s recommendation would give fast food workers in New York State a separate minimum wage for the first time. The $15 per hour pay—effective in New York City in 2019 and elsewhere in the state in July 2021—will be a 70% increase from fast food workers’ current minimum wage of $8.75, the statewide rate.

The new minimum wage is unique because it circumvents the legislative process—the state empowers the labor commissioner or a wage board to access whether pay for a particular job is sufficient—and because it contributes to a growing trend of minimum wage hikes that apply only to a specific sector of a state or city’s economy.

In September, the Los Angeles City Council approved an ordinance that gave workers at large L.A. hotels a minimum wage of $15.37 per hour. In June, some home health care aides in Massachusetts won a $15 per hour starting wage after five months of negotiations with Governor Charlie Baker’s administration.

“This is the low hanging fruit model,” says Tom Juravich, professor of labor studies at University of Massachusetts Amherst. “You work politically where you have opportunities.”

New York Governor Andrew Cuomo proposed raising the minimum wage for fast food workers in May with an op-ed in The New York Times. He wrote that “nowhere is the income gap more extreme and obnoxious than in the fast-food industry.” But Cuomo’s targeting of fast food workers through the wage board process came after the state legislature failed to support his effort to raise the overall minimum wage to $11.50 in New York City and $10.50 elsewhere in the state. (New York’s current minimum wage is set to increase from $8.75 to $9 at the end of the year.)

“These are strategic decisions by [worker] activists,” Juravich says. When they see a political opening, they take it. It’s a something-is-better-than-nothing approach. “It’s not that they’re saying other [workers] don’t deserve more money, it’s just that they have a foot in the door,” he says.

Once worker activists break down a door in one industry, they hope to go onto the next, Juravich says. That domino effect will get a jolt if—say a few years from now—an industry-specific minimum wage hike has not caused catastrophic consequences in terms of employment. In that sense, sectorial minimum wage hikes are just another aspect of the incremental movement for higher pay that’s sweeping the nation as a comprehensive wage hike fails at the federal level.

Right on cue, the Fight For $15 organization that’s backed by the SEIU released a statement Wednesday championing the wage board decision and announcing that it has protests scheduled to take place in Tampa and a few other cities on Thursday.

This article originally appeared on Fortune.

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TIME Wages

This Big Retailer Just Raised its Minimum Wage for U.S. Workers — Again

Richard Cadan Media Kitchen cabinet fronts made at Ikea’s factory in Älmhult.

Company is already reaping the benefits of the last pay hike

Last June, Ikea announced it would raise its hourly minimum wage in U.S. stores from $9.17 to $10.76, a 17.3% hike. Now, almost exactly one year later to the day, Ikea is doing it again.

The Swedish furniture giant says the pay will go up to $11.87, a 10% increase for Ikea and a whole $4.62 above the current U.S. federal minimum wage of $7.25. (There is a movement underway to bring that up to $12 by 2020.) The hike will take effect on the first day of 2016 and will have an impact on 30% of Ikea’s U.S. employees.

This is a smart business move by Ikea, which has been expanding globally at a rapid pace, and it is one that will inevitably reap good P.R. The last time around went well for the company: Rob Olson, Ikea’s U.S. CFO, told the Huffington Post that in the six months since the last hike, Ikea has had 5 percent less worker turnover and is already attracting better talent.

Ikea was one of Fortune’s Best Companies to Work For in 2006 and 2007, but then dropped off the list. Perhaps its continued attention to better worker wages will get it back on.

TIME States

Kentucky Raises Minimum Wage for State Workers, Urges Businesses To Do the Same

Steve Beshear
Timothy D. Easley—AP Kentucky Gov. Steve Beshear addresses the audience at the 50th annual Kentucky Country Ham Breakfast in Louisville, Ky., on July 19, 2015

The hike comes amid national calls for a minimum wage increase to $15 per hour

The hourly minimum wage for state workers in Kentucky is being raised from $7.25 to $10.10, Gov. Steve Beshear announced Monday.

The wage increase affects 510 state employees and will cost taxpayers $1.6 million. A third of the affected employees work in state nursing homes for military veterans, according to Beshear. Other wage changes include an increase of the hourly tipped minimum wage from $2.19 to $4.90. The policy will go into effect July 1.

Beshear took to Twitter to rigorously defend the new policy.

The increase for state employees sends a message to private business, says Beshear.

Beshear joins Democrat House Speaker Greg Stumbo and many of his party’s state representatives in his fight for higher minimum wages for Kentuckians. Rep. Stumbo has been advocating for legislation raising the minimum wage for all workers in Kentucky in recent legislative sessions. The bill has passed the Democratic controlled House but is facing opposition in the Republican senate. The hike comes amid national calls for a minimum wage increase to $15 per hour.

The movement has seen success in recent months, with $15 minimum wages having been established in Seattle, San Francisco and Los Angeles. The issue is also gaining the attention of 2016 presidential hopefuls; Hillary Clinton echoed wage activists in a speech delivered at a convention of low-wage workers in Detroit on Sunday, stating that she supports a $15 minimum wage.

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