4 Ways Raising Fast-Food Workers’ Wages May Hurt the Economy

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As the debate over a wage hike for fast-food workers rages on, it is clear that while any increase would benefit the employee, its impact on the greater economy is not as apparent. Here are four ways that additional compensation for workers in the quick service restaurant industry could hurt the market.

1. Wage Increases Might Mean Fewer Food Choices for Soldiers

As first reported in The Fiscal Times, hundreds of fast food restaurants on military bases could close next year due to a rise in pay and benefits mandated by two federal regulations that will affect those working on Navy and Marine Corps installations. The first is a revision to the Department of Labor’s health and welfare rate for federal workers, dictating that they receive wages comparable to similar positions in the vicinity. This means that military base workers at chains such as McDonald’s (NYSE:MCD) in Washington state, which has the highest minimum wage in the U.S. at $9.32 per hour, will receive the same pay and could force fast-food chains on installations to close.

The other raise starts in 2015, when the executive order President Obama signed last February increases minimum wages for federal workers to $10.10 to adjust for inflation. McDonald’s has closed three establishments on military bases ahead of the pay raises and 390 more fast-food restaurants could shut down as well, resulting in a possible loss of 5,750 jobs. If no new establishments replace the ones that close, it might reduce the food choices service members and their families have, lowering morale.

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