The Cost of $15: Nearly A Half-Million Jobs

On Thursday, labor union-backed protesters will “strike” at over 100 fast food restaurants around the country–the third such coordinated national action this year.

The Employment Policies Institute has taken out a series of full page ads in USA Today and The Wall Street Journal, warning that a $15 minimum wage would force employers to replace jobs with less costly, automated alternatives–including self-service ordering kiosks and even automatic burger makers.

The exact number of lost opportunities is difficult to quantify, since the service industry has never shouldered a minimum wage increase of this magnitude. (The jump from the current minimum wage of $7.25 an hour up to $15 an hour is a 107 percent increase.)
Still, past research on the minimum wage provides a range of employment estimates to estimate the effects of this proposal.

Eighty-five percent of the most credible studies on the subject from the last two decades point to job losses following an increase in the minimum wage, and this consensus has only been strengthened in recent years. The “consensus” effect of the minimum wage on employment is one to three percent, although studies focusing on specific industries or small businesses have found even larger effects in the range of five to nine percent.

EPI analyzed Census Bureau data from January 2012 through October 2013, focusing on fast food workers in all 50 states that would be affected by a wage increase to $15 an hour. Approximately 2.5 million workers nationwide fit this description. Using the conservative assumption that affected employment falls by three percent for each ten percent minimum wage increase, we find that roughly 460,000 jobs would be lost in the fast food industry as a consequence of a $15 minimum wage.

This is a conservative estimate because it only includes employment loss among those who hold a fast food job as their primary employment. Including those who work in the industry as a second job would increase the estimates below.

Just over one-third of those lost jobs would be concentrated in five states: California, New York, Texas, Florida, and Pennsylvania. The full list of lost fast-food jobs, separated by state, is available below.

Fast Food Job Loss By State, $15 Minimum Wage
UNITED STATES-459,438
CALIFORNIA-50,063
TEXAS-48,965
NEW YORK-23,637
FLORIDA-23,433
PENNSYLVANIA-21,280
NORTH CAROLINA-20,022
MICHIGAN-17,236
GEORGIA-16,360
ILLINOIS-15,585
OHIO-14,563
INDIANA-13,119
WISCONSIN-11,792
VIRGINIA-11,367
NEW JERSEY-10,933
TENNESSEE-9,659
SOUTH CAROLINA-9,548
MISSOURI-8,986
KENTUCKY-8,200
ALABAMA-8,065
ARIZONA-8,010
MINNESOTA-7,968
LOUISIANA-7,500
MARYLAND-7,444
MASSACHUSETTS-7,368
COLORADO-6,611
IOWA-5,980
OKLAHOMA-5,959
ARKANSAS-5,443
UTAH-4,772
KANSAS-4,696
WASHINGTON-4,323
MISSISSIPPI-3,810
NEW MEXICO-3,602
OREGON-3,377
NEBRASKA-3,119
CONNECTICUT-3,007
NEVADA-2,801
WEST VIRGINIA-2,475
IDAHO-2,471
HAWAII-2,232
MAINE-2,067
NEW HAMPSHIRE-1,990
RHODE ISLAND-1,855
MONTANA-1,592
DELAWARE-1,374
SOUTH DAKOTA-1,357
WYOMING-930
NORTH DAKOTA-824
DISTRICT OF COLUMBIA-588
ALASKA-552
VERMONT-530

Methodology: Source is the January 2012 to October 2013 Current Population Survey Outgoing Rotation Group files (CPS ORG).

The sample is restricted to private wage and salary workers in the  restaurants and other food services industry. Employment in limited services eating places was calculated by multiplying the sample weight in the CPS ORG for workers in the restaurants and other food services industry by 0.4447, which is the share of restaurants and other food services industry employment in limited services eating places, which was derived from Occupational Employment Statistics data.