Wisconsin is one of the states that has not raised its minimum wage above the federal level of $7.25 per hour since 2009. However, some advocates and lawmakers have been pushing for a gradual increase to $15 per hour by 2025. They argue that raising the minimum wage would reduce poverty, boost consumer spending, and improve the quality of life for low-wage workers.
However, not everyone agrees with this proposal. Some critics and business owners claim that raising the minimum wage would hurt the economy, increase unemployment, and force small businesses to close or cut costs. One of the industries that would be most affected by a higher minimum wage is the fast-food sector, which employs many low-wage workers and operates on thin profit margins.
In this article, we will examine the case of Burger King, one of the largest fast-food chains in Wisconsin, and how it responded to the minimum wage hike that took effect in January 2024. We will also explore the impacts of the wage hike on the workers, the customers, and the state economy.
Burger King’s Response to the Minimum Wage Hike
Burger King, which has more than 200 locations in Wisconsin, announced in December 2023 that it would lay off 10% of its workforce, or about 1,500 employees, in response to the minimum wage hike that would take effect in January 2024. The company said that it could not afford to pay the higher labor costs without sacrificing its profitability and competitiveness.
The minimum wage hike in Wisconsin was part of a bill that passed the state legislature in November 2023, after years of debate and protests. The bill raised the minimum wage from $7.25 to $9.50 per hour in January 2024, and then to $11 per hour in 2025, $12.50 in 2026, $14 in 2027, and finally $15 in 2028. The bill also eliminated the lower minimum wage for tipped and opportunity employees, who previously earned $2.33 and $5.90 per hour, respectively.
Burger King’s decision to lay off workers was met with mixed reactions from the public. Some supported the company’s move, saying that it was a rational response to a government-imposed burden that would harm the economy and the consumers. Others criticized the company’s move, saying that it was a greedy and heartless act that would hurt the workers and their families.
Impacts of the Minimum Wage Hike on the Workers
The workers who were laid off by Burger King faced a difficult situation. Many of them had been working for the company for years, and relied on their wages to support themselves and their dependents. Some of them had no other skills or qualifications to find alternative jobs, especially in a tight labor market. Others had to take on multiple jobs or rely on public assistance to make ends meet.
The workers who remained employed by Burger King also faced challenges. Although they received a higher wage, they also had to work harder and longer hours, as the company reduced its staff and increased its productivity expectations. Some of them also reported lower tips, as the customers reduced their spending or switched to cheaper alternatives.
However, some workers also benefited from the minimum wage hike. They reported having more income, more purchasing power, and more dignity. They said that they could afford to pay their bills, save for their future, and enjoy a better quality of life. They also said that they felt more respected and valued by their employers and their customers.
Impacts of the Minimum Wage Hike on the Customers
The customers of Burger King also experienced the effects of the minimum wage hike. Some of them noticed that the prices of the menu items increased, as the company passed on some of the labor costs to the consumers. Some of them also noticed that the service quality and speed decreased, as the company operated with fewer workers and more automation.
Some customers reacted to these changes by reducing their frequency or amount of spending at Burger King, or by switching to other fast-food chains or restaurants that offered lower prices or better service. Some customers also expressed their dissatisfaction or frustration with the company or the workers, either verbally or through social media.
However, some customers also supported the minimum wage hike and its impacts on Burger King. They said that they were willing to pay more or wait longer for their food, as long as the workers received a fair and living wage. They said that they valued the workers’ well-being and happiness, and that they recognized the social and economic benefits of a higher minimum wage.
Impacts of the Minimum Wage Hike on the State Economy
The minimum wage hike in Wisconsin also had implications for the state economy. According to a study by the Economic Policy Institute, a progressive think tank, raising the minimum wage to $15 per hour by 2028 would increase the incomes of 1.3 million workers, or 38% of the state’s workforce, by an average of $4,000 per year. The study also estimated that the wage hike would generate $1.8 billion in additional consumer spending, create 10,000 new jobs, and reduce poverty by 17%.
However, according to a study by the Employment Policies Institute, a conservative think tank, raising the minimum wage to $15 per hour by 2028 would reduce the employment of 129,000 workers, or 4.1% of the state’s workforce, by 2028. The study also projected that the wage hike would increase the prices of goods and services by 4.5%, reduce the state’s economic output by $5.8 billion, and increase the state’s budget deficit by $1.1 billion.
The actual impacts of the minimum wage hike on the state economy are likely to depend on various factors, such as the responses of the employers, the workers, and the consumers, the availability and cost of substitutes and complements, the degree and direction of spillover effects, and the interactions and feedback loops among different sectors and regions.
Conclusion
In conclusion, Wisconsin’s minimum wage hike in 2024 led to massive layoffs at Burger King, one of the largest fast-food chains in the state. The company said that it could not afford the higher labor costs without sacrificing its profitability and competitiveness. The wage hike also had impacts on the workers, the customers, and the state economy, both positive and negative, depending on the perspective and the outcome.
The minimum wage hike was a controversial and complex issue, with no clear-cut or simple solution. It involved trade-offs and uncertainties, as well as values and preferences. It also reflected the broader and deeper challenges and opportunities of the state and the nation in the 21st century.