Featured investigation / July 6, 2026

$25 minimum wage proposed. What happens to meal prices?

Use a meal-cost model to test whether a $25 wage floor would flow through to fast-food prices.

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Cost pass-through model

Interactive calculator

Open the calculator scenario

Question

How much labor-cost increase gets passed to consumers?

Claim being tested

Raising the minimum wage to $25 an hour would likely raise fast-food meal prices by almost 30% under a realistic labor-cost pass-through scenario. Average restaurant wages are around $13.50 per hour, and food-industry profit margins are thin, around 4%, which means a large wage shock has little room to be absorbed before it reaches customers.

The almost-30% claim is realistic under the model assumptions. Moving from a $13.50 average wage to a $25 wage is an 85% wage increase. If labor is roughly 35% of restaurant operating cost and profit margin is only about 4%, there is not enough profit cushion to absorb the shock. With full labor-cost pass-through, the modeled meal price rises by about 30%.

Competing story frames

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Worker affordability framing

Sen. Chris Murphy

Murphy introduces landmark bill to raise minimum wage to $25 nationwide

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Business cost framing

CT Insider

Editorial: Wage proposal going nowhere

Fact-based response

Why the numbers are plausible

The proposal phases in a $25 federal minimum wage over time, with a faster schedule for large employers and a longer one for smaller businesses.

The baseline uses a $13.50 current average wage, a $25 target wage, 35% labor share of restaurant cost, and a 4% profit margin.

That wage jump is roughly 85%. Applying it only to the labor share creates about 30% restaurant cost pressure before management responses.

Because the modeled profit margin is only 4%, absorbing the wage shock entirely through profits is not mathematically realistic for the average operator.

Restaurants could respond through higher prices, lower hours, staffing changes, automation, service fees, smaller portions, or closure. The calculator isolates the direct price-pass-through question.