Indiana Minimum Wage Hike Leads to Massive Layoffs at Fast-Food Chain

The debate over the minimum wage often ignites passionate arguments among policymakers, economists, business owners, and workers. Advocates for increasing the minimum wage believe it would enhance the living standards of low-income workers, alleviate poverty, and stimulate economic growth. Conversely, opponents argue that such raises would inflate labor costs, diminish profits, and compel employers to slash jobs, hours, or benefits.

In this blog post, we delve into the ramifications of Indiana’s recent minimum wage hike, which escalated from $7.25 to $10 in 2024, particularly examining the substantial job cuts witnessed at a major fast-food chain and the ensuing impacts on workers, consumers, and the broader economy.

The Indiana Minimum Wage Increase

Indiana joined the ranks of 22 states that raised their minimum wage in 2024, following a nationwide trend. The state’s minimum wage had remained stagnant since 2009, mirroring the federal minimum of $7.25. Data from the Bureau of Labor Statistics indicated that in 2020, approximately 4% of Indiana’s workforce earned at or below the minimum wage, the highest proportion nationwide.

The Indiana legislation aimed to gradually elevate the minimum wage to $15 over four years, with incremental increases to $12 in 2025, $13 in 2026, $14 in 2027, and ultimately $15 in 2028. Additionally, the bill proposed mandatory overtime payment at one-and-a-half times the regular rate for hours exceeding 40 per week.

Motivated by the belief that the prevailing minimum wage failed to sustain a decent standard of living in Indiana, proponents pointed to data from MIT’s Living Wage Calculator. It indicated that a single adult in Marion County needed a minimum hourly wage of $13.39 to cover basic expenses, while a family of four required $28.71.

Despite facing opposition from business associations, certain political factions, and some economists, who cautioned against the potential adverse effects on the state’s economy, particularly for small enterprises and low-skilled laborers, the bill secured passage in the Indiana General Assembly in March 2024. Governor Eric Holcomb signed it into law in April 2024, with the initial increase from $7.25 to $10 taking effect on July 1, 2024.

The Fast-Food Industry’s Reaction

Among the sectors most affected by the minimum wage hike was the fast-food industry, which employed a substantial number of low-wage workers. According to the National Restaurant Association, Indiana housed over 11,000 fast-food outlets in 2020, engaging more than 200,000 workers at an average hourly wage of $9.62.

The hike presented a formidable challenge for fast-food chains, with labor costs soaring by over 20%. While some responded by adjusting prices, streamlining menus, investing in automation, or offering incentives to attract and retain staff, not all could weather the storm. Notably, Burger King, overseeing over 600 Indiana outlets and employing over 12,000 workers, attributed the wage hike to widespread layoffs affecting 40% of its workforce, alongside hour reductions and select closures.

The Implications for Workers, Consumers, and the Economy

The minimum wage hike elicited mixed consequences for workers, consumers, and the broader economy. While some workers welcomed the wage increase, enhancing their purchasing power and quality of life, others faced job losses, reduced hours, or diminished benefits, exacerbating financial strain. A study by the Indiana University Kelley School of Business estimated a net loss of 15,000 jobs in the fast-food sector in Indiana in 2024.

Consumers encountered higher prices and limited options at fast-food establishments, contributing to a 6.5% increase in food away from home prices in Indiana in 2024, compared to 3.2% in 2023. Consequently, some consumers sought alternatives such as cooking at home or patronizing other dining options.

The minimum wage hike also impacted the state’s economy, already grappling with the aftermath of the COVID-19 pandemic. Sales tax revenue from the food service and drinking places sector declined by 8.7% in 2024 compared to the previous year, while businesses relocated to neighboring states with lower labor costs, such as Kentucky and Ohio.


Indiana’s minimum wage hike aimed to uplift low-wage workers but produced unintended repercussions for workers, consumers, and businesses alike, particularly within the fast-food industry. The episode underscores the complexities and trade-offs inherent in setting minimum wage levels, emphasizing the need for a nuanced approach tailored to local conditions and economic dynamics.

Leave a Comment