Starbucks Predictably Increases Drink Prices Right After Big Wage Hike

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Starbucks coffee decided to raise prices on many of its drinks Tuesday, just one day after deciding to increase wages for all its employees nationally.

The famous chain of coffee shops has already increased prices by 10 to 30 cents for most drinks. The company notes that it made the decision while trying to balance customer value and increased operating costs. It has made similar decisions in July the past two years but this time it comes within a day of deciding to raise wages for all employees, MarketWatch first reported.

Starbucks announced Monday that it will increase wages for all employees nationally by five percent or greater by Oct. 3 “Depending on the market, customers will experience increases of 10 to 20 cents on select sizes of brewed coffee, and 10 to 30 cents on espresso beverages and tea lattes,” Starbucks detailed in a press release. “[We] believe that our approach to value properly balances the experience we provide customers with our need to effectively run our business.”

A Starbucks spokeswoman told The Daily Caller News Foundation the decisions to increase prices and wages are not related to each other. “The wage increases and beverage price increases are separate decisions based on distinct factors and long-range planning,” she said. “This kind of an investment will help us remain competitive, achieve our growth aspirations, and attract and retain the best talent in the industry.”
Nevertheless many economists have found that higher prices are a likely possibility from across the board wage increases like in the case of government mandated minimum wages.

Starbucks is not alone with several prominent service and retail companies increasing wages for their employees. Walmart, McDonald‘s, Gap, Target, and TJ Maxx, for instance, decided to raise their own minimum wage in 2015. Gravity Payments President Dan Price famously raised his own internal minimum wage to $70,000 only to be faced with financial difficultly later on.

Critics often argue that raising the minimum wage will result in less employment opportunities and reduced hours. The increased cost of labor is often too much for businesses to handle. Supporters counter that job loss is limited at best and the economic benefits of less people living in poverty outweigh any possible negative outcomes.

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