WEST LAFAYETTE, Ind. – Boosting employee wages to $15 an hour at limited-service restaurants would lead to an estimated 4.3% increase in prices at those restaurants, according to a recent Purdue University School of Hospitality and Tourism Management study.

Researchers also examined the impact of limited-service restaurants offering health-care benefits and found that, due to current tax credits in the Affordable Care Act, there would be a minimal effect on prices at limited-service restaurants with fewer than 25 full-time employees. The study says increasing wages to $22 an hour, the average American private industry employee rate, according to the Bureau of Labor Statistics, would result in a 25% increase in menu prices.

"We wanted to find out what happens if foodservice employees' wages go up to $15 an hour and what happens if you take it to $22 an hour," said Richard Ghiselli, professor and head of the School of Hospitality and Tourism Management, in a press release. "Healthcare benefits are a little more complex. We did an analysis based on information at the time we started the study (2013). There were tax credits available then. With those tax credits available, giving full-time employees health insurance shouldn't affect businesses that much. When those tax credits expire, then it changes."

Employee turnover in the foodservice industry led to the study, Ghiselli explained. "Turnover has been one of the more troublesome problems to manage in the foodservice industry. In 2013, franchised establishments experienced a turnover rate of 93%," he said. "People often hypothesize that if you raise pay and offer benefits, turnover will go down. I don't think we answered the question of whether that reduces turnover, but the study showed that if you raise pay and offer health insurance, prices will go up."

Ghiselli said the study's results were close to what he expected and that there could potentially be other effects of raising wages and offering health benefits. "There were no surprises. We thought prices would go up. We just wanted to know how much they would go up if you raise pay and offer health insurance," he said. "The other way to look at this if you don't want to raise the prices is to examine the impact on product size. As expected, a hamburger would be much smaller."

The current federal minimum wage is $7.25 an hour. Some states and cities across the United States, including Illinois, Michigan and Ohio, have raised their respective minimum wage rates to more than $8 an hour. In the past two years, fast-food workers across the nation have gone on strike or had demonstrations calling for a living wage, including increases to $15 per hour.