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Your Starbucks coffee is getting more expensive — and wage hikes are to blame

AP Photo/Elise Amendola, File

AP Photo/Elise Amendola, File

You thought Starbucks couldn’t charge any more for a cup of coffee — but you’re wrong.

Drinks increased by as much as 30 cents this week. Brewed coffee prices are up by 10-20 cents and espresso and tea latte drinks are 10-30 cents more, according to a statement on the Starbucks website.

Why?

On Monday, Starbucks announced it’s raising wages for its U.S. employees by anywhere from 5 to 15 percent, beginning in October. A letter from CEO Howard Schultz informed employees about the wage increase, along with an expansion of health care options, and doubling stock rewards for employees who have worked at the company for two years.

“Effective October 3, all partners and store managers in U.S. company-operated stores will receive an increase in base pay of 5% or greater,” Schultz said. “The range of increase will be determined by geographic and market factors and is intended to ensure Starbucks remains a retail employer of choice in all the markets where we operate.”

This means a wage increase for approximately 150,000 workers.

The very next day, Starbucks announced the prices increases.

The wave of minimum wage hikes this year have forced many cities and states to raise wages, and businesses and consumers across the country are starting to feel the effects.

Smaller coffee shops that are forced to raise employee wages will have to raise their prices as well.

“Starbucks has a higher profit margin at 14.4 percent, so Starbucks may be in a better position to raise prices,” economics professor and AEI scholar Mark Perry told The Fiscal Times. “But Dunkin’ Donuts is very price-competitive. They could get squeezed from these wage pressures that can’t really be offset by price increases.”

If Dunkin’ Donuts is going to struggle to profit under new minimum wage requirements, there’s no doubt that many smaller chains will be forced to go out of business altogether.


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