McDonald’s Corp. plans to raise pay by more than 10 percent and add benefits such as paid vacation for workers at U.S. restaurants it operates — an effort to rejuvenate the struggling fast-food giant that offers fresh evidence of rising wage pressure in the American labor market.
Starting July 1, McDonald’s will pay at least $1 per hour more than the local legal minimum wage for employees at the roughly 1,500 restaurants it owns in the U.S. The increase, which McDonald’s said will apply to about 90,000 workers, will lift the average hourly rate for its U.S. restaurant employees to $9.90 on July 1 and more than $10 by the end of 2016, from $9.01 currently. McDonald’s also will enable workers to accrue up to five days of paid time off annually.
The changes come amid mounting criticism from labor groups over wages and conditions at McDonald’s and other fast-food chains. The move doesn’t apply to employees of the franchisees who operate nearly 90 percent of the 14,350 U.S. McDonald’s and set their own pay policies.
McDonald’s would not say how many company-owned stores there are in Colorado.
“Work is not done”
McDonald’s employee Andrew Olson of Aurora, who organizes local workers on behalf of the labor movement Fight for $15, said he has mixed feelings about Wednesday’s news.
“I’m really happy that they did. But … our work is not done,” he said. “Unless we get the franchise stores to follow suit, I wouldn’t call it a win.”
McDonald’s CEO Steve Easterbrook, who took over March 1, said the policy is a response to employee surveys and is key to plans to revive sales after more than two years of declines.
“Motivated teams deliver better customer service, and delivering better customer service in our restaurants is clearly going to be a vital part of our turnaround,” he said.
The move follows similar efforts by other major U.S. employers — including Walmart, which is raising hourly pay for 500,000 workers to at least $10 next year — and reflects wider public pressures over income inequity as well as intensifying competition for low-skilled workers.
“The underlying motivation is a response to market conditions,” said Patrick O’Keefe, an economist at CohnReznick. “The firms that have announced very publicly that they’re raising their entry wage are signaling that to attract the quality of labor they’re looking for, they have to be more competitive.”
The federal minimum wage of $7.25 an hour hasn’t increased since 2009, although 29 states have set minimums above the federal level, as have cities such as San Francisco, which requires pay of at least $11.05 an hour. Colorado’s minimum wage is $8.23 an hour.
The McDonald’s announcement is unlikely to satisfy its strongest critics, who have been calling for larger increases and demanding the company take responsibility for pay and other policies at its franchisees.
Fast Food Forward, a group backed by the Service Employees International Union, has helped organize nationwide protests at McDonald’s and other chains, demanding a $15 hourly minimum and the right to form a union without employer backlash.
McDonald’s said the protests weren’t a factor in its decision.
The move could put pressure for similar increases on McDonald’s franchisees, powerful stakeholders with whom the company carefully manages its relationships.
Tom Carlson Jr., who owns four McDonald’s locations in downtown Denver, including the 16th Street Mall store where Fight for $15 will protest Thursday, said he is constantly evaluating compensation packages to remain a competitive employer.
“Our restaurants’ average wage runs anywhere between $9 to $11 an hour,” he said. “We offer a competitive wage and benefits package consistent with the areas in which we do business.”
Denver Post staff reporter Laura Keeney contributed to this report.
