McDonald’s Pledges to Raise Minimum Pay

All company-owned locations in the U.S. will pay at least $1 over local minimum wage.

April 03, 2015

DES PLAINES, Ill. – McDonald’s announced this week that it will raise wages at the roughly 1,500 restaurants it owns in the U.S. beginning July 1. The new policy, which guarantees that the company will pay at least $1 an hour more than the local minimum wage, only applies to company-owned locations, not franchisees, however.

The wage increase will apply to approximately 90,000 workers at all levels of experience and rank at company-owned restaurants, lift the average hourly rate to $9.90 on July 1, and to more than $10 by the end of 2016. The announcement 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 inequality as well as intensifying competition for low-skilled workers. McDonald’s said the move is its first unilateral, across-the-board pay increase for restaurant workers.

Labor groups have grown increasingly vocal in their criticism of wages and conditions at McDonald’s and other fast-food chains, but the company said recent protests weren’t a factor in its decision. Average hourly earnings for non-manager employees at limited-service restaurants like McDonald’s rose to $9.54 an hour in January, up 3.5% from a year earlier, according to Labor Department data, well above the 2.2% pace for all private-sector workers.

In addition to the wage increase, McDonald’s said it will enable workers after a year of employment to accrue up to five days of paid time-off annually. The company also plans to make subsidies for some education costs available to all 750,000 U.S. workers, including at franchisees.

Even though it doesn’t apply to franchised restaurants – which make up almost 90% of the company’s U.S. locations – the pay raise also could upset franchisees, many of whom feel pressure to match McDonald’s in order to remain competitive.

If you are wondering what increases in the minimum wage could mean for your business, NACS has created an online Minimum Wage Labor Cost Calculator, available here.

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