McDonald’s Is Raising Wages For Its Workers, But There’s A Catch

April 2, 2015  |  

McDonald’s is promising a raise to 90,000 of its workers totaling at least $1 more than the local minimum wage. That will make the average wage $9.90 on July 1 of this year and more than $10 by next year. The current average is $9.01.

But there’s a catch: This raise only applies to those workers at restaurants that are operated by McDonald’s. Franchisees are exempt. McDonald’s operates 90 percent of all 14,350 US restaurants. The national minimum wage is $7.25 per hour.

“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,” said the company’s new CEO, Steve Easterbrook, in an interview with The Wall Street Journal.

Faced with competition from fast-casual restaurants like Chipotle and changing American tastes, which now favor healthier fare, McD’s has seen a slump in its business. Revenue last year fell two percent to $27.4 billion and numbers have been sliding for the past couple of years. To remedy the situation, the company has been working hard at its marketing, has plans to redesign restaurants, and is trimming its menu, which some say had become an unwieldy melting pot of too many items.

Faced with ongoing protest over low wages, this move is the first time the company has raised wages on a broad scale, says the WSJ. Wal-Mart and Target, for instance, already announced pay raises.

“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,” Patrick O’Keefe, an economist at CohnReznick LLC and a former Labor Department official, told the Journal.

With that in mind, even if franchisees aren’t on board now, they might be forced to raise their game to maintain standards.

“McDonald’s will also let workers at non-franchised locations who have been with the company for more than a year earn up to five days of paid time off each year,” reports The Huffington Post. Plus, the fast food giant will also foot the bill for workers to earn a high school diploma and plans to offer some college tuition assistance. Franchise workers can also take advantage of the educational benefits, but will not be given the paid time off.

“We’ve been working on a comprehensive benefits package for our employees — the people who bring our brand to life for customers every day in our U.S. restaurants,” Easterbrook said in a statement. “We’ve listened to our employees and learned that — in addition to increased wages — paid personal leave and financial assistance for completing their education would make a real different in their careers and lives.”

Here’s a clip from CBS This Morning in which Easterbrook talks about the goings-on at McDonald’s.

Additional contribution by Ann Brown.

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