McDonald’s, Like Target and Walmart, Raises Its Minimum Wage

In February, Walmart announced that it was raising its minimum wage to $9 an hour.

In March, Target announced that it was raising its minimum wage to $9 an hour.

Now, McDonald’s is announcing plans to raise its minimum wage to “an average of $9.90 an hour.”

The part in quotes is from the New York Times, which explains the minimum wage increase as follows:

McDonald’s announced on Wednesday that it would raise wages and offer new benefits to 90,000 employees in the 1,500 outlets in the United States that it owns and operates, responding to competitive pressure from a tighter job market and to labor campaigns drawing public attention to its pay policies.

The decision, however, does not affect the 750,000 employees who work for the more than 3,100 franchisees that operate roughly 12,500 McDonald’s restaurants around the country.

The company will increase wages to at least $1 over the local legal minimum wage for workers in restaurants under corporate control to an average of $9.90 an hour by July 1. That average will increase to more than $10 in 2016.

The distinction between corporate-owned McDonald’s and franchise-owned McDonald’s is important, because it’s also part of the argument that McDonald’s made when it sued the city of Seattle last month, arguing that franchisees did not have the resources to raise employee wages to $15/hr at the same rate as big corporations.

(To recap, because this is important: Seattle is mandating a $15/hr minimum wage, but giving businesses varying amounts of time to implement this wage. The city is assuming that big businesses should be able to give workers $15/hr within three years, and small businesses should be able to adjust expenses and budget for the $15/hr wage within seven years. McDonald’s is suing on the idea that its franchisees should count as small businesses, not big ones.)

I’m curious to know more about why corporate-owned McDonald’s can afford to raise wages and why franchises cannot. I know that franchise owners often front a lot of their own business expenses and franchises sometimes run on a very slim profit margin, but I still find some of the details confusing, so I’m hoping one of you will be able to fill us in.

I’ll end this with some information sent over from Fight For $15 that puts this McDonald’s minimum wage increase into perspective:

1. Half a million Walmart workers just won raises to $10, 456% more employees than are covered by McDonald’s announcement.

2. The increase applies only to workers at corporate stores, which means only about 10% of the company’s U.S. workers will see a change in their income. About 1.6 million workers worldwide will get a raise of $0.

3. Nearly everyone who works at McDonald’s will still get paid less than $10 an hour — not enough to pay the bills. And many will still be making far less. In many places, McDonald’s workers earn the federal minimum of $7.25, which means even those who will see an increase as a result of Wednesday’s publicity stunt will still be stuck trying to support families on $8.25 an hour.

4. The announcement came a day after McDonald’s and other fast-food workers announced plans for the biggest-ever strike to hit the fast-food industry — a 200-city walkout on April 15.

5. McDonald’s low wages cost taxpayers more than $1 billion a year. This won’t put a dent in that amount.

It sounds like the April 15 strike is going to be a big deal — I’ve already seen stories about it all over Facebook and the wider Internet — and I’ll be interested to see what happens.

Photo credit: Mike Mozart

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