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 Workers groups said the move by McDonald's, which is also adding
benefits such as paid vacations, fell short of their goals. They
planned a nationwide protest for Thursday. Wal-Mart Stores Inc <WMT.N>
and other retailers have introduced entry-level wage hikes in
response to frequent worker protests calling for higher pay and
better conditions.
McDonald's, which announced the increases on Wednesday, has been
fighting weak traffic and slumping sales in the United States.
The pay increase, for workers at roughly 1,500 company-owned U.S.
restaurants, will take effect on July 1.
Starting wages at the restaurants will move to $1 above the locally
mandated minimum wage. The increase will take the average hourly
rate for those workers to $9.90 on July 1, up from $9.01 currently,
McDonald's said.
By the end of 2016, McDonald's said, the average hourly wage rate
for McDonald's employees at those restaurants will exceed $10.
Almost 90 percent of McDonald's more than 14,000 U.S. restaurants
are operated by franchisees, who set pay and benefits for their own
workers. But the expectation is they will face pressure to follow
suit to stay competitive as employers.
McDonald's also said that full- and part-time crew employees at
company-operated restaurants, with at least one year of service,
will begin to accrue personal paid time-off. Workers said the
company does not currently offer paid time-off.
Beyond that, some employees at both company- and franchise-run
stores will be eligible for education assistance.
"We know that a motivated workforce leads to better customer
service, so we believe this initial step not only benefits our
employees, it will improve the McDonald's restaurant experience,"
Steve Easterbrook, who became McDonald's chief executive on March 1,
said in a statement.
The wage move quickly drew criticism.
"This is too little to make a real difference, and covers only a
fraction of workers," Kwanza Brooks, a McDonald's worker from
Charlotte, North Carolina, who earns $7.25 per hour, said in a
statement.
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Brooks is part of the union-supported "Fight for $15" movement,
which is calling on employers to more than double wages above the
federal minimum wage of $7.25. The group plans a nationwide protest
at McDonald's restaurants on Thursday.
Shares of McDonald's, whose annual profit and revenue fell last
year, were essentially flat at $96.29 in extended trading.
The wage increase at McDonald's company-run restaurants could force
franchisees to follow. In turn, that could cause those franchisees
to raise food prices to cover higher labor costs.
That could benefit McDonald's because it collects royalties from
franchisees based on sales. But, it also could squeeze franchisee
profits and threaten the company's Dollar Menu, which is popular
with the chain's core base of lower-income diners.
Bigger sales from price increases means more revenue to McDonald's
Corp, which could solve some of the company's problems and make
Easterbrook look like he is fixing things, said Richard Adams, a
former McDonald's franchisee who now consults for current ones.
"They'll try to paint this as altruistic," said Adams. "It's not as
nice as it sounds."
(Reporting by Lisa Baertlein, additional reporting by Edwin Chan in
San Francisco; Editing by Chris Reese, Jonathan Oatis and Steve
Orlofsky)
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