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 The pressure comes at a particularly difficult time for the world's
biggest fast-food chain. McDonald's and its roughly 3,000 U.S.
franchisees are fighting to break a long streak of lackluster sales
that has made it virtually impossible to boost prices on its famous
hamburgers and french fries to cover higher labor costs.
McDonald's declined comment. It referred reporters to a December
statement saying that franchisees set wages for roughly 90 percent
of the chain's more than 14,000 U.S. restaurants. McDonald's Corp
says it can increase pay only in the small number of restaurants it
operates.
Wal-Mart on Thursday said it would increase entry-level pay to $9 an
hour, a move it estimated would cost $1 billion and affect some
500,000 employees.
Gary Chaison, professor of industrial relations at Clark University
in Worcester, Massachusetts, said there is substantial overlap
between fast-food and Wal-Mart workers in smaller communities.
"They are going to have to raise their wages," Chaison said of the
fast-food chains in those locations. "They cannot afford to be
unstaffed."
Wal-Mart, the world's biggest retailer, and McDonald's have been the
target of frequent protests by union-supported hourly workers
demanding that their pay be increased to $15 per hour from an
average that is closer to the federal minimum wage of $7.25 per
hour.
While supporters of those campaigns declared victory following
Thursday's Wal-Mart announcement, economists said it reflected an
improving U.S. economy that has added more than a million jobs over
the past three months, a performance unmatched since the late 1990s.
"It's finally happening. The strengthening economy is putting some
upward pressure on wages," said Wally Hopp, a professor at the
University of Michigan's Ross School of Business.
"For the first time in five or six years you're seeing 'Now Hiring'
signs" in fast-food restaurants, said Richard Adams, a former
McDonald's franchisee who is now an adviser.
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Adams and others said that in most parts of the United States
Wal-Mart tends to attract older, more seasoned employees than
McDonald's, which mainly competes with other fast-food chains for
younger, entry-level workers.
Experienced fast-food workers would be the most likely to see their
pay rise over time as employers seeking to boost productivity and
service quality fight over them, he said.
McDonald's executives last month warned that labor-related costs
would grow "a little faster than normal" and squeeze profits in
2015, due to state and local minimum wage increases and new federal
healthcare costs.
But while more experienced McDonald's workers may see their wages
rise, Allen Sanderson, a senior lecturer in economics at the
University of Chicago, said entry-level fast-food workers face dim
prospects for wage hikes.
"If somebody quits, they can hire somebody else and teach them to
make french fries in an hour," he said.
(Additional reporting by Nathan Layne in Chicago; Editing by Leslie
Adler)
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