McDonald's also joins the raising pay trend and the company is planning to raise pay for of 90,000 US employees starting on July 1, 2015. The rising pays will not include franchises of the fast food chain.
McDonald’s Corporation has decided to raise the wages of its employees by more than 10%. However this raise is only for the U.S restaurants and not the franchises. This comes due to the rising wage pressure in the American labor market. So from July 1st McDonald’s will start to pay at least $1 an hour more than the local minimum wage for its employees at the U.S restaurants that it owns. McDonald’s has around 1500 restaurants in the U.S.
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This move is because similar other major U.S employers have also raised the minimum wage for their workers. Employers such as Wal-Mart Stores Inc. have announced to raise the hourly pay for its 500,000 workers to at least $10 next year. This reflects the wide public pressure that is rising in the U.S over income inequality.
However the employees working at the McDonald’s franchises in U.S this raise will not apply. Even though franchises operate nearly 90 percent of the 14350 U.S McDonald’s restaurants, the McDonald’s Corporation has decided not to give a raise to these employees.
This means that the company will only be raising the wage of around 90,000 workers at all levels of experience and rank at company-owned restaurants. The average hourly rate will increase to $9.90 from July 1 and more than $10 by the end of 2016. The current wage rate is $9.01.
The CEO of McDonald’s Steve Easterbrook who took over on March 1 stated to WSJ that this policy is basically a response to employee surveys and is central to the company’s plans to revive sales after more than two years of decline.
Mr. Steve stated that motivated teams are capable of delivering better customer service and delivering better customer service is the vital part of the company’s turnaround. Apart from this labor groups in the U.S have grown quite vocal in their demands and criticism of wages and conditions at McDonald’s and even other fast food chains.
However the company denies that the recent protests were the reason for the company to raise the wages. This increase in wages could most probably reflect some payback after several years of wages barely keeping pace with inflation. Economist Patrick O’Keefe stated that better pay among lower-skilled workers has the potential to bubble up through the economy.
This means that raising the starting wage will obviously increase wages of the other employees within a given company as well. Plus more money in workers pockets means they have more to spend and this will increase demand and consumer spending will increase which will basically lead to overall economic expansion.
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Apart from McDonald’s other restaurants have also stated that they are going to increase their wages as well. Even though McDonald’s has increased its wage rate many critics are still not happy and they want to see a much higher rise in the wage rate.