McDonald's will raise its minimum wage to an average of $9.90 by July 1, up from $9.01, in advance of a planned wave of strikes on April 15 by fast-food workers demanding better pay and working conditions.
The move will cover roughly 90,000 people across its 1,500 company-owned locations in the United States, the company announced today. That doesn't include the 90 percent of McDonald's 14,350 locations that are franchised, and the company can't dictate wage hikes at those employers, but it's possible that franchisees could follow suit.
The federal minimum wage is still $7.25, although more states and cities have been raising their own minimum wages in recent months. Major employers have also acted on their own this year to raise wages, including Walmart, T.J. Maxx, and Target, which some economists have interpreted as evidence that demand for service workers is finally outstripping supply. Unlike those retailers, which set an initial floor of $9 an hour, McDonald's will instead set its minimum at $1 above the local minimum wage wherever the employee works.
Such employee-friendly moves often come in the wake of leadership shakeups, and McDonald's is no exception. Chief executive Steve Easterbrook took over on March 1. Last year was one of its worst in decades, and the new management promised to reinvent the chain as a "modern, progressive burger company."
"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 difference in their careers and lives," Easterbrook said in a statement. “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.”
McDonald's will also allow workers to accrue up to five days of paid time off after one year of service, which has recently been the subject of a major push by the Obama administration and Congressional Democrats. The company will expand access to its free high school completion and college tuition assistance programs.
The announcement comes after a years-long movement by the Fast Food Workers Campaign, which is backed by the Service Employees International Union. Disclosures filed last night revealed that in 2014 the union spent $3.8 million on the Fast Food Workers Committee, which has orchestrated protests and organizing across the country, as well as $1.3 million on hiring Berlin Rosen, a public relations firm that has handled much of the public outreach.
Walmart's wage hike also happened after an organizing campaign backed by the United Food and Commercial Workers union, and may have been partly an attempt to take the air out of a demand for unionization. McDonalds is more insulated against union drives, because of its franchised structure -- which is why the fast food workers campaign has a parallel legal strategy to designate McDonald's as a "joint employer," which would allow for unionization on a national scale. McDonalds has been fighting hard on both fronts, but unlike SEIU, it does not have to disclose how much it is spending to do so.
The fast food workers campaign criticized McDonalds' move, and vowed not to let it stem the wave of protests.
“Because we joined together and stood up, McDonald’s was forced to raise pay," said Kwanza Brooks, a McDonald's worker from Charlotte, N.C., who makes $7.25 an hour, in a statement provided by Berlin Rosen.
"Still, this is too little to make a real difference, and covers only a fraction of workers. It’s a weak move for a company that made $5.6 billion in profits last year," Brooks said. "We’re going to keep fighting until we win $15 and the right to join together in a union for all fast-food workers and our families."
It's true that a dollar raise tends to be too small to make meaningful economic differences in workers' lives. An analysis by Americans for Tax Fairness found that Walmart's raise would be insufficient to move most of its employees off public assistance programs like food stamps; the same is likely true of McDonalds' move.
McDonalds has argued that as a franchisor -- and not a joint employer -- it can't tell its franchisees how much to pay workers. Raising wages only at its company-owned stores may serve to highlight its lack of control over working conditions at franchised locations.
And indeed, it may prove more difficult for the franchisees to raise wages than the company-owned stores, since they also bear the cost of a franchise fee that amounts to 4 percent of their sales, and a real estate fee that can range upwards of 8.5 percent of sales.
This article has been updated and corrected to reflect the accurate number of U.S. franchises.