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McDonald’s to raise hourly wages

McDonald’s to raise hourly wages

Increase to come amid growing pressure on quick-service operators to boost pay

McDonald’s Corp. plans to raise wages and benefits for employees at company-owned restaurants for both full-time and part-time workers, the company said Wednesday.

Starting in July, McDonald’s company-owned restaurants in the U.S. will pay employees at least $1 per hour more than the locally mandated minimum wage. And the wages of all workers, up to the restaurant manager position, will increase based on tenure and job performance. By the end of 2016, the company suggested that the average hourly pay for McDonald’s workers will top $10 an hour.

In addition, workers at company-owned restaurants with at least a year of service will start to accrue personal paid time off, even if they are part-time workers. For instance, an employee who works an average of 20 hours a week will accrue 20 hours of paid time off per year. Workers who don’t take their time off will be paid for the value of that time, the company said.

Oak Brook, Ill.-based McDonald’s employs 90,000 workers at its company-owned locations, and its U.S. restaurants comprise about 10 percent of its global system, the company said.

The company also said it will expand its Archways to Opportunities education program, to provide all 750,000 McDonald’s workers in the U.S. — including those at franchise restaurants — with free high school completion and college tuition assistance.

“We’ve been working on a comprehensive benefits package for our employees — the people who bring our brand to life for customers every day in our U.S. restaurants,” McDonald’s CEO Steve Easterbrook said in a statement. “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.”

The announcement came as the 35,000-unit chain is under growing pressure to increase wages and improve working conditions at its 14,000 U.S. restaurants. The announcement follows similar statements from retailers such as Walmart, Target and others about raising wages. They also come as a growing number of states increase the minimum wage.

At the same time, McDonald’s is fending off an effort by the National Labor Relations Board to classify the operator as a “joint employer” of workers at franchise outlets, which represent 80 percent of domestic locations. McDonald’s has long maintained that it does not control how much franchisees pay their workers. Its announcement Wednesday only affects company-owned locations.

McDonald’s said that its 3,100 franchisees “operate individual businesses and make their own decisions on pay and benefits for their employees.”

The move also appears unlikely to reduce pressure on the company from labor unions and other activists to increase wages.

Fight for $15, a group pushing quick-service restaurants to raise pay, which is backed by the Service Employees International Union, sent a statement from Kwanza Brooks, a McDonald’s worker in Charlotte, N.C., who is paid $7.25 an hour.

“Because we joined together and stood up, McDonald’s was forced to raise pay,” Brooks said in the statement. “Still, this is too little, too late 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. We’re going to keep fighting until we win $15 and union rights for all fast-food workers and our families.”

The company is also working to lift U.S. sales out of a two-year slump, including a 4-percent decline in same-store sales in February. The chain’s domestic systemwide sales fell 1.1 percent in 2014, its first decline in at least 30 years.

The chain is taking a more aggressive approach to boost sales, and under Easterbrook is testing previously established limits. For instance, next month McDonald’s will test all-day breakfast, an offering it had long resisted due to concerns over operational complexity.

At an investor conference last month, executives suggested that wages would be on the table as they sought to improve McDonald’s reputation.

“A big part of our turnaround agenda is what are we doing about our employment image and our employee relationships,” chief administrative officer Pete Bensen said.

“We are acting with a renewed sense of energy and purpose to turn our business around,” Easterbrook said in a statement. “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 McDonald’s restaurant experience. We’ll continue to evaluate opportunities that will make a difference for our people.”

Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze

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