McDonald's raises minimum pay at corporate-owned stores across the US, as the battle for workers heats up
- McDonald's is going to start paying workers more.
- The move comes as restaurants struggle to hire workers.
- "Together with our franchisees, we face a challenging hiring environment," said executive Joe Erlinger.
McDonald's is raising its minimum wage in corporate-owned stores, as fast-food chains struggle to hire employees.
On Thursday, the fast-food giant announced it is rolling out pay increases at corporate-owned locations, which will shift entry level pay for crew to at least $11 to $17 per hour. The starting range for shift manager will be at least $15 to $20 per hour, based on restaurant location.
According to the company, the pay increases - which have already started and will roll out over the next several months - will boost workers' pay by an average of 10 percent. The company is aiming to hire 10,000 employees in the next three months at company-owned locations.
Ultimately, the company said average hourly pay will reach $15 per hour, using a "market-by-market approach." In a press release, the company said some restaurants have or will reach an average hourly minimum wage of $15 per hour this year, with average hourly wages expected to reach $15 an hour by 2024.
The higher pay will impact employees at corporate-owned locations, which make up roughly 5% of total US restaurants or about 650 locations. At the vast majority of locations, franchisees decide workers' wages, along with other policies related to hiring and firing.
"Together with our franchisees, we face a challenging hiring environment, and staying ahead means we must constantly renew our commitment to offer one of the leading employment packages in the industry," McDonald's US president Joe Erlinger said in a message sent to U.S. employees and franchisees seen by Insider.
"The existing programs at company-owned restaurants, and these moves, are intended to ensure our company-owned restaurants continue competing for the talent we need, while also recognizing the hard work of our crew and managers," Erlinger continued. "Simply put: putting our people first and doing the right thing for them will drive continued growth for our business."
McDonald's executives hinted that the company was considering increasing pay in a recent call with investors, when discussing what CEO Chris Kempczinski called a "very tight labor market."
"We're working through what some changes in our company-owned restaurants might look like from a wages-and-compensation perspective," said Joe Erlinger, the company's US president.
"We think the external environment is right to do this," Erlinger continued. "We think the internal environment is also right to do this. And we think it's actually a great business decision for us."
McDonald's workers recently announced plans to strike in 15 cities on May 19, demanding that employees make a minimum of $15 per hour. The fast-food giant has been a frequent target of the Service Employees International Union-backed Fight for $15 movement since 2012.
"We know McDonald's can afford to raise pay to $15/hr for every single employee, not just some employees at corporate-owned and operated stores," Fight for $15 said in a statement on Thursday. "We're ready to continue our fight to win $15 for every worker across the country. "
"Last year, in the middle of a global pandemic, McDonald's made $5 billion and gave billions to its shareholders - all while workers like me risked our lives to keep stores running for less than $15/hr," Hakim Dumkia, a worker in St. Louis, recently said. "I can't afford to wait any longer for a raise."
"I plan to go on strike to say to McDonald's: don't wait for politicians in Washington to pay us what we need to survive," Dumkia continued. "We supported McDonald's through the pandemic, and now you need to pay us enough to support our families and our communities."
The pressure is on for fast-food giants to raise wages
Employers across the industry are being forced to add new benefits and raise wages as restaurants struggle to hire employees. On Monday, Chipotle - which is not a franchise - announced it is raising wages to an average of $15 per hour. Starbucks announced in December that it would raise its minimum across the US to $15 per hour over the next three years.
In a recent letter to members, the board of independent McDonald's franchisee group National Owners Association wrote that McDonald's has been working with franchisees to discuss how to best retain workers.
"We want to be the employer of first choice in our industry," reads the NOA letter, which was obtained by Insider. "The proposal allows for Owner control and discretion. One size doesn't fit all."
The NOA board wrote that higher wages would likely translate to more expensive menu items, a common practice in the restaurant industry.
"Inflation is the flip side to all of these changes," the letter said. "Price increases are happening everywhere you look and will continue as employers pass along these added costs. We will do the same. A Big Mac will get more expensive."
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There's a simple solution for companies struggling to hire: Pay workers more