Some of this nation’s biggest retailers and fast-food establishments are raising minimum wages in the wake of protests by workers and their advocates that have risen along with a robust jobs market.
McDonald’s this week became the latest major company to give at least a portion of its workers an average hourly pay boost to $9.90 from $9.01. The move, which has drawn criticism for not going far enough, will go into effect on July 1. It follows a similar wage lift in February by Walmart, the nation’s largest private employer.
Walmart stores are raising hourly pay for 500,000 workers to at least $10 next year. The trend in higher wages initiated by the private sector, as opposed to federal or local governments, reflects more widespread public pressure over income inequality, and growing competition for low-skilled workers.
In the case of McDonald’s, its pay increase doesn’t apply to employees of franchisees, which operate about 90 percent of the 14,350 U.S. McDonald’s stores. This omission is the subject of much of the criticism against the fast food giant. The raise applies to some 90,000 workers at all levels of experience and rank at company-owned restaurants. The move will raise the average hourly rate to $9.90 on July 1, and more than $10 by the end of 2016 — from the current $9.01.
The pay increases come after several years of wages barely keeping up with inflation. McDonald’s executives say the wage hike is not a result of protests but a new policy that is more responsive to the needs of employees and part of a strategy to boost lagging sales after more than two years of declines — due mostly to growing competition in the fast — or not-so-fast — food business.
The federal minimum wage of $7.25 an hour hasn’t changed since 2009, although 29 states have set minimums above the federal level, as have cities such as San Francisco, which requires pay of at least $11.05 an hour, and Seattle, which just had its new $15 an hour minimum wage go into effect this week, the highest city-wide minimum in the country.
‘Good Corporate Citizens’
“We’ve known for a really long time that if you look like a good corporate citizen, that’s good for sales,” Bob Keener, spokesman for the nonprofit Business for a Fair Minimum Wage, told The Huffington Post. “If you make a big public announcement about how you’re going to raise wages, you look like a good corporate citizen, and that’s going to increase your sales.”
Competition among thise corporate players are driving wages upward. As the U.S. economy adds more jobs, even retailers who have boasted in the past that payrolls are low to help keep prices low will have to increase wages to avoid losing good workers, and to avoid losing the public trust.
For every additional $1 a company spends each month in wages, it could see anywhere from $4 to $28 in monthly sales increases, according to a 2007 study by professors at the Massachusetts Institute of Technology, the University of Pennsylvania’s Wharton School and elsewhere.