McDonald’s Issues Shallow Wage Increase

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Wednesday of this week McDonald’s decided to announce a hike in their wages this week, but only by around $1, causing an outcry from various corners of the internet. McDonald’s was under pressure from several outside groups to raise wages, but their move doesn’t seem to be enough to soothe complaints.

Wages are rising throughout the restaurant industry, as we’ve mentioned before, though Congress has done little to mandate these increases. And it’s likely the labor competition will continue to drive up wages, since job growth in this area is steady.

American employers added around 300,000 jobs in February for this year, and restaurants are seeing an even higher growth trajectory. Total employment growth hovers around 2.4 percent, while restaurants have seen a 4.3 percent increase.

The wage increase will, obviously, increase labor costs for McDonald’s. The company plans to phase in the increase in beginning in July, and it will cost the chain around $78 million a year in total thereafter.

Over on, Panos Mourdoukoutas argues that the people who will be most directly affected by the wage increases are employees at franchises of McDonald’s. If those franchises elect to increase wages along with their parent company, he says, many of them will go out of business and be forced to lay off employees.

While wage hikes are generally a good thing for employees, this may be a case of too little too late—or it may wind up coming back to bite McDonald’s and their franchisees.

Are you considering wage increases this year? If so, by how much?

Full story here: McDonald's Wage Increase Signals Higher Labor Costs