Economy

You Will Earn at Least $21 an Hour at McDonald's in This Country

April 6th 2015

By:
Laura Donovan

Earlier this week, McDonald's announced that it would raise average worker pay from $9 to $9.90 an hour on July 1 and add benefits like paid vacation. This may seem like progress considering the chain's low pay was the subject of nationwide protests in December. But this increase raises a bigger question: Why are American McDonald's workers paid so much less than McDonald's workers in other countries?

Take Denmark. In Denmark, McDonald's workers can earn up to $21 an hour, with the average full-time employee making $45,000 a year before taxes.

Louise Marie Rantzau, a Danish McDonald's worker, wrote a piece for Reuters last year arguing for better wages for her American counterparts.

"Employees younger than 18 make at least $15 — meaning teenagers working at McDonald’s in Denmark make more than two times what many adults in America earn working at the Golden Arches," she wrote. "To anyone who says that fast-food jobs can’t be good jobs, I would answer that mine isn’t bad."

Well, the food probably costs more in Denmark, you're probably saying. But not really: the average price of a Denmark Big Mac is $5.38, less than a dollar more than the U.S. average of $4.79.

So why are American McDonald's workers getting the short end of the stick compared to workers in Denmark?

According to The New York Times, Denmark doesn't have a minimum wage law, but fast food workers must make at least $20 an hour due to an agreement between Denmark’s largest union and Danish employers organization Horesta. As CJR's Ryan Chittum pointed out, the result is that, even after Denmark's high taxes, Danish McDonald's workers take home about $28,000 a year -- still around twice as much as the average full-time, American McDonald's worker earns annually.

"How can fast-food companies expect employees to work hard but not pay them enough to live on?" Rantzau wrote. "All fast-food workers should be able to support themselves while helping large companies like McDonald’s make huge profits."

Denmark's McDonald's workers also receive five weeks of paid vacation, something that is a luxury in the United States.

Steadily increasing wages could lead to happier workers and thus lower turnover costs. This might be true in Denmark, according to the New York Times. While the industry doesn't have hard numbers on retention, HMSHost Denmark, Copenhagen Airport's fast food management, guesses that roughly 70 percent of its Burger King and Starbucks workers decide to keep their jobs for more than a year. In the U.S., McDonald's workers are much less likely to stay that long, according to an internal study that found workers averaged just eight months on the job.

Critics counter that fast food restaurants in Denmark are less profitable than those in the United States -- something that makes sense given the similar prices offered by McDonald's in the two countries. They say that this explains why, controlled for population, there are fewer McDonald's in Denmark relative to the United States.

That there are fewer low-wage, fast food jobs in Denmark is not necessarily hurting employment, though. Despite having a high fast food worker minimum wage, a high cost of living, and a stronger social safety net, Denmark's unemployment rate is not that far from that of the United States and was recently lower, as Matthew Yglesias wrote at Vox.

"There is something that they are doing in terms of education, training, active labor market policy, and regulation that is allowing them to maintain a low level of unemployment without nearly as much reliance on low-wage, low-productivity fast food jobs as we see in the United States," he wrote.

While liberal economist John Schmitt, who works at the Center for Economic Policy Research, believes McDonald's Danish wages are instructive, he also thinks their American operations would not be able to quickly raise pay to Denmark's level. “We see from Denmark that it’s possible to run a profitable fast-food business while paying workers these kinds of wages," but "[w]e would need to phase this in. We’ve created a low-road economy, and it’s going to take us some time to build up the speed to get onto the high road.”

The Fight for 15, which encourages better wages for fast food workers all over, will be rallying across the country on April 15 in support of pay increases. Here's our coverage of their major day of action in December:

 

Thousands of fast food workers said no to low wages yesterday, and it was pretty inspiring...

Posted by ATTN: on Friday, December 5, 2014