Economy

The Real Motive Behind McDonald's Raising Wages for Some Workers

Earlier this month, fast food behemoth McDonald's announced that it would increase employee wages by more than 10 percent across 1,500 company-operated stores in the U.S., as well as phasing in other benefits like paid vacation and financial assistance for getting a high school degree and taking college courses.

In a company release, McDonald's new president and CEO Steve Easterbrook said that the move signaled a shift in the way it treats "the people who bring our brand to life for customers every day."

"We are acting with a renewed sense of energy and purpose to turn our business around," Easterbrook said. "We've listened to our employees and learned that -- in addition to increased wages -- paid and personal leave and financial assistance for completing their education would make a real difference in their careers and lives."

For the estimated 90,000 workers at the company-operated stores, the benefits and the move to at least $1 above the local minimum wage––and to the projected average of at least $10 per hour by the end of next year––could be significant. But company-owned stores are far outnumbered by their over 3,100 franchisee-owned counterparts, whose 750,000 employees won't benefit from the changes.

 

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

Posted by ATTN: on Friday, December 5, 2014

 

"It’s important to know that approximately 90 percent of our U.S. restaurants are independently owned and operated by franchisees who set wages according to job level and local and federal laws" Lisa McComb, a spokesperson for the company, told ATTN: in an email. "McDonald’s does not and cannot determine wages set by our 3,100 U.S. franchisees."

Worker's rights advocates jumped to characterize the move as a public relations gambit considering how few employees stand to benefit.

"McDonald's action falls far short of what is needed to make sure fast food jobs provide a decent living for the men and women who work in them," Christine Owens, executive director of the National Employment Law Project, said in a statement. "It leaves out hundreds of thousands of McDonald's workers at franchises, most of whom are adults and many of whom are trying to support families on poverty wages and inadequate hours."

But if McDonald's announcement isn't an outright public relations stunt, it does come at a suspiciously convenient time.

For months, the company has been mired in legal questions about how much it is responsible for the labor practices of its franchises. In December, complaints were filed by the National Labor Relations Board (NLRB) alleging the firing or intimidation of workers at stores nationwide for participating in union organizing as well as protesting for higher wages. It remains to be seen whether the company will be treated as a "joint employer," which it was accused of being by the NLRB, and which would tie together corporate headquarters and contracted franchises in liability for things like labor violations.

But with these pay raises at company-operated stores, McDonald's has pitted itself against its own franchises, drawing a clear distinction between the two and underlining the fact that franchise locations operate independently of the practices or directives of the corporation.

"Essentially, the world's largest restaurant operator has pitted its own stores' pay scale against those of its franchisees and other fast-food chains, as well as against other service-sector companies such as Target and Wal-Mart," Jessica Wohl wrote in the Chicago Tribune.

The announcement also comes in the thick of a McDonald's brand image crisis, as workers nationwide protest for higher wages and the right to unionize and as the company comes off of one of its least profitable years in two decades. Easterbrook, who took the reigns this month after the company's former CEO departed, said recently that he wants to make McDonald's into a "modern, progressive burger company" at a time when healthier food is increasingly in high demand. While healthier food is one thing for company image, vocal and visibly unhappy workers on street corners is quite another.

McDonald's is just the latest large company to announce wage hikes. In recent months, multiple megastores, such as Walmart, Target and the owner of TJMaxx, Marshalls, and HomeGoods, announced plans to increase employee wages. But some were suspicious of the timing of these increases, which came on the heels of a pledge by workers nationwide to stage massive demonstrations in hundreds of cities across the country. Whether the announcements were timed in a manner to attempt to placate and give hope to disenfranchised workers is unclear, but organizers at some rallies drew attention to the timing.

Despite McDonald's increase in wages, The Fight for 15 still plans nationwide demonstrations planned for April 15th where workers will call for a $15 wage.

At a recent protest in the Twin Cities ares, Guillermo Lindsey, a McDonald's worker and activist addressed how the raises were likely interpreted by many of McDonald's hundreds of thousands of employees.

"Every year we help McDonald's gross $5 billion in profit. And they give us a measly $1 raise? Nah, I don't want that, I want $15 and a union, don't you?"