McDonald's plans to raise wages of roughly 90,000 of its U.S. workers in addition to providing benefits such as paid vacations, the fast-food giant said Wednesday. But the move only applies to workers at restaurants directly owned by McDonald's and will not cover the hundreds of thousands of other workers employed at McDonald's franchises.
On July 1, starting wages at McDonald's roughly 1,500 company-operated U.S. restaurants will be $1 above the locally mandated minimum wage. By the end of 2016, McDonald's says they expect that the average hourly wage rate for McDonald's employees at those restaurants to be above $10.
The move from McDonald's follows entry-level wage hikes by Walmart, Target, Gap and T.J. Maxx, and comes amid a flurry of fast-food and retail worker protests calling for higher pay and better working conditions.
"We know that a motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald's restaurant experience,” McDonald's President and CEO Steve Easterbrook said in a statement.
The change, however, excludes workers at nearly 90 percent of McDonald’s in the U.S., because it affects only workers at the about 1,500 restaurants run by McDonald's. Franchisees operate the vast majority of McDonald’s in the U.S. — more than 14,000 restaurants in total — and they set pay and benefits for their workers.
"If McDonald’s truly cares about its workforce, it should encourage its franchises to raise wages, or even require higher wages in its franchise agreements," said Ross Eisenbrey, vice-president of the Economic Policy Institute.
Though activists, advocacy groups and employees downplayed the move as a minor one, they still claimed some credit for the raise, pointing to their nationwide protest movement.
The executive director of the National Employment Law Project, Christine Owens, called wage the announcement “a modest gesture” that “falls far short of what is needed to make sure fast food jobs provide a decent living.”
But she noted: “Even this action would not have happened without the courageous advocacy of fast food workers around the country who, in their Fight for $15, are raising public awareness of the costs of low wages and raising the stakes for big companies that can, but won’t, raise workers’ pay."
The advocacy group Fast Food Forward, which did not respond to a request for comment from Al Jazeera, has organized protests across the U.S. at chain restaurants, including McDonald’s, to raise employee pay to at least $15 per hour.
The latest major protest took place in December, when fast food workers in about 190 cities walked off the job, asking for higher wages and the right to form a union.
In September, rallies took place in about 150 cities as part of the so-called “Fight for $15” campaign. The fast food protest movement, which is backed by the Service Employees International Union (SEIU) and other organizations, gained national attention last year at a time when the wage gap between the poor and the rich has become a hot political issue.
The next scheduled protest headed by Fast Food Forward will take place on April 15, according to its website. McDonald’s said the protests did note play a role in the decision to raise wages, according to the Wall Street Journal, which first reported the story.
The McDonald's wage hike could put pressure on franchisees to increase worker wages. In turn, that could force those business owners to raise food prices to cover additional labor costs — a move that could ultimately benefit McDonald's since it collects royalties from franchisees based on total dollar sales.
Increased sales due to price increases means more revenue to the parent company, said Richard Adams, a former McDonald's franchisee who now consults for current ones.
“They'll try to paint this as altruistic, but they're increasing their corporate income by doing this,” Adams told Reuters. “It's not as nice as it sounds.”
Al Jazeera and wire services