McDonald’s will raise the wages it pays to its lowest-earning workers to $1 above the local minimum wage, in the latest sign of wage pressures increasing in the U.S.
The move, which Wall Street Journal reported first Wednesday, will not apply to the fast-food chain’s franchises, which make up the vast majority of its business. Instead it will affect 90,000 workers at the 1,500 restaurants it owns in the U.S.
By lifting the minimum wage it pays on July 1 and raising wages throughout the payscale up to restaurant managers, McDonald’s will raise the average wage for its hourly employees to above $10 by the end of 2015, the company said.
It also will begin giving paid leave to all part-time and full-time employees who work more than 20 hours a week, which they will begin to accrue after a year.
“We are acting with a renewed sense of energy and purpose to turn our business around,” McDonald’s CEO Steve Easterbrook said. “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 is just the latest major U.S. business to announce it is increasing the minimum hourly rate it pays employees. Walmart and Target, among others, recently have announced similar moves.
The fast-food chain has been a target of union and liberal activists seeking increases in the minimum wage. President Obama and congressional Democrats have pushed for a $10.10 federal minimum wage. Many states have minimum wages above the $7.25 federal floor, with the highest being Washington state at $9.47.
The announced wage increase is the latest anecdotal sign of economic pressure on wages and salaries. Average wage gains throughout the economic recovery have barely kept pace with inflation, although there have been some initial signs of rising pay in recent months.
Federal policymakers, including Federal Reserve Chairwoman Janet Yellen, have expressed optimism that wage growth will accelerate as unemployment continues to fall. The unemployment rate was at 5.5 percent in February, close to the levels Yellen and others see as consistent with a healthy economy.
