The editors of the Wall Street Journal remark on the decision by McDonald’s to increase the minimum wage for its company-owned store employees:
McDonald’s Corp. on Wednesday became the latest big company to raise wages for its low-income workers, announcing plans to pay at least $1 more than the local minimum wage plus some paid vacation starting July 1 for about 90,000 workers at its 1,500 corporate-owned U.S. restaurants. But don’t expect organized labor to give the company a break today, or any day, for doing so.
The wage increase is worth cheering, assuming McDonald’s can sustain it and remain competitive. The rewards of work can and do flow to all productive employees in a free-market economy, not least because talent is a business’s greatest asset.
My immediate reaction to the announcement was that it was a publicity stunt. This morning I’ve already being pounded with banner ads from the company touting its move.
While the extra dough will undoubtedly be welcome to the employees who’ll get it, how effective will the company’s announcement really be, either for the employees in all McDonalds’s stores, for employees retention in all McDonald’s stores, or for the reputation of all McDonald’s stores? I think the answer is “not very”.
McDonald’s owns about a fifth of its stores. The rest are owned by independent franchisees. That means that more than 350,000 minimum wage employees at McDonald’s stores won’t be affected by the pay raise compared with the 90,000 who will.
If McDonald’s is really serious about improving its public image, improving employee retention in all McDonald’s stores, and helping the employees in those stores, I have a modest proposal for doing it. Lower the franchise fees from its present 4% of monthly sales for franchisees that follow corporate’s lead and increase the lowest wage paid to employees as McDonald’s corporate has. Then we’ll know that the company is really serious and the move is more than a publicity stunt.
