McDonald’s revealed Thursday that it will raise wages for workers at company-run stores across the U.S.
Hourly wages will grow by an average of 10 percent in the next few months to an average of $13 per hour and increase to an average of $15 per hour by 2024. The company said entry-level workers will earn a minimum of $11 to $17 per hour and shift managers will make a minimum of $15 to $20 per hour. Previously, hourly employees earned an average of almost $12 per hour and shift managers earned an average of $16 to $18 per hour. The fast-food giant hopes to hire 10,000 workers in the next few months.
The pay raise applies to more than 36,500 employees and nearly 660 company-operated stores, or about 5 percent of McDonald’s domestic footprint. The chain is pushing franchisees, which own roughly 12,800 U.S. stores, to change their pay scale, as well.
“We encourage all our owner/operators to make this same commitment to their restaurant teams in ways that make the most sense for their community, their people and their long-term growth,” McDonald’s U.S. President Joe Erlinger said in an internal letter to employees.
McDonald’s indicated that a wage hike was possible earlier in May during its quarterly earnings call. Erlinger noted that U.S. franchisees joined a system webcast to gather the best ways to combat the ongoing labor crisis.
The executive later said that company stores must stay ahead of the labor market issue. He described changes to wages and compensation as a “great business decision” for McDonald’s.
“We think the external environment is ripe to do this,” Erlinger said during the chain’s Q1 earnings conference call. “We think the internal environment is also ripe to do this.”
McDonald’s upgrade comes just a few days after Chipotle announced that it’s raising its average wage to $15 per hour. Unlike McDonald’s, Chipotle is completely company-owned, so the pay raise applies to its entire domestic system.
The brand’s new pay scale will result in hourly employees earning starting wages ranging from $11 to $18. Chipotle is also giving restaurant workers the chance to advance to a six-figure general manager position in as little as three and a half years. As the brand seeks 20,000 employees, it’s offering a $200 employee referral bonus for crew members and a $750 referral bonus for apprentices or general managers.
McDonald’s and Chipotle are among numerous restaurant chains that are pushing hard to attract and retain new workers amid the labor shortage. For example, Whataburger promoted all of its general managers and pushed their salaries to six figures. Additionally, Taco Bell said general managers at corporate stores would now receive up to four weeks of accrued vacation per year. These workers also now receive four weeks of paid “baby bonding” time for new parents and guardians and eight weeks of fully paid short-term disability after the bird of a child.
A recent Black Box Intelligence survey of more than 360 operators showed 57 percent of respondents believe higher pay through unemployment is the main driver of the labor shortage. The $1.9 American Rescue Plan includes a $300 weekly boost in unemployment benefits through the beginning of September.
In response to the labor shortage, President Joe Biden said Monday that workers will have to accept a suitable job offer or lose their unemployment benefits. The White House is directing the Department of Labor to reaffirm unemployment standards and to help states reinstate “work search” requirements for those utilizing unemployment insurance.
However, Biden disagreed that the enhanced unemployment benefits are the reason for the labor crisis.
“The line has been, because of the generous unemployment benefits, that it’s a major factor in labor shortages,” Biden said during a press conference on Monday. “Americans want to work. Americans want to work. And as my dad used to say, ‘A job is about a lot more than a paycheck; it’s about your dignity, your place in the community, being able to look your kid in the eye and say, everything is going to be okay.’”
Food and drink places added 187,000 jobs in April, according to the U.S. Bureau of Labor Statistics. Roughly 10.64 million were on payroll, which is still down 1.65 million from February 2020.