Fast food chain McDonald’s announced on Wednesday that it was planning to raise the hourly wage of employees in its company-owned stores to an average of $10 per hour. However, the pay increase only applies to the 10% of employees that work at company-owned stores; the pay and employee benefits are determined by franchise owners for the remaining 90% of McDonald’s workers.
The pay increase for employees at company-owned McDonald’s will kick in on July 1.
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More on McDonald’s pay raise
As a part of the new pay plan, starting wages will move to $1 above the local minimum wage. The increase will take the average hourly rate for those workers to $9.90 on July 1st, a boost from $9.01 currently.
McDonald’s also said that by year-end 2016, the average hourly wage rate for McDonald’s employees at company-owned restaurants will be greater than $10.
However, nearly 90% of McDonald’s over 14,000 U.S. restaurants are operated by franchisees, who determine compensation for their workers. However, analysts note franchisees will face pressure to do the same to stay competitive as employers.
The company also noted that full- and part-time crew employees with at least one year of service will begin to accrue personal paid time-off for the the first time.
Furthermore, some employees at both company- and franchise-run stores will become eligible for education assistance from the company.
Critics say this is not nearly enough
“This is too little to make a real difference, and covers only a fraction of workers,” said Kwanza Brooks, a McDonald’s worker from Charlotte, North Carolina, who earns $7.25 per hour.
Brooks is fully behind the union-backed “Fight for $15” movement, which is asking employers to double wages above the federal minimum wage of $7.25. The group is organizing a protest at McDonald’s restaurants all across the country on Thursday.
Analysts noted that the wage increase at McDonald’s company-run restaurants could eventually lead to franchisees doing the same. Moreover, the franchisees might well have to raise food prices to cover their increased labor costs.
That would benefit McDonald’s as the firm is paid royalties from franchisees based on sales. That said, raising wages will likely squeeze franchisee profits or even threaten the famous Dollar Menu, a mainstay among the firm’s many low-income diners.
More sales from price increases means more profit for McDonald’s Corp, which would help the fast food chain’s bottom line and make new CEO Easterbrook seem like he is fixing things, noted Richard Adams, an ex-McDonald’s franchisee who acts as consultant.
“They’ll try to paint this as altruistic,” Adams explained. “It’s not as nice as it sounds.”