In a bid to attract new workers in a crowded job market, fast-food giant McDonald’s Corporation will also raise wages. However, the wage hikes cover only company-owned stores. In addition, the hikes will apply on a staggered basis.
Wage Raises At McDonald’s
With many restaurant chains such as Chipotle and Olive Garden offering higher worker pay, McDonald’s had to adjust as well in order to compete. Earlier this week, Chipotle wants to hire 20,000 new workers.
It announced it will raise hourly pay to entice applicants. Earlier in March, Olive Garden also announced they were going to raise worker pay.
Workers at McDonald’s company-owned stores will get pay raises at an average of 1-% over the next few months. Entry-level employees will make between $11 to $17 per hour.
Meanwhile, shift managers will earn between $15 to $20 an hour, depending on location. The pay increase will apply to McDonald’s 650 company-owned restaurants. For the remaining 95% or 14,000 restaurants, local owners determine worker pay rates.
The US fast-food and casual dining restaurant sector needs workers. As the economy opens up, the sector will need to do more to keep up with demand. However, while jobs are plentiful, there are fewer takers this year.
In fact, the recent April jobs report showed a significant jump in the number of workers hired in the restaurant and bar sector. Meanwhile, staffing levels remain 20% below their rates a year ago. As a result, employment at fast-food and fast-casual restaurants was down 6 percent over the same period.
Where are the workers? Experts believe that many workers left due to fears of contracting coronavirus. Jobs for foodservice gigs literally evaporated during the first few months of the pandemic.
Faced with uncertainty, many food workers left the industry to work for more jobs in faster-growing sectors like shipping and delivery. For example, Amazon hired more than 400,000 workers last year to help keep up with demand.
This year, the company plans to hire more than 75,000 additional workers. They hope to do so with offers of $1,000 signing bonuses and average hourly pay of $17 per hour.
‘Wage Raises Not Enough‘
Even as major food chains are working to raise rates, some groups insist that the hikes are not enough. Union activists say that throughout the pandemic, food workers received praise as essential workers.
They provide a basic need and help keep businesses afloat. As a result, McDonald’s generated $4.7 billion in profits, enough to award shareholders $3.7 billion in dividends. CEO Chris Kempczinski received more than $10.8 million in compensation for his work last year.
“All through the pandemic, these workers were called ‘essential,’ but clearly, once again, they’re being treated as disposable,” said Allynn Umel, an organizing director for the Fight for $15.
The group is allied with the Service Employees International Union. This union pushes for McDonald’s to raise its minimum wage across all its stores. “Anything less than $15 an hour is an insult,” Umel says.
Businesses say the worker shortage can affect their rate of recovery. Many former food workers are reluctant to return to work for two reasons.
They worry about the wisdom of returning back to work to an industry that’s prone to outbreaks and infections. In addition, many jobless workers are receiving generous unemployment benefits. Returning to work for the same amount as the unemployment checks they receive doesn’t make sense.
Greg Levin, president and CFO of B.J.’s Restaurants, said that given the conditions, it’s hard to recruit workers. “We’re not only competing with our peer companies out there, and I know everybody is challenged with that.
We’re also right now kind of competing with the federal government and somewhat of the unemployment subsidies,” he observed.
Watch the CNBC TV News reporting that McDonald's will raise wages at company-owned locations:
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