McDonald’s has been struggling lately with a slump in sales, hemorrhaging of younger customers to chains like Chipotle, bad PR, and protests by workers demanding higher wages—all contributing to a fall in stock values.
Despite these setbacks, McDonald’s is raising its wages for about a tenth of its restaurant workforce– a move that follows other major employers like Wal-Mart, Target, and Gap among other brands.
The average hourly wage is expected to climb to more than $10 per hour by the end of 2016 and some employees will begin to accumulate paid leave in July. All employees will benefit from expanded high school completion and college tuition assistance for all employees.
The corporation is able to do this, but it is by no means certain that franchises can afford to follow suit and raise wages and still stay in business. This is something that McDonald’s protesters could consider: When an employer goes out of business, the employee, at least temporarily, faces a new minimum wage: zero.
Franchisees are the ones who have to weigh the higher costs of labor against their bottom lines. It’s not surprising that some are skeptical of their ability to hike the minimum wage.
A Forbes contributors captures the dilemma of one franchise owners:
We own a franchise, it is not Mickey d’s but the same thing applies. It was our money, our hard work, our tightening the belt, repairing equipment to cut down costs, the risk we took on our investment.
Now here you people come, “Ohhhh they need a living wage,” No they don’t. It takes roughly four hours for us to train any one of 20 people we employ, they don’t need any special skill set, mostly just come to work and do the job they were hired to do. But oh no, people like you think I am not entitled to profits that you feel are excessive, of course you don’t do bank deposits, carry the change to the store, order the inventory or have to fill in after 22 years of ownership when an employee fails to show. Nawww you think that there is a cap to our profits and we should have to share them, well here’s one for you. Tooo Bad. We are a fast food operation, you want fast, quick food and cheap, served in a clean operation and handled safely, well tell you what, you pay me double what I charge now and I’ll be happy to pay everyone 15 an hr.
The idea Mickey d’s makes too much is really not a discussion issue, as much as it is a corporate issue. Last time I looked Mickey d’s is basically a franchise operation, with many super franchisers. Now you go chew on that a while.
The Forbes piece rightly says they don’t know how many franchises can absorb the wage hikes.
However, a year ago, Forbes made an interesting and good point that raising wages can be good for a company in that it becomes more competitive in recruiting good talent. But McDonald’s provides jobs to many people who are not skilled and who need entry level jobs to gain skills and make themselves more employable. As a franchise owner notes, they can train any of the workers they employ in four hours.
We applaud giving people a raise, especially people with lower skill sets who are willing to take an entry level job and work hard and move up. We do not applaud the government’s setting unrealistic wages that will put some operations out of business.