The Economist May 22nd 2021 pp56-57 |Business|Worker shortages|”Paying a pittance is passe” “Why McDonald’s is supersizing its wages”
Image from tampabay.com the Tampa Bay Times from September 2020 but still relevant today.
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Summary provided by 2244
Despite announcing a “vow…to raise wages”, “Fight for fifteen, an advocacy group, carried out a “strike of McDonald’s workers in 15 cities across America.” As it turns out raising wages all across McDonalds (MCD) is more complicated that you might guess. MCD corporate can act for stores they directly own accounting for only 650 of the 14,000 stores. The bulk are franchises for which MCD does not “have much say in the labor practices.” For the direct MCD employees, MCD says increases of “10% on average” and that “new hires would go from $11 to $17 an hour and that average wages for all staff paid by the hour would reach $15 by 2024.” MCD said it will also add 10,000 employees to the 650 stores in the next three months to ramp up as “America reopens for business.” These steps largely follow or mirror others including Chipotle and Olive Garden.
Large and small restaurants are struggling to recruit with New York being an example. “According to the Brooklyn Chamber of Commerce entry-level cooks…are now offered up to $25 an hour” up from $15 pre-pandemic. Some employers “are stretching to offer health-care benefits even to part-timers. Many promise sign-on bonuses.” There’s a sense from economists that the labor shortage will ease when COVID fears diminish further and children return to school. For MCD, corporate wage increases will have little effect on their profits that are made largely from franchise fees and like other restaurants sales growth has been remarkable. MCD reportedly had same store increases of 14% Q1 2021 Vs Q1 2020 “thanks to a boom in online orders. Online buyers spent “twice as much when they buy from home and 20% more ordering via mobile devices, the companies operating margin hit 44.5%, the highest in years.”
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