McDonald’s CEO: Why we’re raising wages

You had to know that this was coming. Once Walmart committed to raising wages it’s only a matter of time before others have to follow suit in order to remain competitive in attracting employees as well as public perception. Walmart employs roughly 500,000 people so when they unilaterally raise their base wage it’s going to move the market.

McDonald’s CEO Steve Easterbrook wrote a commentary piece in the Chicago Tribune explaining their reasoning for raising wages. McDonald’s has been in the press recently with their announcement around ending the use of human antibiotics in their US chicken supply.

McDonald’s has committed to raising their minimum pay in their corporate owned US restaurants $1 over the locally mandated minimum wage starting July 1 of this year. They estimate that their average wage will be over $10/hr. The main reasons that Steve Easterbrook sites for the wage increase are:

  • To make McDonald’s a modern, progressive burger company on many fronts, focusing specifically on the consumer perception of our food, and our people
  • The time is right to take a first step in rewarding our team members who work so hard every day

He also talks about providing training opportunities for their employees to gain job skills and high school or college credit. He was very clear that this was just for the corporate owned stores obviously because the franchisees make their own decisions on compensation etc. But I suspect in order for them to compete with talent they are going to have to be very close  in order remain competitive for hiring talent. We’ll be seeing more and more of this from now on, but obviously will only hear about the giants like McDonald’s, Walmart, etc.

I have copied the full article below:

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Amid the continuing national dialogue on wages, benefits, job creation and providing marketable skills to our nation’s workers, we have challenged ourselves as to whether we can do more to make a real difference in the lives of our employees. Specifically, what can McDonald’s — as the restaurant industry leader — do right now?

McDonald’s raising its minimum wage, but some say it’s not enough

As the new CEO of McDonald’s Corp., I’m taking action to make McDonald’s a modern, progressive burger company on many fronts, focusing specifically on the consumer perception of our food, and our people. I believe the time is right to take a first step in rewarding our team members who work so hard every day. Wage is just one part of the equation. Getting people started on the road to success by providing the skills, training and opportunities they need to continuously improve is also important.

Our first step will impact the more than 90,000 employees at McDonald’s 1,500 company-owned U.S. restaurants. On July 1, we’re raising starting wages by $1 over the locally mandated minimum wage and adjusting pay for existing restaurant employees. By the end of 2016, we project that the average hourly wage rate for McDonald’s employees at company-owned restaurants will be in excess of $10. In addition, we’re offering paid personal time off for any reason to restaurant crew members who have been with us for at least one year. If they choose not to take the paid leave they’ve earned, they will get a check for the value of that time. We understand that life balance is important and believe that this will make a difference for our people.

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In addition, in partnership with our independent owner-operators, we are offering new and enhanced educational opportunities to employees at all McDonald’s restaurants across the U.S. Eligible employees who want to advance their education will have an opportunity to improve their language skills and earn a high school diploma or college credit.

Providing opportunities is essential for fostering professional growth and advancement in the workforce. Employers need to create more programs and pathways to help people stretch and develop — and to give them the tools and guidance necessary to succeed. At McDonald’s, we have seven Hamburger University campuses around the world where restaurant managers and corporate employees can build on their talents and find new opportunities to keep them competitive in today’s marketplace. They can also earn college credit. McDonald’s is one of only eight Fortune 500 companies that already award college credit for certain training courses and e-learning modules.

I worked to redefine the term “McJob” when I ran the McDonald’s United Kingdom business because we saw firsthand how these front-line jobs can bring out the best in people — embodied by what we call the Three C’s (commitment, competence and confidence).

At McDonald’s, we must recruit and retain talented people and motivate them to bring their best to the job every day. We must provide them with valuable skills that they use at McDonald’s or wherever their career might take them. Our challenge is the same as other large companies that seek to close the skills and education gap America is confronting.

This is an initial step for our U.S. business. I understand that some may believe it doesn’t go far enough. These actions demonstrate meaningful progress, and it is what we can do right now in our company-owned stores. We remain committed to regularly reviewing the total employment experience we offer our people.

This is not a one-size-fits-all approach, and cannot be for a company like McDonald’s, which is based on a franchise model. McDonald’s is a very large system that also includes 3,100 independent owner-operators in the U.S. who make their own decisions about how they run their business and pay their employees, based on their local market environment.

As I mentioned earlier, I am committed to taking the actions reflective of a modern, progressive burger company. In that spirit, we recently announced that we’ll stop using human antibiotics in our U.S. chicken supply. We understand that when we improve in key areas like food, our restaurants and our employees, it can have a tremendous and positive impact — both within our industry and in communities across the country. Our energy is focused on making even more meaningful changes to benefit our customers and employees.

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