One of the consequences of the pandemic has been an increasingly tight labor market, especially in the fast-food sector. As a result, McDonald’s and many other franchises are responding with wage hikes in many restaurants.
But staffing shortages are only one part of the equation. The fast-food industry as a whole has come under scrutiny recently from policymakers and political movements, such as “Fight For 15,” which advocates for a higher federal minimum wage.
McDonald’s’s leadership recently injected around $1 billion into the system of restaurants it manages. Part of the company’s goal is to raise wages at its locations to an average of $11–$17 an hour for entry-level positions and $15–$20 an hour for shift managers.
Unfortunately, the nature of the company’s franchising agreement restrains the company from doing much other than encouraging franchise managers at the over 13,000 restaurants not owned by McDonald’s.
Many franchise owners didn’t take kindly to the top-down wage boost decision, but it’s hard to argue with the corporation’s years of balance sheet growth.
Because the corporation is so closely entwined with its franchises, any decision from either side is bound to affect the other.
And franchisees aren’t only feeling pressure from the corporate decision to increase wages. The move also puts public pressure on all McDonald’s restaurants to bring about changes in the wage structure.
At least one franchise manager noted that finding, hiring, and retaining staff had become easier after a pay raise in his restaurant.
On the other hand, the International Franchise Association pushed back, saying franchise operators should be free to set wages in accordance with each restaurant’s individual needs. And, indeed, the costs associated with operating in high-income areas far exceed those of rural locations, making universal wage levels awkward.
Despite the back and forth, there’s every indication that most McDonald’s locations will adopt wage increases to some extent in the foreseeable future.