McDonald’s to raise minimum wage in US restaurants by 10%

The increase will bring average hourly pay rates above $13 in company-owned stores

A hiring sign offers a $500 signing-on bonus outside a McDonalds restaurant in Butler County, Pennsyvannia. More than 36,500 employees are expected to benefit from raises in company-owned restaurants as the labour market tightens. AP PhotoShow less

McDonald’s will raise hourly wages in company-owned stores to help it hire and retain workers in an increasingly tight labour market for US restaurants.

The raises, which average about 10 per cent, bring hourly entry-level salaries to a range of $11 to $17, with managers starting at $15 to $20, depending on location. Once the raises are completed, average hourly pay at company-owned restaurants will be more than $13, McDonald’s said.

More than 36,500 employees are slated to receive this round of hikes, which have already started and will be fully rolled out in the coming months, the company said. Average hourly wages across all company-owned locations are expected to reach $15 an hour by 2024.

The pay hikes are another sign of inflationary pressures building in the US

economy, as bottlenecks in the supply of goods and labour meet surging demand in the economic reopening. Consumer prices jumped last month by the most in more than a decade, and companies report paying soaring costs for everything from construction materials to food.

The concern among some economists is that wage and price increases could feed off each other and create an inflationary spiral, though most expect that living costs will settle down after a temporary spike this year.

The restaurant industry is among several that have been forced to reconsider how much they pay workers who’ve been reluctant to resume low-wage and potentially high-risk jobs during a health crisis. Earlier this week, Chipotle Mexican Grill said it would boost its average wage to $15 an hour.

Even before the pandemic, labour was a major concern for the food industry. Now companies are trying to boost staffing ahead of a busy summer season as Americans start to venture out. McDonald’s is looking to hire 10,000 new employees at its company-owned stores over the next three months alone.

Only employees at the chain’s 650 company-owned stores will get the pay increases at this time, not those at franchised locations where management makes its own decisions on wages. But franchisees are looking at wages, too, said Mark Salebra, chairman of the US National Franchisee Leadership Alliance.

“Together with our franchisees, we face a challenging hiring environment, and staying ahead means we must constantly renew our commitment to offer one of the leading employment packages in the industry,” Joe Erlinger, president of McDonald’s USA, said in a message seen by Bloomberg. “Simply put: putting our people first and doing the right thing for them will drive continued growth for our business.”

Wages for restaurant workers have climbed steadily in recent years, though the trend eased during the Covid-19 pandemic, data from the Bureau of Labour Statistics shows. With Democrats in control of Congress, there’s been more discussion in 2021 about raising the national minimum wage to $15 an hour, a plan endorsed by President Joe Biden.

Mr Biden signed an executive order last month that raises the minimum wage for federal contractors and tipped employees working on government contracts to $15 an hour, but efforts to raise the national minimum wage appear to have stalled.