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McDonald's to Raise Average Pay to $15 an Hour

By Rich Duprey - May 13, 2021 at 11:55AM

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It's probably still going to face strikes next week by workers wanting pay hikes now.

Almost a week ahead of a planned strike by its workers, who demand $15 per hour, McDonald's (MCD -0.80%) announced it will begin raising pay to that level by 2024.

But because it only applies to company-owned stores, the pay increase will not affect the vast majority of McDonald's workers, who are employed at the chain's thousands of independently owned and operated restaurants. Some 95% of McDonald's locations are franchised.

The move, though, will likely not sit well with the franchisees, who will then be under pressure to follow suit even though they may not be generating the same sort of profits McDonald's does.

$5 and $10 bill on American flag

Image source: Getty Images.

The fast-food leader said a tight labor market was forcing its hand to raise wages. Earlier this year, CEO Chris Kempczinski told analysts McDonald's would do "just fine" having to pay employees $15 an hour since nearly half the states had already raised the cost of labor by mandating the higher wages.

"So long as it's done...in a staged way and in a way that is equitable for everybody," Kempczinski said, McDonald's could cope with it.

The company previously announced it would stop lobbying against a $15 minimum wage.

Apparently the restaurant chain isn't going to wait for the rest of the states or the federal government to hike the minimum wage. McDonald's corporate office sent a letter to its U.S. restaurants saying workers would see pay rise 10% over the next few months, and by 2024 it expected average employee wages at company-owned stores would be $15 an hour.

That's likely not going to be enough to mollify workers who are planning to go on strike next week in 15 cities as part of a planned action organized by the labor group Fight for $15, which is seeking immediate pay hikes.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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