Workers Say McDonald’s Isn’t Keeping Up With Rising Local Wages

(Bloomberg) -- Three years after McDonald’s Corp. made a splash by saying it would pay all workers at corporate-owned stores in the U.S. at least $1 an hour above the local minimum wage, some workers say the fast-food giant hasn’t kept pace with the times.

In April 2015, amid a tightening labor market and after a string of high-profile labor protests, the burger giant unveiled a new first-of-its-kind wage floor for employees at the roughly 1,500 stores run directly by the corporation.

“A motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald’s restaurant experience,” Chief Executive Officer Steve Easterbrook said then in the statement announcing the move. As of July 1 of that year, all employees at corporate-owned restaurants would be paid at least $1 an hour above the local minimum, the company said.

Fast forward to 2018, and now some of Easterbrook’s employees say McDonald’s has violated the spirit of the announcement -- the buck-above-local-wage floor that McDonald’s today says was a one-time bump in 2015 and not designed to continue in perpetuity.

A series of recent pay stubs for 16 McDonald’s employees in eight cities, shared by the union-backed “Fight For $15” campaign, show workers receiving hourly rates that are substantially less than a dollar above the current local minimum.

Pay Stubs

Chicago employee Kayla Kuper, who’s worked at a corporate-owned store since 2015, said she was hired at $11 an hour, one dollar above the $10 hourly rate that the city began requiring that year under a 2014 ordinance. Since then, Chicago’s minimum wage has advanced to $11 an hour while Kuper’s rate has ticked up only to $11.40.

“The wage increase in 2015 –- to be a $1 above the local minimum wage -– was applicable to the local wages on July 1, 2015, but was not a policy thereafter,” McDonald’s spokeswoman Terri Hickey said in an emailed statement.

The 2015 increase in starting wages was “part of an expanded benefits package that also included paid time off,” Hickey said. Tuition assistance was part of the package as well, and the Oak Brook, Illinois, company last month expanded its tuition assistance for employees, she added.

2015 Announcement

The 2015 McDonald’s statement announcing the news didn’t directly address whether employees’ pay would remain $1 above local requirements as those wage floors continued to rise. It did project that by the end of 2016, the average hourly wage for McDonald’s employees at company-owned restaurants would be above $10.

In Milpitas, California, north of San Jose, where the local minimum wage rose to $12 an hour on Jan. 1, several workers’ February paychecks show they received $12.35 or $12.45. In Los Angeles, where the minimum wage for large employers has been $12 since July, some checks show hourly pay of $12.69 or less.

“They need to give us the dollar that they promised us,” said one of those employees, Fanny Velazquez, who’s worked for the corporation for a decade. “I can’t pay my rent or my bills.”

Union’s Push

The Fight For $15, a 6-year-old effort by the Service Employees International Union to organize fast food workers and secure more stringent wage laws, seized on the paychecks as evidence that the McDonald’s 2015 announcement was a “publicity stunt.”

“If McDonald’s wants to play semantics with its workers and continue to drive a race to the bottom instead of giving us real raises, it is going to continue losing workers to the growing number of employers who are leading the way to a better economy for all,” said Betty Douglas, a McDonald’s worker in St. Louis, in a statement on behalf of the Fight for $15.

Fight For $15 criticized McDonald’s pay announcement from the start, because it didn’t apply to the majority of the chain’s stores, which are owned by franchisees, and didn’t meet the group’s signature demand of $15 hourly pay.

The group plans to launch a hotline Monday that workers can call to report their wages, and will hold rallies in three cities on Tuesday to press its case that workers need a union in order to hold the company accountable.

Compliance Headaches

Business leaders have complained in recent years that the proliferation of local mandates on compensation and benefits has created compliance headaches for companies that operate nationwide.

The local minimum wage laws that union organizers say McDonald’s has failed to keep pace with are partially an outgrowth of pressure from the Fight For $15 and similar groups. That’s helped spur states and cities to push their wage floors far above the federal rate of $7.25 an hour, where it has been since 2009.

Burger chains like McDonald’s are facing record-high turnover as workers depart for better jobs options in a tightening labor market. Last year, McDonald’s lagged behind peers like Wendy’s and Burger King in average drive-through times. Some employees complain that the chain’s “Experience of the Future,” a suite of changes to menus, technology and food delivery, has meant performing more tasks without commensurate staffing expansions or pay increases.

“It’s going to get increasingly challenging to attract the talent you want into your business,” Easterbrook said earlier this year, “and then you’ve got to work really hard through training and development to retain them.”

©2018 Bloomberg L.P.