Following in the footsteps of retailers Wal-Mart and Target, McDonald's said today it would raise pay for employees at its roughly 1,500 corporate-run U.S. restaurants by more than 10 percent and offer new benefits like paid vacation.
Beginning July 1, the Oak Brook-based fast-food chain will pay workers at least $1 an hour more than local legal minimum wage, raises the company said will apply to about 90,000 workers at all levels of experience.
The raises do not apply to workers of franchised restaurants, which comprise about 90 percent of its 14,350 U.S. locations. McDonald's said its 3,100 U.S. franchisees "operate their individual businesses and make their own decisions about pay and benefits."
The pay bumps will lift the average hourly rate for its U.S. restaurant workers to $9.90 on July 1 and above $10 by the end of 2016, up from $9.01 now. The changes also include a provision for both full-time and part-time employees to accrue paid-time off after a full year of employment.
A McDonald's employee who works an average of 20 hours per week will now be eligible to accrue 20 hours of paid vacation per year. If they don't use the time they've earned, they'll be paid for it.
McDonald's Chief Executive Steve Easterbrook, who took over on March 1, told the Wall Street Journal the policy is a response to employee surveys and is central to his plans to revive sales after more than two years of declines.
"What we need to underpin that is highly motivated teams in our restaurants," he said in the Journal. "Motivated teams deliver better customer service and delivering better customer service in our restaurants is clearly going to be a vital part of our turnaround."
The announcement comes as McDonald's, the world's largest fast-food company whose entry-level jobs inspired the derogatory term "McJob," is under increasing pressure from unions and activist groups over low wages and work conditions.
Labor groups, such as Fight for $15, have been staging demonstrations and protests outside McDonald's across the country as they seek to raise the minimum wage.