McDonald’s said on Thursday it expects to pay average hourly wages of $15 an hour at company locations by 2024, as a brutal labor shortage coming out of the pandemic pushes the chain to start paying wages long demanded by labor advocates.
The Chicago-based burger giant plans to give the vast majority of workers at its company-owned restaurants 10% raises. It also plans to raise the starting salary to $11 to $17 an hour. The company expects the average hourly wage to hit $15 in a “phase, market-by-market approach” with some markets hitting that rate this year.
McDonald’s operates just 657 of its 13,682 U.S. restaurants, but the pay increase will impact more than 36,500 workers. Franchisees operate the rest of those locations and their employees are not covered.
Still, the announcement is an acknowledgement that the $15-an-hour fast-food wage is an increasing reality—especially as operators increasingly struggle to find enough workers to staff their restaurants. Labor advocates have been pushing the company for years to raise its wages to that level, and more of its competitors are taking deliberate steps to get there now or in the near future.
Chipotle Mexican Grill said last week that it is raising its average hourly pay to $15. The coffee giant Starbucks said in December that it expects to pay all of its workers at least $15 an hour within three years.
McDonald’s is taking these steps in a bid to be more competitive for workers and keep those that it has.
“In this highly competitive market for talent, successful employee recognition, recruitment and retention is fundamental to drive growth,” Joe Erlinger, president of McDonald’s USA, said in a system message viewed by Restaurant Business.
“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.”
Franchisees operate the bulk of McDonald’s restaurants and numerous anecdotal reports have found them offering $500 sign-on bonuses and $50 to get people to simply come in for an interview. Most operators we’ve spoken with have said they pay well above local minimum wages.
Mark Salebra, chair of the U.S. National Franchisee Leadership Alliance, McDonald’s internal franchisee leadership group, said in a statement from the company that operators are leading an effort to improve pay and benefits.
“To remain employers of choice and further differentiate what we have to offer, owner/operators are leading an effort to implement an enhanced employee value proposition,” Salebra said. “This platform includes a set of industry-leading best practices on pay and benefits that independent owner/operators can implement however they deem appropriate to stay competitive in their local markets.”
McDonald’s starting pay at company locations will average $13 an hour once the company increases that rate.
The company also said that shift managers’ starting wages will average $15 to $20 an hour, depending on location. The company has also been upgrading its benefits in recent years, with its Archways to Opportunity tuition program, paid time off, employee assistance, retirement benefits for workers 21 and older and free meals.
McDonald’s said it is hiring 10,000 employees at corporate restaurants.
Erlinger told investors last month that company restaurants “are faring a bit better” on labor. “We have higher crew sizes overall than the average franchisee,” he said. “We recognize we need to continue to stay a little bit ahead of things on this topic.”
And he said that the company was looking at wages. “We think the external environment is right to do this,” Erlinger said. “We think the internal environment is also right to do this. And we think it’s actually a great business decision for us.”
UPDATE: This story has been updated to correct that most but not all workers will be getting raises.