Why 88 percent of McDonald's workers are going to miss out on raises

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McDonald's has announced it will raise workers' wages to $10 by the end of 2016.

But the move will only apply to the 90,000 employees of company-owned restaurants, or about 12 percent of McDonald's 750,000-strong U.S. workforce.


Asked why this was the case, a McDonald's representative referred Fusion back to the company's press release, which simply says that the franchises get to set their own pay standards.

But Sam Ochs, editor of fast-food industry publication QSR Magazine, told Fusion that McDonald's had to start at the corporate level because franchisees need to see how the raise will play out before they themselves will act similarly.


"The franchisor-franchisee relationship is a delicate thing," he said. "Both have to work together to make the brand strong. Something like suddenly raising wages would fall under the category of not making the franchisee very happy."

Ochs could not say what specific leverage franchisees have over McDonald's corporate, but that it is unlikely the latter does not make major decisions without first consulting the former, who often have their livelihoods invested in their franchises, he said.

"Being able to do this on the corporate end of things will help it move along to point of the whole system adopting it," he said.

The announcement follows pressure from labor and low-income nonprofit groups to have U.S. corporations increase low-level employees' pay, growth in which has now been stalled for years. Half a dozen other major American retail firms have recently announced wage increases for all of their workers.


In a statement released by Berlin Rosen, a P.R. firm that represents some of the advocacy groups, Kwanza Brooks, a McDonald's worker from Charlotte, N.C. who makes $7.25 an hour, said the announcement was "too little to make a difference."

“It’s a weak move for a company that made $5.6 billion in profits last year," Brooks said. "We’re going to keep fighting until we win $15 and union rights for all fast-food workers and our families."


McDonald's also said it would now offer free high school completion and college tuition support for all employees, including franchise workers. The company will now cover the cost of high school classes taken through a program called Career Online High School. It will also "assist with college credits and tuition assistance," though no further details about this element are provided in the McDonald's release. And it will expand its offerings of free English language classes for non-native speakers.

The assistance programs "reflects the values of the men and women who own McDonald's franchises, and understand the value of opportunity," the company said in its statement.


Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.

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