McDonald's says it's raising pay for workers at its company-owned U.S. restaurants, making it the latest employer to sweeten worker incentives in an improving economy.
The company owns about 10 percent of its more than 14,300 U.S. restaurants, representing about 90,000 workers. The rest are run by franchisees, and McDonald's said they "make their own decisions on pay and benefits."
The announcement comes as several other major companies including, Wal-Mart Stores Inc., have announced wage hikes as the economy has picked up and made it more difficult to find reliable workers. Over the past 12 months, the unemployment rate has dropped to 5.5 percent from 6.7 percent.
"It's a very competitive environment and a significant rationale for this plan is that we want to be the most competitive and attractive employer," said McDonald's USA President Mike Andres in a phone interview. He added that people also have "new expectations" around jobs.
The change also comes as McDonald's has been dealing with negative publicity from demonstrations over pay and labor practices at its restaurants. In addition to ongoing protests since late 2012, worker groups have been pressuring the company with lawsuits and cases filed with the National Labor Relations Board and U.S. Occupational Safety and Health Administration on behalf of workers.
But Andres said few McDonald's workers were taking part in the protests, and that they aren't hurting the company's image.
"They're not taking a toll," he said.
In a statement, McDonald's worker Kwanza Brooks of North Carolina called the move "too little to make a real difference" and that it only covers a fraction of workers.
Starting on July 1, McDonald's says the starting wages will be a dollar more than the local minimum wage where company-owned restaurants are located. Wages will be adjusted accordingly based on tenure and performance, it said. By the end of 2016, it said the average hourly wage for McDonald's workers at those stores will be more than $10 an hour, up from $9 an hour.
In addition to wage increases, McDonald's says workers at company-owned stores will get paid time off.
Employees who have worked for the company for at least a year and work an average of 20 hours a week will be eligible to accrue about 20 hours of paid time off a year. Workers who don't take the time off will be paid for the value of that time, McDonald's said.
Last month, McDonald's Chief Administrative Officer Pete Bensen hinted such an announcement could be in the works. Bensen said at the time that a big part of the turnaround effort in the U.S. would be what the company is doing "around the employment image and our employee-employer relationship."
McDonald's U.S. business has been struggling, with sales and customers counts at established locations falling two years in a row. In January, the company named Steve Easterbrook, its chief brand officer, as its new CEO.
"We know that 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," Easterbrook said in a statement Wednesday.
McDonald's also said it is expanding benefits to help workers at company- and franchise-owned restaurants complete high school and college. It did not immediately provide details on that program.