McDonald's Raises Are Shameless Public Relations Ploy

If you read the news last week, you'd think McDonald's was breaking its long tradition as one of America's most anti-union low-wage employers to give its many employees a meaningful, well-deserved raise. Here are a few headlines that give off this impression:

• McDonald's Fortunes Are So Dire, It's Doing a Decent Thing For Its Workers [Slate]
• Following the Crowd, McDonald's Pledges to Raise Wages [Washington Post]
• McDonald's to Increase Hourly Wages, Offer Paid Vacation [Bloomberg]

As always, the devil is in the details. What McDonald's is actually doing is increasing wages at “company-owned” stores to $1 above the local minimum wage.

The majority of McDonald's stores are not company-owned. For the most part, the company's restaurants are operated by independent franchisees. Globally, over 80 percent of McDonald's stores operate this way; in the United States, the number is closer to 90 percent. It's estimated that the raise will benefit around 90,000 employees out of a workforce of 750,000. That means 88 percent won't be affected at all.

Then there's the other concrete half of McDonald's much-touted plan: the expansion of paid time-off.

McDonald's states that starting on July 1, “all crew (part-time and full-time) at company-owned restaurants will be eligible for paid time-off after a year on the job, which they can use for any reason whatsoever. And those who don’t use the time-off they’ve earned will be paid for it.”

Although a year is a long time to wait before receiving paid vacation, it is nominally an improvement over having none, which is the status quo in much of the fast food industry. But there's a catch. McDonald's is shy about publishing turnover numbers (its UK division intentionally doesn't publish them because it warns that “these can't be compared to staff turnover figures from other similar companies because different methods of calculation are used across the industry.”)

However, one executive admitted in the Baltimore Sun in 2008 that while annual managerial turnover is around 20 percent, it ranges between 80 to 90 percent for crew, the group that would be most impacted by additions of wage increases and paid time-off. The National Restaurant Administration says that fast food restaurants as a whole have an annual turnover rate of around 75 percent.

Any way you slice it, the vast majority of McDonald's employees won't be seeing a raise or paid vacation as a result of the new policy. But the announcement generated a lot of positive press, something the company sorely needs as it faces mounting strikes and poor optics resulting from moves like tripling CEO pay between 2011 and 2013.