A 10% raise helped McDonald's ease its worker shortage, CEO says
- Raising wages seems to have helped
McDonald'sattract workers, along with unemployment benefits ending.
- "We're getting close to full staffing levels," CEO Chris Kempczinski said, per Restaurant Business.
- Anecdotally, raising wages seems to be a powerful motivator for luring workers back.
Remarks from a McDonald's earning calls shows one strategy that may have helped the fast-food giant hire workers amidst the US labor shortage: Paying more.
In a Wednesday earnings call, CEO Chris Kempczinski linked the chain's announcement of a wage hike to more ease in filling positions. McDonald's was one of a myriad of chains struggling to hire workers in April, with one location paying prospective workers $50 to simply show up for an interview.
Insider's Kate Taylor reported in May that the company was raising pay at corporate-owned locations by an average of 10%, an announcement that came after executives alluded to changes in compensation amidst a tight labor market.
"We're seeing wages going up about 5% or so in our US restaurants. And that is also helping improve the situation," Kempczinski said. He added: "After we made our announcement back in April, we're getting close to full staffing levels."
Something else that may have played a role, per Kempczinski: States winding down enhanced unemployment benefits early. He said that "applications in states that have ended early the federal stimulus have tended to do better," and that he believed application rates would pick up as those benefits wind down. Taylor also reported in April that some McDonald's franchisee were saying those enhanced benefits were making it difficult to find workers.
"What's going on here? When people can make more staying at home than going to work, they will stay at home," franchisees in the National Owner's Association wrote in that April letter. "It's that simple. We don't blame them. We fault the system." While it's not really as simple as "people don't want to work," some Republican states that cut unemployment early are recovering faster.
It's yet another entry in the labor shortage chronicles, where businesses and economists alike try to figure out how to lure workers back. The Washington Post's Eli Rosenberg reported on a handful of businesses that raised wages to $15 an hour; they succeeded in luring in new workers and bringing turnover down.
Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, previously told Insider that raising the minimum wage could be one simple solution to the labor shortage. Another prominent figure agrees with her: President Joe Biden recently said that businesses will need to pay $15 or "be in a bind for a little while."
But the minimum wage hasn't budged in 12 years, and recent attempts to increase it to $15 per hour have failed. Some McDonald's workers have made their stance on that clear, striking against "starvation wages."
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