By Robert Wenzel
With the economy improving, one of the hot topics currently being debated is increasing the minimum wage. This topic will continue to remain in the news with the recent announcement by McDonald’s that they will be raising the minimum wage for some of their workers.
The increase, which will be implemented effective July 1, will be a $1 an hour increase above the local minimum wage. Also, the higher wage will only apply to corporately owned McDonald’s stores. Furthermore, employees who have worked for the corporation for over a year will be able to accrue vacation time up to 20 hours a year.
Background
Currently, the federal minimum wage is $7.25 an hour. However, there are 29 states (including California) whose minimum wage is higher than the federal level. In addition, there are some local municipalities, such as San Francisco, who have minimum wages that are more than the state or national levels.
At the same time, the City of Los Angeles is currently debating raising their city minimum wage to approximately $15.00 an hour.
Concerns and opinions
There are various opinions concerning McDonald’s announcement. Since the vast majority of McDonald’s stores are owned by franchisees, most locations are able to set wages as the owner sees fit provided that they are within all legal boundaries. However, with pay to increase for the corporate stores, there is a concern among franchise owners that they will have to pay their workers more to keep up with the corporately-owned locations.
In addition, other small business owners are worried that they may have to pay their employees more to keep up with other, similar companies. The company owner may have to increase prices to match the higher employee pay. In turn, this could result in the business losing customers as the consumer could go to another store or business.
At the same time, there are people who feel that companies are not doing enough to pay their workers. After McDonald’s announced their wage plan, there was a protest held near a Detroit-area McDonald’s. The protesters did not feel that the $1 an hour increase was enough and were demanding that the new minimum wage be at $15 an hour.
However, there are some individuals who feel that increasing the minimum wage could be beneficial. Increasing wages could make it easier to hire workers. In addition, it could be easier to retain better employees since the higher wages would act as an incentive for workers to remain at a business.
Another ideology is that the higher pay for employees could help stimulate economic growth further. The theory behind this concept is that since workers are earning more money, they will have more disposable income to spend on items. The additional capital could help to further stimulate the economy.
Lastly, one philosophy is that having a higher wage would help employee morale and productivity. Paying workers more would help the employee to be more productive and happier at work, which would potentially make it easier to retain customers and increase the amount of money that the company makes.
Conclusion
McDonald’s announcement will keep the national debate about minimum wage a topic. Companies will be forced to evaluate their wage structure and determine if it would be in their best interest to increase employee compensation and if so, by how much. If the business decides to have a higher wage, then they will also need to evaluate how this will affect their clients and overall business structure.