QOTD: Slow Your Roll on McDonald’s Wage Hike

Bank of America Merrill Lynch economist Ethan Harris on the McDonald’s wage hike:

Anecdotal evidence of stronger wage growth continues to build. The latest news:
McDonalds is joining Walmart and several other retailers with plans to increase pay
and benefits for its workers. They are raising the minimum wage by about 10% at
the 1,500 outlets that are directly owned by the parent company. Unfortunately, this
wage “supersizing” looks a lot less impressive on closer inspection. McDonalds is
raising its minimum wage only for outlets that employ 90,000 workers, the remaining
750,000 workers at franchises are not included. Assuming all 90,000 get the raise
and no one else, the average increase is 1.1% for all employees. Of course there
will be spillovers as the franchises and other fast food stores come under pressure
to match the increase, but clearly the direct impact on average wages is low. This
32 ounce coke seems to have a lot of ice in it.

Josh here – well, it’s a start. And it’s value is probably more a signaling thing to the rest of the country (read: other employees) that times are changing.

Source:

Fast food, fast wages?
Bank of America Merrill Lynch – April 2nd 2015