The Impact of Raising McDonald's Wages to $20 per Hour

Recent discussions around minimum wage standards have put McDonald's in the spotlight. Some advocates are calling for a significant increase in the minimum wage, arguing that employees deserve a living wage. However, the practical implications of such a policy shift are profound and multifaceted. Let's explore the ramifications of raising McDonald's wages to $20 per hour, an often-discussed but rarely examined figure.

Wage Standards and Labor Law

The thought of all US workers, including those earning significantly more than the minimum wage, making $20 per hour may seem ambitious. The reality, however, is that large corporations like McDonald's often set their own wage standards, particularly in regions where the minimum wage is lower. For instance, if the minimum wage in Alabama is $10 per hour, employees there are likely earning above that amount.

Despite the prevalence of higher wages, the idea that all employees should earn $20 per hour without justification is seen as unrealistic by many. The argument against such a drastic increase is rooted in the belief that young and inexperienced workers, who may still be learning basic work habits like punctuality, do not warrant such a high wage. Proponents of this view argue that higher wages for inexperienced workers are not sustainable, especially for small businesses.

Impact on Business Operations

A significant cost increase like this would have immediate and long-term effects on McDonald's business operations. The example of California, where 50 stores were closed due to the 20/hr wage increase, demonstrates the potential economic strain a large increase could have. Businesses have an incentive to minimize costs and pay the lowest legal amount to remain competitive.

While raising wages would ensure fair treatment for employees, it could lead to higher food prices and smaller profit margins. McDonald's, and other fast-food chains, might opt to pay the bare minimum required in each state or city to remain profitable. This strategy aligns with the motivation to retain employees at the lowest possible cost.

Minimum Wage and Skill Levels

The prevailing minimum wage for entry-level positions like those at McDonald's is typically around $10 per hour. At this wage, new hires can learn essential workplace skills, manage basic responsibilities, and potentially receive rewards for exceptional performance. Setting the minimum wage at $20 per hour would significantly disrupt this learning process and may make it unaffordable for small businesses.

Motivated by the need to retain skilled workers, businesses may adhere to the minimum wage dictated by regional labor laws. For example, in Tennessee, the starting wage for floor employees may be lower than $20 per hour, while managers might earn closer to the minimum wage threshold to maintain profitability and manage staffing costs.

Local Regulation and Industry-Specific Wages

The argument that raising wages would only affect workers in California and not others is partially true. Individual states and cities have varying minimum wage laws. McDonald's, being a national chain, must comply with local regulations, which can lead to different starting wages in different regions. While some stores might set wages significantly above the minimum, others adhere more closely to the local legal requirements.

It's important to note that not all workers are paid the minimum wage. Many higher sales stores may have higher starting wages, while workers in different industries, such as retail or hospitality, might earn different amounts based on their roles and responsibilities.

Conclusion

In conclusion, the idea of all US workers making $20 per hour is a complex issue. While it's important to ensure fair wages and compensation for hard work, the practical implications of such a policy shift cannot be ignored. Increasing wages to this level would have significant impacts on business operations, cost structures, and regional labor laws. Instead of a blanket increase, it's essential to consider the specific needs of each industry and region to create a sustainable and fair wage system.