Quick Hit Wednesday March 5th, 2014, 4:33pm

Guest Post: McDonald’s: Rising Inequality Could Spur Higher Wages

The following is from the Workers Organizing Committee of Chicago and the Fight for 15 campaign.

In its annual 10-K filing with the Securities and Exchange Commission, McDonald’s, for the first time, admitted that it could be forced to raise wages due to increased focus on income inequality.

The company said that its results and financial condition could be affected by “the long-term trend toward higher wages and social expenses in both mature and developing markets, which may intensify with increasing public focus on matters of income inequality.”

For the second year in a row, McDonald’s cited the nationwide strikes by fast-food workers demanding $15 and a union without retaliation as a risk factor. And this year, in an acknowledgment that the social media campaign by workers—which unmasked McDonald’s out-of-touch employee help site — has taken a toll, the company said that “the impact of campaigns by labor organizations and activists, including through the use of social media and other mobile communications and applications” were a risk to its business.

In its report, McDonald's said that "weak economies, high unemployment rates, inflationary pressures and volatility in financial markets" have pressured its performance and adversely affected sales. But its profits increased slightly in 2013, to $5.586 billion, from $5.465 billion in 2012, according to the filing.

“With nearly $5.6 billion in profits, McDonald’s can clearly afford to pay us more," said Isabel Vasquez mother of two and McDonald's employee of 16 years in Chicago. "The company should be worried about continued worker protests because we are not going to stop taking action until we win $15 and the right to form a union without retaliation.”

“McDonald’s has it wrong. Higher wages will allow them to sell more burgers. The company said that weak economies and high unemployment rates have pressured its performance and adversely affected sales, but it fails to recognize that investing in its employees is a surefire way to help strengthen consumer demand” said Christine Owens, National Employment Law Project Executive Director.

Indeed, a growing chorus of business leaders is beginning to recognize the benefits of higher wages. Last month, GAP Chief Executive Glenn Murphy said raising workers’ wages to $10 an hour “will directly support our business, and is one that we expect to deliver a return many times over.” And writing about the potential effects of a wage increase on the fast-food industry, the investor site Seeking Alpha wrote, “Very possibly [fast-food restaurants] will sell more hamburgers, since minimum wage earners will have increased spending power…That's the most likely outcome.”

Fast food is a $200 billion a year industry and retail is a $4.7 trillion industry, yet many service workers across the country earn minimum wage or just above it and are forced to rely on public assistance programs to provide for their families and get healthcare for their children. Nationally, the median wage for cooks, cashiers and crew at fast-food restaurants is just $8.94 an hour.

In the Chicago metro area there are 275,000 low wage fast food and retail workers. An adult with one child needs to make $20.86 an hour working full time in the Chicago area just to afford the basics, according to a model developed by a professor at MIT.


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