McDonald's to raise wages for 90,000 US workers

McDonald's will raise the wages of roughly 90,000 employees in the US, as the struggling burger chain follows the likes of Walmart in lifting pay amid a national debate over income inequality.

The world's largest restaurant group will pay employees at the 1,500 stores that it owns at least $1 an hour more than the local minimum wage beginning July 1, and will allow them to accrue paid time off. The increase will raise the average US employee wage from around $9 to more than $10 by the end of next year.

Critics have already blasted the increase because it does not apply to employees who work at the roughly 13,000 US outlets owned by franchisees, who the company says are free to set their own wages. Those employees will be eligible for a new education financial aid programme.

The move comes a month after Steve Easterbrook took over as chief executive amid a two-year slump in sales growth. The British Mr Easterbrook pledged to work urgently to turn the business round and revive McDonald's image amid a revolution in consumer tastes.

"We are acting with a renewed sense of energy and purpose to turn our business around," Mr Easterbrook said. "We know that a motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald's restaurant experience."

The company has become the main target of a national campaign that advocates for a $15 minimum wage and union rights for low-wage workers, coming under fire at strikes and walkouts across the country over the past two years.

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"Because we joined together and stood up, McDonald's was forced to raise pay. Still, this is too little to make a real difference, and covers only a fraction of workers," said Kwanza Brooks, who earns $7.25 an hour, the federal minimum.

"It's a weak move for a company that made $5.6bn in profits last year. We're going to keep fighting until we win $15 and union rights for all fast-food workers and our families."

McDonald's joins Target, TJ Maxx, Gap and Ikea in raising wages. In February, Walmart, the largest private sector employer in the US, said it would spend $1bn to boost the wages of half a million low-paid workers to at least $10 by early 2016.

President Barack Obama, who has called income inequality "the defining challenge of our time", applauded Walmart's decision. He has been unable to convince a Republican-controlled Congress to raise the federal level to $10.10 an hour.

But raising the minimum wage has become a bipartisan issue outside of Washington. In January, 29 states introduced their own higher minimum wage bills, including GOP-dominated states like Arkansas and Nebraska and liberal outposts like Oregon.

McDonald's shares closed down more than 1 per cent.

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