McDonald’s CEO Admits Obama’s Economy and Higher Wages Is A Rousing Success

*The following is an opinion column by R Muse*

For the past seven years President Barack Obama has worked tirelessly to address income inequality plaguing far too many Americans, including issuing non-stop calls for a minimum wage hike, As is usually the case, Republicans opposed any plan to help lift Americans earning poverty wages out of their financial distress, and complained loudly and bitterly that raising wages is certain to break businesses.

However, that is not the case by any means. In fact, the CEO of McDonald’s fast food chain, Steve Easterbrook, was pleased to announce that driven by the President’s push for higher wages and a growing economy, McDonald’s profits are up, employee turnover is lower, and customer satisfaction scores are higher. So much for the GOP’s lies that higher wages and employee benefits are business killers.

Last year McDonald’s raised wages for over 90,000 of its employees and provided more incentives and benefit packages. The results are in and according to Mr. Easterbrook; “I am pleased with the progress we’ve made in the 13 months since I became CEO. We are making improvements that our customers are noticing to serve hotter, fresher food with improved overall service experience. We are returning many of our critical markets to growth in terms of sales, guest counts, and market share. And we’re increasing profitability both for the company and our franchisees, whose cash flow’s approaching all-time highs in many of our major markets.”

Fortune magazine reported that, “U.S. comparable sales rose 5.4 percent, their third straight increase after what had been two years of declines.” Although this increased sales growth is related to offering new menu deals, it is beyond refute that the higher profits and undeniably welcomed customer satisfaction is due to happier employees; also a factor in that increased growth in profits.

Across Europe, McDonald’s franchisees typically outperform their American counterparts because their employees are happier earning a minimum wage of $12 to $21 an hour and are provided respectable benefit packages; with a nominally small increase in retail costs of food items. Coupled with European McDonald’s success, the announcement by Easterbrook just drove a stake through the heart of the right wing talking point that “increasing wages and providing more benefits hurts businesses;” at least for corporate giants like McDonald’s, Target, and Walmart it has not.

The McDonald’s CEO also reported that besides a significant growth in profits, there is an overall 6 percent uptick in customer satisfaction. It is something Mr. Easterbrook attributes to better compensation and incentive packages for McDonald’s employees. Besides higher wages and vacation pay, McDonald’s offers tuition assistance to eligible employees; a benefit he says has led to lower employee turnover.

As announced by the company less than a year ago, McDonald’s immediate employee pay increase “lifted the average hourly rate for its U.S. restaurant employees to $1 above the mandated minimum wage.” The company expects average wages to rise to over $10 an hour by the end of 2016.

The hamburger chain also announced it plans to dole out vacation benefits to employees of the stores it operates, according to a company press release. To sweeten the deal even more, the company announced that its employees who choose not take the time off will be paid for the value of that time. The company also made an important offer of tuition assistance to its employees under a program called “Archways To Opportunity.”

Labor advocates say the store could still go farther and affect more McDonald’s employees. Currently, McDonald’s does not offer all these benefits to individual franchisee’s employees who make up about 90 percent of McDonald’s labor force. According to the research director at Jobs With Justice, Erin Johansson, “It’s great news, however we would definitely like to see them extend the wage increases not just to their direct employees, but to their franchisees as well.”

It is true, of course, that McDonald’s demanding that each franchise owner provide their employees with the same wage hikes and benefit packages would reduce employee turnover and have exactly the same effect on profits and customer satisfaction. As a value-added benefit to American taxpayers, paying higher wages and offering benefits would certainly reduce the unfair tax burden on Americans who pay out a little over $1.2 billion annually in taxes to cover public assistance programs for underpaid McDonald’s employees.

It is noteworthy that none of this would have transpired without the economy, or call for higher wages, created under President Obama. As the data show, all it takes is one or two companies to raise their minimum wages and offer employee benefits to encourage wage competition at other companies. In fact, companies that have raised wages, like Walmart, McDonald’s, Target, and TJ Maxx have all remained profitable putting every dirty Republican lie about higher wages killing business to rest.

In the case of McDonald’s, the corporation is likely learning that it is just “smart business sense to provide livable wages and benefits to their employees;” even though $10 or $15 dollars an hour is not really considered a “living wage.” With higher profits, lower employee turnover and higher customer satisfaction, one might think Republicans would abandon their opposition to raising the federal minimum wage to aid businesses large and small to experience the growing success of a corporate giant like McDonald’s. However, Republicans have to answer to their libertarian masters the Koch brothers, and until Charles and David Koch give the “all clear,” congressional Republicans will stay the course and keep as many Americans earning slave wages as humanly possible.

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