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5/27/14

USA - Minimum wage: McDonald's and America's new low-wage economy explained - by Josh Freedman

Recently week, more than 2,000 fast food workers and activists picketed outside McDonald's (MCD) annual shareholder meeting to protest low wages.

The demonstrations in Oak Brook, Ill. are a reminder of the growing economic inequality in America. At McDonald's, workers making the federal minimum wage earn $7.25 an hour, while those in Illinois take in $8.25 at the state's minimum wage. By contrast, the chain's CEO Don Thompson made approximately $9.5 million last year, which means it would take a minimum wage worker more than a million hours of work to earn Thompson's annual salary.

We could blame greedy corporate executives for the pay gap, but that would be too simplistic. It doesn't capture the changing corporate structures central to understanding the rise of low-wage work at some of America's biggest companies.

McDonald's, for instance, doesn't actually employ most of its workers; instead, they work for individual franchise restaurants that operate as independent businesses and pay fees to use the company's brand and sell its products. Beyond that, however, the individual franchise owner is technically the employer and therefore responsible for setting and paying workers' wages.

Read more: McDonald's and America's new low-wage economy explained - The Term Sheet: Fortune's deals blogTerm Sheet

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