McDonald's Admits It May Lose The Fight To Keep Wages Low

McDonald's Admits It May Lose The Fight To Keep Wages Low

McDonald’s is joining the rest of us in worrying about income inequality, but not because it thinks low-wage workers don't make enough -- instead, it worries it might have to pay its own workers more.

A groundswell of public concern about income inequality could hurt the fast-food giant's profit margins, McDonald's warned its latest annual filing with the Securities and Exchange Commission.

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,” is one of the “risk factors” facing McDonald's in 2014, according to the filing.

McDonald's spokeswoman Heidi Barker wrote in an email to The Huffington Post that the statement was part of routine disclosures McDonald's is required to make to shareholders "regarding possible circumstances or events – whether in or out of our control- which may impact our future business performance."

McDonald’s has been a high-profile target of recent protests aimed at pushing the fast-food industry to pay workers more. In demonstrations outside McDonald’s and other fast-food chains, protesters demanded a wage of $15 an hour, arguing the companies could afford to pay more, given their billions in profits and cushy CEO salaries.

Though McDonald's might disagree, narrowing the gap between its rank-and-file workers and its top dogs could actually benefit the company, by helping the economy overall and putting more money in the pockets of people most likely to spend it.

Income inequality is a “root cause” of the financial crisis and slow recovery, according to a new study from Columbia Management, a money-management firm. That’s because wealthier households are more likely to save the money they earn, while middle- and low-income households tend to spend their money almost immediately. Raising the pay of workers at places like McDonald’s and Walmart -- even at the expense of shareholders and wealthy executives -- would give those workers more money to spend at places like McDonald’s and Walmart.

McDonald’s CEO Don Thompson claimed last year that the company has always been “an above minimum wage employer.” Indeed, the median wage for fast-food workers is about $8.90 an hour -- a full dollar more than the federal minimum wage of $7.25. But that's still not enough to afford basic necessities in most places.

An online budgeting tool for employees provided by McDonald's essentially admitted as much, encouraging workers to get a second job in order to make $24,500 a year. The fast food giant’s “McResource Line” came under fire after an employee recorded a conversation with a McResource representative encouraging her to apply for food stamps. McDonald’s ultimately took the site down after it ignited controversy.

Meanwhile, James Skinner, the CEO Thompson replaced, took home $8.75 million in the last year of his McDonald’s career. That’s about 580 times the income of a full-time worker paid the minimum wage, according to data compiled by Bloomberg. The pay gap between a McDonald’s CEO and a McDonald's worker has doubled in the past 10 years, Bloomberg found.

This post has been updated to include comment from McDonald's.

Before You Go

McDonald's Grew During The Recession

10 Things The Fast Food Industry Doesn't Want You To Know

Popular in the Community