McDonald's wage hike comes with something more: paid time off

The fast-food giant McDonald’s snagged attention by announcing that it will start paying at least $1 above minimum wage. Just as important, though, may be this new idea: adding paid time off to the benefits menu, even for part-time workers.

That’s a benefit many US workers in low-wage service jobs don’t have. It puts some money behind the notion that workers deserve not just a break but some longer times away from work.

And it gives flexibility when workers feel torn between family needs, like caring for a sick child and earning a paycheck.

Some 43 million private sector US workers don’t have sick-leave benefits, according to the White House. And just 49 percent of those in the bottom quarter of workers get paid time off, according to a 2013 report by the Center for Economic Policy Research. That’s compared with 90 percent among the top 25 percent.

The moves on both pay and benefits are incremental rather than revolutionary. For one thing, they apply only to the 10 percent of McDonald’s restaurants that are company-owned. Some 90,000 workers will be affected, while the move also puts some symbolic pressure on McDonald’s franchises to follow suit.

Critics of McDonald’s say they still plan to keep protesting for further boosts in wages and benefits – including many activists uniting behind a “Fight for 15” goal of $15 an hour.

But the moves announced Wednesday by the nation’s largest restaurant chain hint at what economists say is a tightening labor market, where companies increasingly feel they need to compete for workers and for the loyalty of customers.

Wal-Mart, Target, and TJX (parent of T.J. Maxx and Marshalls) are among the other low-wage firms that have offered pay hikes recently.

Labor leaders say that campaigns to promote the idea of living wages have also put public pressure on the companies.

“Make no mistake, McDonald’s didn’t wake up one day and just decide to raise wages for its worker,” AFL-CIO leader Richard Trumka said Thursday.

The movement is about more than wages, he added: “It’s about overtime protections. It’s about paid leave. It’s about a voice on the job. It’s a movement to create a lasting economy that works for everyone.”

Politics at the state and local level, influenced partly by the union-backed activism, are also part of the equation that companies are looking at.

Last fall, for example, California Gov. Jerry Brown (D) signed into law a measure requiring employers to offer at least three days paid sick leave to full- and part-time workers. 

McDonald’s CEO Steve Easterbrook, in announcing the company’s new policies, said paid time off is something many workers want.

“We've listened to our employees and learned that – in addition to increased wages – paid personal leave and financial assistance for completing their education would make a real difference in their careers and lives," he said.

An employee who works 20 hours per week will be eligible for about 20 hours of paid time off per year, the company said in describing the new benefit, which will start in July. If workers don't take the time off, they’ll get pay instead.

Meanwhile, starting wages at the company-owned restaurants will be one dollar over the locally-mandated minimum wage, starting in July. Other workers will see their pay “adjusted accordingly based on tenure and job performance,” said the firm, which is based in Oak Brook, Ill.

That’s not what the Fight for 15 protesters are hoping for. Even with the raise, no one is about to confuse fast-food employment with middle-class jobs.

But it’s a significant change in benefits and pay – one that should push the firm’s average wages above $10 an hour by the end of 2016, the company says. And in a nod to the fact that workers want upward mobility beyond that, McDonald’s is also enhancing its Archways to Opportunities program of education assistance.

Lots of low-wage workers in America – at McDonald’s and other employers – don’t currently get paid sick days or paid time off.

Only 30 percent of private-sector workers in the bottom quarter of the wage pool get paid sick leave, while 84 percent in the top quarter do, according to Labor Department data. The government numbers also show a sharp divide in sick days between full- and part-time workers. Three-quarters of full-time workers in the private sector have the benefit, while only one-fourth of part-time workers do.

In his State of the Union address in January, President Obama called for passage of a Healthy Families Act to provide paid sick days to private sector US workers who don’t have sick-leave benefits.
 
 In a similar vein, he also proposed $2 billion in funding to encourage more states to assist families that can’t afford to take unpaid leave to care for a new baby or ill family member.