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McDonald's hikes wages amid labor crunch

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McDonald’s is raising the hourly wages at its U.S. company-owned restaurants. Yahoo Finance’s Alexandra Canal shares the details.

Video Transcript

ZACK GUZMAN: We've been hearing anecdotal evidence of employers out there getting a little bit more desperate to cling on to the labor that they have, the employees that they have working for them. And the latest company to be proving that out is McDonald's, announcing that they'll be moving wages higher by about 10% for workers at their company-owned locations. And for more on that, I want to bring on Yahoo Finance's Alexandra Canal with the latest there. Allie.

ALEXANDRA CANAL: All right, big news from McDonald's, raising hourly wages by an average of 10% for more than 36,500 employees at over 660 US restaurants. Now a big caveat here is that these are only company-owned restaurants. Franchises are not included. And I certainly think that's something that McDonald's is going to have to address because 95% of their restaurants are franchise-owned, over 14-- nearly 14,000 franchises versus 660 company-owned restaurants. And if we take a look at exactly how much more money certain positions are going to be receiving, you'll see that entry level employees will be set to earn between $11 and $17 an hour, whereas shift managers will earn between $15 to $20 an hour.

And the move comes as McDonald's employees were planning to strike on May 19 across 15 US cities. We've certainly seen a labor crunch. They would be striking over low wages. So McDonald's certainly had to respond to that. But right now, we have the April jobs report come in way below expectations. A lot of people saying that that was due to those enhanced unemployment benefits, discouraging residents from going out there and finding more work. So a lot of these companies are trying to think of incentives. McDonald's is not the only one. We also saw last week Chipotle saying that they will be raising the minimum wage to $15 an hour. McDonald's added to their announcement today that they also plan to do that by the year 2024. Certain markets could reach that minimum amount by 2021.

And then this morning, we heard from Amazon. They will be hiring 75,000 employees across its fulfillment and transportation centers with average starting pay of over $17 per hour, plus a sign-on bonus of up to $1,000. So we're seeing this across multiple sectors, as all of these businesses try to beef up their workforce amid the reopening.

ZACK GUZMAN: Yeah, and that's a lot of the competition here, the back and forth of making sure you want to hold on to those workers in this environment. I mean, we've seen that play out, including kind of the rebound in these hospitality jobs. Of course, we also got unemployment claims here this morning also reaching a new pandemic low there, too. So a lot going on, on the labor space here, Allie. But I mean, it's also the restaurants as well. Darden among them, too, that had raised wages, or at least, paid bonuses to employees. I mean, when you think about the sense of desperation you're getting from these restaurants now to not lose workers at this point in the recovery, I mean, how much farther do you think that we could see that go?

ALEXANDRA CANAL: I think we could see it go a little further. I know that when I go out on the streets in the cities, I'm seeing a lot of signs. Help wanted. We're offering these sorts of benefits, $17 an hour versus the $15. So there are certainly a lot of incentives that are going into this to try and convince workers. Judging from the April jobs report, that wasn't a good sign that this will be slowing down any time soon. I think that's going to depend on a lot of different factors. But hopefully, as the summer months come, as people start to get out there, vaccinations are on the rise, people will want to go back to the workforce. But right now, I just think it's too early to tell.

ZACK GUZMAN: All right, Alexandra Canal, bringing us the latest there on the labor front, appreciate that.