Hey guys, I just found this article from The Fortune that discusses the positive changes that have happened to McDonald’s following its implementation of higher wages and better benefits for its workers. As the title states, service has improved for the company, but the article also mentions that turnover rates have improved, and the company grew about 6% in the quarter following the implementation of these new wages and benefits.
McDonald’s isn’t the first company to raise wages for its employees, companies such as WalMart and Costco have also raised wages and benefits for their workers, and seen similar results. However, it is worth mentioning that, as this article states, McDonald’s has been laying off a lot of workers as of late, and seems to be trimming the fat within their corporation. Essentially, they’re cutting out what they don’t need, and using the extra cash they’ve saved to help out other more efficient workers.
So, do you think that this business model is effective? Do you predict that other companies will be following suit? They might be saving money, but do you think that this will be good for the country, since so many people might lose their jobs if this policy is adopted by other companies?
Hey Mario, I think that it was a smart move by McDonald's to increase the wages oft their employees and their successful results speak for themselves. However, I thought it was interesting the the majority of McDonald's employees are unaffected because they work at franchised stores, so the franchisees who hire and pay their own workers are feeling pressure to match this wage hike. Personally I would think that seeing the success the other stores are having, the franchise stores will also increase wages.
ReplyDeleteIn terms of the laying off workers and "trimming the fat", I think it is very effective for a business to follow this model, and while I can see many companies copying McDonalds recent moves, I feel that these may moves may have major repercussions. The largest downside of all of this is that the unemployment rate would increase, but then again if the minimum wage is increased nationally to $15 wouldn't that also cause some sort of increase in unemployment?
I wonder if there is demographic data on the employees from McDonald's, because this could give us insight into these policies effects on poverty. If they are hiring more older people, this would explain the reduced turnover and lower turnover makes workers more effective. If that's the case, then in terms of reducing poverty this may a good policy, as the majority of very young people working at McDonald's are not in poverty. If the shift towards hiring older people who will stick around longer, reduce turnover, and improve efficiency is strong enough then even with reduced employment it could also reduce poverty.
ReplyDeleteI am more interested in seeing if McDonalds or similar fast food establishments will automate more jobs. For example, some European McDonalds do not have people taking order inside. Instead, you use a touch screen device. If wages go up there is always a risk of technology taking over lower skilled labor.
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