Don Thompson, CEO of McDonald’s, recently remarked that his company would support raising the federal minimum wage from $7.25 to $10.10 per hour.
It is always noteworthy when a chief executive has kind words about regulation affecting his industry. After all, if McDonald’s saw benefit in paying its workers more, it could do so today without having to wait for Congress. No regulation needed.
If an employer is willing to increase wages only when everyone else is mandated by law, however, his actions reveal more about his relation to his competitors than they do about his underlying generosity.
While there are a large variety of fast-order restaurants, not all operate in the same manner, particularly in how they utilize labor. It’s easy for a company to support a higher minimum wage when it plans on employing fewer workers as a result of the regulation — and, that’s exactly what McDonald’s has the ability to do.
First, consider scale of operation and how it affects production costs. In 2013, McDonald’s sales revenues exceeded $28 billion while Five Guys, America’s fastest-growing fast-food chain, netted only $1.1 billion in sales.