American Attitudes Toward Minimum Wage Could Wreck McDonald’s

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By Douglas A. McIntyre Published
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One of the keys to McDonald’s Corp.’s (NYSE: MCD) profits is its ability to pay its store workers are little as legally possible — sometimes not much better than the federal minimum wage of $7.25. It has been under pressure to move that floor to $10, or even $15. So far it has succeeded in virtually ignoring the pressure. As public opinion swings toward a higher federal minimum wage, McDonald’s faces paying tens of thousands of workers more than a $1 an hour more than they make now — cutting McDonald’s profits by tens of millions of dollars each year.

According to a new Gallup poll on attitudes about raising the minimum wage:

With momentum building at the federal and state level to increase hourly base pay, more than three-quarters of Americans (76%) say they would vote for raising the minimum wage to $9 per hour (it is currently $7.25) in a hypothetical national referendum, a five-percentage-point increase since March. About one-fifth (22%) would vote against this.

There is already some support in Washington for an increase in the minimum wage to $10.10. The White House has thrown its support behind a bill introduced by Senator Tom Harkin of Iowa and House member George Miller of California called the Fair Minimum Wage Act. The bill could still be blocked in Congress. Some people who are opposed to the bill have argued that when the margins at fast-food companies and large retailers are squeezed by the wage increase, they will cut their work force to make up for the expense.

Part of the push to raise the minimum wage is to use some of McDonald’s practices against it. The fast-food chain has a “McResource” help line that can aid workers in the process of getting food stamps. Advocates of raising the minimum wage hope public sentiment over the system will rally support for higher pay for fast-food workers.

But rallies in the streets for a higher minimum wage and against McDonald’s practices mean very little if the general public does not support them. Gallup’s data show that the tide has turned against the low-wage practices of companies with large low-paid workforces. McDonald’s profit margins are likely to get smaller.

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Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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