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McDonald's Plans Wage Boost for Workers in Company-Owned Restaurants

After acknowledging a 'very tight labor market' during last month's earnings call, McDonald's USA plans to lift wages in company-owned stores to $15 per hour.

McDonald's  (MCD) - Get McDonald's Corporation Report shares edged higher Thursday after McDonald's USA said it would raise wages at company-owned restaurants in order to attract new workers.

McDonald's said hourly wages for 36,500 employees working at company-owned restaurants would rise by 10%, to a range of between $11 and $17 per hour for entry-level and $15 to $20 per hour for shift managers, as part of a multi-month rollout.

McDonald's USA said the increases will boost average hourly wages to $15 per hour by 2024.

 “Together with our franchisees, we face a challenging hiring environment, and staying ahead means we must constantly renew our commitment to offer one of the leading employment packages in the industry," said McDonald’s USA President Joe Erlinger.

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McDonald's shares were marked 0.3%  higher in early trading Thursday to change hands at $228.70 each, a move that would extend their year-to-date gain to around 5.5%.

Wage pressures have been simmering in the U.S. labor market for the past few months, while at the same time many companies -- particularly small businesses -- have reported difficultly in bringing back staff as states re-open and the pandemic wanes.

April JOLTS job openings data indicating 8.1 million open positions, the highest on record, while last week's April non-farm payrolls reported showed average hourly earnings rise 0.7% on the month -- against a forecast of -0.1% -- and 0.3% on the year. 

Last last month, Erlinger told investors on a conference call that McDonald's would need to "stay a little bit ahead of things" with respect to what CEO Chris Kempczinski described as a "very tight labor market that's putting pressure on both us and our franchisees."

"We're working through what some changes in our company-owned restaurants might look like from a wages and compensation perspective," Erlinger said. "We think the external environment is right to do this. We think the internal environment is also right to do this, and we think it's actually a great business decision for us."