A spokesperson for McDonald's told the Insider on Tuesday, May 25, that the fast-food chain was ramping up recruitment. The spokesperson added that individual restaurants were offering a range of benefits including pay incentives, such as appreciation pay, sign-on and referral bonuses and paid time off.
Earlier this month, Fox5 New York reported that McDonald's was raising pay at 650 company-owned stores in the U.S. as part of its push to hire thousands of new workers in a tight labor market. The fast-food giant has also encouraged its franchisees, which make up 95 percent of its nearly 14,000 stores in the country, to boost pay.
"We encourage all our owner/operators to make this same commitment to their restaurant teams in ways that make the most sense for their community, their people and their long-term growth," McDonald's President Joe Erlinger wrote in a letter to employees.
The Chicago-based fast-food company said its hourly wages will increase an average of 10 percent over the next few months to $13 per hour, rising to $15 per hour by 2024. Entry-level workers will make at least $11 per hour while shift managers will make at least $15 per hour.
Other restaurant chains are also upping their wages.
Chipotle recently said that it will raise workers' pay to an average of $15 per hour by the end of June. Darden Restaurants, the owner of Olive Garden and other chains, said in March that it will guarantee workers $12 per hour including tips by 2023.
Labor shortage cripples fast-food industry
The fast-food industry is suffering from a labor shortage because of the Wuhan coronavirus (COVID-19) pandemic. This has caused restaurant chains to cut open hours and close dining rooms. (Related: Nobody wants to work: Labor shortage holds back restaurant industry as states ease pandemic restrictions.)
Chipotle, Taco Bell, and others are offering lucrative perks such as cash bonuses, raises and education benefits to attract new staff. One McDonald's restaurant in Tampa, Florida even offered $50 to anyone who would show up for a job interview.
Several news outlets reported that the labor shortages may have been caused by a mix of unemployment benefits, COVID-19 health concerns, caring responsibilities and low wages.
Some chains are turning to large-scale hiring events to screen swaths of candidates at once. IHOP hosted a "National Recruiting Day" on May 19 to fill some of its 10,000 openings. The open positions include a variety of part- and full-time opportunities across all 1,600+ restaurants across the IHOP system.
Taco Bell hosted hiring parties at 2,000 U.S. stores last month to hire 5,000 employees. The fast-food chain converted parking lots into job fairs. Some candidates had "drive-up interviews" from their cars. Taco Bell also added new benefits for managers at company-owned stores.
Also last month, McDonald's locations in Texas held a three-day hiring event to fill up 25,000 openings. Whataburger, which is looking to hire 50,000 new employees, extended perks to existing employees and hosted a free virtual leadership conference on April 21.
As of last month, restaurants and bars were 1.8 million jobs – or 15 percent – below pre-pandemic levels, with many establishments saying they are suffering from a dearth of applicants for a number of open positions.
"I don't think anything like this has ever happened. Everybody in the world is hiring at the same time" chef and owner of two North Carolina restaurants Katie Button told the New York Times. Chef Hugh Acheson said more than 300 long line cook openings posted in February were still open two months later.
Workers and customers still have concerns about the safety of indoor dining, and not everyone is vaccinated. Some studies found fast-food and retail workers to be more at risk than others of contracting COVID-19.
Enhanced unemployment benefits contribute to labor shortages
Some employers and economists cite enhanced unemployment benefits as one of the biggest factors for labor shortages. Under relief bills passed by Congress, those receiving jobless benefits get an additional $300 a week on top of regular state benefits, which average $318 a week, according to the Department of Labor.
That means the average unemployment recipient earns better than the equivalent of working full time at $15 an hour. Those enhanced benefits are available until September 6. (Related: LABOR COLLAPSE: Small business owners can’t compete with federal stimulus, struggle to hire workers.)
A University of Chicago study found 42 percent of those on benefits receive more than they did on their prior jobs, and the share is higher when factoring in temporary health insurance offered through relief bills.
Citing labor shortages, 23 GOP-led states opted out of a federal program that boosted unemployment benefits by $300 a week. Florida was the latest Republican state to stop its participation in the Federal Pandemic Unemployment Compensation program.
Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Mississippi, Missouri, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming have also said that they would drop out of the program.
The states' decision come in light of the jobs report released by the Labor Department last month. This report revealed that the economy added just 266,000 jobs – sharply missing the 1 million forecasted by Refinitiv economists.
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