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If In-N-Out Can Pay (a Lot) More Than Minimum Wage, Why Can't McDonald's?

Eric Justian headshotWords by Eric Justian
Energy & Environment

Here's an interesting point about corporate social responsibility: Major companies can choose to lead the charge, or if they neglect to do so for too long, the democratic process may step in and do so for them on terms the companies may not particularly like. Right or wrong, this is the situation faced by many low-wage employers in the U.S. following President Barack Obama's call to raise the minimum wage.

There are, however, examples of fast food and retail companies out there that strive to pay a fair wage. And they show that companies can indeed pay more and do well. In-N-Out Burger, a fast food chain in California and the Southwest, starts its employees off at a wage of $10.50 an hour. Moo Cluck Moo, a small fast food chain based in Canton, Mich., starts employees out at $12 an hour and ratchets up the pay to $15 an hour after 60 days. So what about McDonald's? Or Burger King? Or Long John Silver's for that matter?

Labor Secretary Thomas Perez makes a good point. If In-N-Out Burger can do it--remain profitable and still provide what has arguably been deemed a superior product--why can't McDonald's? Say's Perez, "I find it a remarkable notion that McDonald's can't afford to pay an increase in the minimum wage but In-N-Out Burger can."

I contacted the McDonald's media department about this issue a couple times, but unfortunately got no response.

In January, during the State of the Union Address, President Obama asked to raise the minimum wage to $10.10 per hour, saying: "Today the federal minimum wage is worth about 20 percent less than it was when Ronald Reagan first stood here. And Tom Harkin and George Miller have a bill to fix that by lifting the minimum wage to $10.10."

Since then Labor Secretary Perez has been touring the nation, campaign-style, making the president's case and raising support for an increase in the minimum wage. He's been visiting places like an ACE Hardware store in the Washington, D.C. area where associates make $13 per hour, which is about $5 more per hour than the D.C. minimum wage. There's plenty of precedent for a higher wage coupled with success.

So here's where it gets complicated. The Congressional Budget Office recently released its report on the effects of an increased minimum wage. The good news is, about a million people will be lifted out of poverty and 16.5 million low-wage Americans would see their household incomes increase. The bad news is, half a million low-wage earners could lose their jobs. Basically, a lot of people will see their household incomes rise by a lot, while a smaller number of households will see their incomes fall. This falls in line with what Brian Parker, co-founder of the restaurant Moo Cluck Moo has to say: "Instead of having a dozen people standing around during downtime, we have three or four. And during that time they are cleaning and prepping food...We have designed our restaurants to run efficiently and pay people more."

Mr. Parker, while paying his employees almost twice the minimum wage, also points out that he'd prefer for the government not to mandate a higher minimum wage. Perhaps if there were more companies like Mr. Parker's, the government wouldn't have to.

Image Credit:  jbcurio: Source