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McDonald’s Raises Reflect a Changing Economy

The slow growing relationship between the economic expansion and wage growth was brought into the spotlight this week when McDonald’s announced it plans to raise wages by over 10 percent for company-owned restaurants. This story in The Wall Street Journal is a good window into what the authors describe as “fresh evidence of the rising wage pressure in the American labor market.”

In July, McDonald’s will pay workers at the 1,500 restaurants it owns in this country a raise to at least a dollar more than the local minimum wage. It doesn’t apply to the franchises, which make up about 90 percent of McDonald’s restaurants in the U.S.

Nevertheless, economists say there are some broader points to be learned here: “The underlying motivation is a response to market conditions,” said Patrick O’Keefe, a former Labor Department official, according to the WSJ article. “The firms that have announced very publicly that they’re raising their entry wage are signaling that to attract the quality of labor they’re looking for, they have to be more competitive.” Check out the story here.

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