Battling to hire employees in a tight job market, McDonald’s on Thursday joined a growing list of fast-food and restaurant companies that are lifting hourly wages in the hopes of attracting job seekers.
Earlier this week, Chipotle said it was raising hourly pay at its restaurants in the hopes of hiring 20,000 new employees and, in late March, Olive Garden said it was raising workers’ pay.
Fast-food and casual dining restaurants have struggled to find workers in parts of the country. As coronavirus vaccinations have increased and government restrictions have eased, the restaurant industry, which laid off or furloughed millions of employees during the pandemic, has begun a hiring spree, as have several other service-related industries.
But even as McDonald’s and other restaurant chains raise wages, union activists say it is not enough for the employees who went to work daily during the pandemic and helped the restaurants survive or even thrive.
report released last week showed a significant jump in the number of workers hired in the restaurant and bar sector, employment levels at full-service restaurants in February remained 20 percent lower than they were a year ago, according to the National Restaurant Association. That’s the equivalent of 1.1 million jobs. Employment at fast-food and fast-casual restaurants was down 6 percent over the same period.
Some restaurants say the challenge of hiring workers could slow their own recoveries from the pandemic. But some potential employees — whether concerned about the safety of serving customers dining indoors, buoyed by government stimulus checks or simply unhappy with the pay being offered — are wary of returning to work.
“We’re not only competing with our peer companies out there, and I know everybody is challenged with that,” Greg Levin, the president and chief financial officer of B.J.’s Restaurants, an American grill chain, told Wall Street analysts in April. “We’re also right now kind of competing with the federal government and somewhat of the unemployment subsidies.”
The company estimates that it needs to hire an additional 5,000 employees to return to prepandemic sales levels.
But some analysts say other factors may be playing a role in making it difficult for the restaurant industry to hire, namely employees who left permanently after the volatility of the past year and others who may have found jobs in other, faster-growing sectors.
added more than 400,000 employees last year, and on Thursday said it was planning to hire an additional 75,000 workers. It will offer a $1,000 signing bonus in some locations, and pay an average of $17 an hour.
McDonald’s, hoping to add 10,000 new employees in the next three months, said it would increase hourly wages for current employees by an average of 10 percent and that the entry-level wage for new employees would rise to $11 to $17 an hour, based on the location of the restaurant.
At its company-owned restaurants, McDonald’s said the average employee wage would increase to $13 an hour, with some restaurants getting to an average wage of $15 an hour later this year. All company-owned restaurants are expected to be at an average hourly wage of $15 by 2024, the company said.
But while the coffee chain Starbucks said last year it would raise the pay for all employees to $15 an hour over a three-year span, McDonald’s has been reluctant to commit to a similar minimum-wage move.
In 2019, the company said it would no longer use its powerful lobbying arm to fight attempts to raise the minimum wage to $15 an hour at the federal, state and local level. In a call with Wall Street analysts in January, Mr. Kempczinski, the McDonald’s C.E.O., said the company was doing “just fine” in the more than two dozen states that had increased minimum wages in a phased-in way.
Tensions rose even higher when the stagehands learned that the Met had outsourced some of its set construction to nonunion shops elsewhere in this country and overseas. (In a letter to the union last year, Peter Gelb, the Met’s general manager, wrote that the average full-time stagehand cost the Met $260,000 in 2019, including benefits; the union disputes that number, saying that when the steady extra stagehands who work at the Met regularly, and sometimes full-time, are factored in, the average pay is far lower.)
The stagehand lockout has not been absolute. Claffey said that at the Met’s request, he has allowed several Local One members to work at the Met under the terms of the previous contract, particularly to help the union wardrobe staff who are on duty.
But although the Met has now reached a deal with the American Guild of Musical Artists, which represents its chorus, it has yet to reach one with Local 802 of the American Federation of Musicians, which represents the orchestra. Both groups were furloughed without pay for nearly a year after the opera house closed before they were brought back to the bargaining table with the promise of partial pay of up to $1,543 per week.
Adam Krauthamer, the president of Local 802, pointed out that because of the Met’s labor divisions, other performing arts institutions were ahead of the Met in reopening.
“Broadway is selling tickets; the Philharmonic is doing performances; they’re building stages right before our eyes,” Krauthamer said in a speech at the rally. “The Met is the only place that continues to try to destroy its workers’ contracts.”
The rally had the backing of several local politicians who spoke, including Gale Brewer, the Manhattan borough president, and the New York State Senators Jessica Ramos and Brad Hoylman, who had a message for the Met’s general manager: “Mr. Gelb, could you leave the drama on the stage, please?”
Boeing says it has received approval from U.S. aviation authorities for proposed fixes to an electrical problem that grounded a portion of its troubled 737 Max fleet for more than a month. The approval is welcome news for the handful of affected airlines in the United States, where the industry is preparing for a busy summer.
The 737 Max plane was initially grounded in March 2019 after a pair of crashes, separated by months, in Indonesia and Ethiopia. Last November, the Federal Aviation Administration cleared the fleet to fly again provided that Boeing and airlines updated the Max’s flight control software and rerouted some electrical wiring, among other changes.
In December, the plane carried paying passengers in the United States for the first time since the crashes. But last month, Boeing said it had notified 16 airlines and other customers of a potential electrical problem with the Max and recommended that they temporarily stop flying some planes.
Boeing and the F.A.A. said last month that the latest electrical issue was unrelated to the 2019 grounding directive.
said in a notice that the electrical power systems on a new 737 Max 8 airplane “did not perform as expected” during routine tests before it was delivered to an airline. It said the same issue affected certain models of the 737 Max 8 and the 737 Max 9.
Specifically, the notice, known as an airworthiness directive, said design changes to support panels in the Max’s flight deck, or cockpit, had resulted in “insufficient electrical grounding of installed equipment.”
The problem could have resulted in loss of critical functions and other problems on the flight deck, the notice said. It directed Boeing to send comments about proposed modifications by mid-June.
Boeing said in a brief statement on Wednesday that it had received final approval from the regulator for the proposed modifications and issued “service bulletins for the affected fleet.” Airline manufacturers typically issue service bulletins to notify a plane’s owner about a change or improvement in a component.
Boeing also said that airlines were preparing to return the affected jets to service and that it planned to resume deliveries of the plane. The company did not provide a timeline or further details.
reported earlier by The Wall Street Journal.
Boeing also appeared to make progress this week on another issue affecting a different model of plane, the 777. Dozens of 777 planes equipped with a Pratt & Whitney engine were grounded worldwide in February after one suffered an engine failure over Colorado. Video of the episode was startling, though the pilots landed the plane safely and no injuries were reported.
After that engine failure, the F.A.A. required that all fan blades in that type of engine be inspected. On Wednesday, the agency’s administrator, Steve Dickson, said the agency was also requiring that manufacturers strengthen the engine cowling, or housing. The “exact timing and requirements” of such a fix had not been determined, the agency said in a statement.
The 2019 crashes aboard the 737 Max killed 346 people and deeply damaged Boeing’s once-sterling reputation. The company later fired its chief executive and paid billions of dollars in fines, settlements and lost orders.
In January, Boeing agreed to pay more than $2.5 billion in a legal settlement with the Justice Department stemming from the 737 Max debacle. The agreement resolved a criminal charge that had centered on the actions of two employees who withheld information from the F.A.A. about changes made to software that was later implicated in both crashes.
One of the most urgent questions in economics is why pay for middle-income workers has increased only slightly since the 1970s, even as pay for those near the top has escalated.
For years, the rough consensus among economists was that inexorable forces like technology and globalization explained much of the trend. But in a new paper, Lawrence Mishel and Josh Bivens, economists at the liberal Economic Policy Institute, conclude that government is to blame. “Intentional policy decisions (either of commission or omission) have generated wage suppression,” they write.
Included among these decisions are policymakers’ willingness to tolerate high unemployment and to let employers fight unions aggressively; trade deals that force workers to compete with low-paid labor abroad; and the tacit or explicit blessing of new legal arrangements, like employment contracts that make it harder for workers to seek new jobs.
Together, Dr. Mishel and Dr. Bivens argue, these developments deprived workers of bargaining power, which kept their wages low.
decline of unions; a succession of trade deals with low-wage countries; and increasingly common arrangements like “fissuring,” in which companies outsource work to lower-paying firms, and noncompete clauses in employment contracts, which make it hard for workers to leave for a competitor.
also written about unions and other reasons that workers have lost leverage, said the portion of the wage gap that Dr. Mishel and Dr. Bivens attribute to such factors probably overstated their impact.
The reason, he said, is that their effects can’t simply be added up. If excessive unemployment explains 25 percent of the gap and weaker unions explain 20 percent, it is not necessarily the case that they combine to explain 45 percent of the gap, as Dr. Mishel and Dr. Bivens imply. The effects overlap somewhat.
Dr. Katz added that education plays a complementary role to bargaining power in determining wages, citing a historical increase in wages for Black workers as an example. In the first several decades of the 20th century, philanthropists and the N.A.A.C.P. worked to improve educational opportunities for Black students in the South. That helped raise wages once a major policy change — the Civil Rights Act of 1964 — increased workers’ power.
“Education by itself wasn’t enough given the Jim Crow apartheid system,” Dr. Katz said. “But it’s not clear you could have gotten the same increase in wages if there had not been earlier activism to provide education.”
Daron Acemoglu, an M.I.T. economist who has studied the effects of technology on wages and employment, said Dr. Mishel and Dr. Bivens were right to push the field to think more deeply about how institutions like unions affect workers’ bargaining power.
But he said they were too dismissive of the role of market forces like the demand for skilled workers, noting that even as the so-called college premium has mostly flattened over the last two decades, the premium for graduate degrees has continued to increase, most likely contributing to inequality.
Still, other economists cautioned that it was important not to lose sight of the overall trend that Dr. Mishel and Dr. Bivens highlight. “There is just an increasing body of work trying to quantify both the direct and indirect effects of declining worker bargaining power,” said Anna Stansbury, the co-author of a well-received paper on the subject with former Treasury Secretary Lawrence Summers. After receiving her doctorate, she will join the faculty of the M.I.T. Sloan School of Management this fall.
“Whether it explains three-quarters or one-half” of the slowdown in wage growth, she continued, “for me the evidence is very compelling that it’s a nontrivial amount.”
The Biden administration is moving in a new direction. It is trying to help low-income Americans by pushing for direct cash assistance in addition to expanding health insurance.
Each is a laudable goal. But doing both at once may not be feasible, as lawmakers raise concerns about the total price tag of Biden’s plans.
If the administration has to make hard choices, it can do more to help the poor by prioritizing cash transfers over expanded health insurance. That’s because cash helps recipients directly, while health insurance would pay mainly for care that many uninsured people were already receiving at low or no cost.
For over a decade, health insurance expansions have dominated the budget and politics of legislation directed toward the poor. In 2019, the government spent more than $600 billion on Medicaid — the major health insurance program for low-income Americans. This was more than 10 times the amount spent on the largest cash transfer program, the earned-income tax credit.
legislation enacted in March brought a welcome shift in focus toward cash benefits. Among its temporary provisions were about $100 billion in increased payments to low-income families with children and $15 billion in stepped-up wage subsidies for low-income workers, overshadowing the approximately $35 billion in new spending for health insurance.
The evidence indicates that for the low-income recipients of these programs, cash transfers will provide a greater bang for the government’s buck. Two separate studies that my collaborators and I conducted found that, on average, low-income adults would benefit more from a dollar in cash than a dollar of government spending on health insurance.
These kinds of comparisons are inherently difficult. One approach we took to measuring the value of health insurance to recipients was to see how much they were willing to pay for it. Another was to estimate the effects of such insurance on their lives, like improved health and increased economic security. Neither approach is airtight.
But they gave very similar answers: The benefit of Medicaid coverage received by a newly insured adult is less than half what that coverage costs taxpayers, which is about $5,500 a year.
The reason is simple: The uninsured already receive a substantial amount of health care, but pay for only a very small portion of it, especially when their medical bills are high.
estimated that 60 percent of government spending to expand Medicaid to new recipients ends up paying for care that the nominally uninsured already receive, courtesy of taxpayer dollars and hospital resources. In other words, from the recipient’s perspective the alternatives are $5,500 in cash or only about 40 percent of that — $2,200 — in health insurance benefits, on top of the care they were already receiving.
The United States has a longstanding tradition of providing free medical services to the indigent. Hospitals emerged in the 18th century largely to care for those with no other sources of help. In modern times, federal and state governments have enacted a grab bag of policies to help defray some of the costs incurred by hospitals and clinics in providing humanitarian care.
The result is today’s health care safety net for the uninsured. It is grossly inadequate and inefficient. It needs a radical overhaul.
But in the meantime, the direct benefits from expanding insurance to the low-income uninsured are, paradoxically, limited by the imperfect patches currently in place. Hospitals are major beneficiaries of health insurance expansions, which reduce their financial burdens and increase their profit margins.
Health insurance has always been an important financial tool for hospitals. During the Great Depression, they pioneered the first widespread health insurance in the United States to help ensure payment for provided care.
More recently, in 2006, when Senator Mitt Romney was the Republican governor of Massachusetts, he embraced the state’s health insurance expansion — which became the blueprint for Obamacare — as a way to reduce the costs that uninsured patients imposed on hospitals and taxpayers. Hospitals later used similar logic in lobbying for Medicaid expansions under Obamacare and against their repeal.
Of course, the newly insured have also benefited greatly from health insurance expansions. On this point, the evidence from Obamacare is in, and the research results are clear: Medicaid coverage is better than the safety-net care available to the uninsured.
saved lives. They also increased access to medical care and reduced medical debt, which can impose substantial financial and emotional pain on patients and their families, even though most of it is never repaid. Covering some of the remaining 30 million Americans who are still uninsured would most likely produce similar benefits.
But people in need also benefit greatly from cash. And there is evidence that cash transfers can also save lives.
In addition, a large body of work shows that wage subsidies to low-income workers with children help lift their families out of poverty, increase economic self-sufficiency, and improve their health and well-being. A recent experiment found that wage subsidies very similar to the ones that were temporarily expanded in March also increase employment and earnings for low-income adults without dependent children. Likewise, direct cash transfers provide important benefits to families and their children, whose academic achievement and physical and mental health can improve as a result.
In an ideal world, everyone would have health insurance and sufficient income. But in the real world, budgetary and political constraints often force wrenching trade-offs.
There are powerful moral imperatives for making sure that everyone has adequate medical care, as well as sufficient income for their nonmedical needs. It’s hard for economists to weigh competing moral imperatives.
But we can, at least, stack dollars on scales. And the good done by cash transfers tips the scale in their favor.
The Biden administration is now trying to make permanent its temporary expansions of both cash subsidies and health insurance. If forced to prioritize how best to help those who are struggling economically — either because of the coronavirus pandemic or from longer-term, structural obstacles — it’s time to recognize that cash is more effective than insurance.
Amy Finkelstein is the John and Jennie S. MacDonald professor of economics at the Massachusetts Institute of Technology.
The latest update on the labor market is scheduled to arrive Thursday morning when the government releases its weekly report on jobless claims.
Analysts surveyed by Bloomberg expect that the number of new claims filed will fall slightly from the previous week.
Last week, the Labor Department reported that 505,000 workers filed first-time claims for state benefits in the week that ended May 1. An additional 101,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits. Neither figure is seasonally adjusted.
The labor market is struggling to return to normal after more than a year of being whipsawed by the pandemic. Restrictions are lifting, businesses are reopening and job listings are on the upswing. Hiring increased in April but at a slower pace than anticipated.
complained of having trouble finding workers. The U.S. Chamber of Commerce and several Republican governors have asserted that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.
The U.S. Labor Department said that as of Wednesday, six states — Iowa, Mississippi, Missouri, Montana, North Dakota and South Carolina — had notified the department that they were terminating federal pandemic-related unemployment benefits next month.
The unemployment rates in those states in March, the latest month for which data is available, ranged from 3.7 percent in Iowa to 6.3 percent in Mississippi.
A handful of other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming and Idaho, have said they also planned to withdraw from the federal program.
38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.
There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. They are wary of locking themselves in to hiring more workers or raising pay when there is so much uncertainty swirling.
Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020.