McDonald's raises pay for 90,000 workers

McDonald's, which has been struggling with workers protests and sagging sales, plans to increase pay for some 90,000 workers starting in July, the company said on Wednesday.

The pay increase will lift the average hourly rate for its U.S. restaurant employees to $1 above the mandated minimum wage on July 1, the company said. McDonald's said it expects average wages to rise to more than $10 an hour by the end of 2016.

The hamburger chain also announced plans to dole out vacation benefits to employees of the stores it operates, which make up roughly 10% of its U.S. stores, the company said in a press release.

Employees who don't take the time off will be paid for the value of that time, the company said.

An organization of fast food workers who have been pushing for chains to raise wages to $15 a hour criticized the increase as insufficient.

"It's a weak move for a company that made $5.6 billion in profits last year," said Kwanza Brooks, McDonald's worker from Charlotte, North Carolina who is associated with Fight For $15, an organization of fast-food workers that has been protesting wages.

Brooks, who said she is paid $7.25 an hour, called the increase a "PR stunt" on a conference call with reporters.

Organizers of Fight For $15 said they will protest the pay increase in front of McDonald's restaurants on Thursday due to concerns that it is insufficient and that it will only benefit 5% of McDonald's workers.

Indeed, the pay increase and vacation benefits apply to employees at stores McDonald's operates — not the company's franchise-operated stores, which make up close to 90% of McDonald's 14,350 U.S. locations.

McDonald's shares fell 1.2% to $96.29 Wednesday.

McDonald's announcement mirrors moves by other national retailers to increase workers' pay amid growing concerns over income inequality and calls by President Obama to boost the federal minimum wage to $10 an hour.

Retailer Target last month announced it would raise its minimum wage to $9 an hour starting in April, following news from Wal-Mart that it plans to raise its wages to $9 an hour in April and $10 an hour by the end of 2016.

Worker advocates largely attribute the increases to worker protests the past two years, including at McDonald's stores, calling for a $15 hourly pay floor.

"Fast food workers are rightly demanding a greater share in the profits that McDonald's and other fast-food corporations are earning off their labor," said Christine Owens of the National Employment Law Project. "They are fighting for wages that can lift them out of poverty and support their families."

The pay increase comes as the restaurant giant struggles for ways to boost sagging sales, including bringing in a new CEO and experimenting with offering its popular breakfast menu all day.

McDonald's board named Steve Easterbrook to replace Don Thompson as CEO earlier this year. The company also recently announced plans to offer its popular breakfast menu all day in certain locations — a development the company had previously resisted due to technical difficulties.

"Consumer needs and preferences have changed and McDonald's current performance reflects the urgent need to evolve with today's consumers, reset strategic priorities and restore business momentum," the company said last month when it reported disappointing February sales numbers.

The company said same-store sales dropped 4% in its troubled U.S. stores for February, and and 1.7% globally.

CEO Easterbrook said the pay increase is meant to motivate workers.

"We know that a motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald's restaurant experience," he said in a statement. "We'll continue to evaluate opportunities that will make a difference for our people."