McDonald's: Do They Really Support a Wage Increase (2014)

McDonald's logo

Controversy

The McDonald’s Corporation has been under fire for unfair wages for its employees, most notably starting in 2013 with employee protests. There have been protests and strikes by McDonald’s employees and activists in attempt to raise their wages. The federal hourly minimum wage in 2014 was a mere $7.25 per hour. A food preparation and serving worker made a mean hourly income of $8.81 per hour. In 2014, Don Thompson, McDonald’s CEO at the time, suggested that his company would support a bill raising the minimum wage from $7.25 an hour to $10.10 an hour. President Obama called on Congress in 2014 to raise the national minimum wage, and proposed a bill to raise the federal minimum wage to $10.10 per hour. While Don Thompson was doing a talk at Northwestern University he said, “I will tell you we will support legislation that moves forward” talking about legislation that raises the minimum wage (Gongloff). While this was being said, their actions were telling a different story. McDonald’s spent millions of dollars in 2014 on lobbying politicians, trying to influence their decisions that would have an effect on the company. For instance, McDonald’s is one of the biggest members of the National Restaurant Association, which has a huge influence in the political world. The NRA fights to oppose policies that would raise minimum wage, protect break times, give paid sick days, as well as other worker concerns. It is said that McDonald’s paid a single lobbying firm, Brownstein Hyatt, $310,000 in 2014 to lobby Congress about minimum wage, among other issues (Opfer). McDonald's views themselves primarily as a franchisor, as more than 80% of their restaurants are franchised. After the corporation said they support a wage increase in 2014, they sold more than 3,500 company owned restaurants to franchisees (Opfer). This is because the franchised restaurants do not have to have the same wage increase as the company owned restaurants, therefore the corporation can still profit off of the low wages. It seems dishonest and unethical to tell employees that the corporation supports a wage increase, while spending millions of dollars lobbying against the same issue, and working their way around actually paying a higher wage.

McDonald's employee serving a meal

Stakeholders
The stakeholders mainly affected by this ethical controversy with McDonald’s are the McDonald’s employees. The employees making the food and doing the services for McDonald’s are not making enough money to live a sustainable life off of their income. They feel that they should be making more money. The McDonald’s corporation acknowledges this issue and says they support a change, but no real change is being done to improve the issue. This also makes the consumers a stakeholder. If the employees are not being paid a fair wage, they may not be putting forth all of their efforts into making the best food for the customers. Unsatisfactory customer service results in unhappy customers, which could result in less profit. This also makes stockholders a stakeholder in this issue.

Individualism

National Restaurant Association logo

The theory of individualism states that the soul purpose and primary goal of a business or corporation is to maximize profit and shareholder wealth. Milton Friedman was an economist and a Nobel Prize winner for economics in 1976 who believed in individualism. Although individualists believe that profit is the only goal of a business, they also believe that this must be achieved in a fair way, following all of the laws and legal rules that pertain to a business and the treatment of their employees. According to an individualist, the McDonald’s Corporation has not performed an unethical act. McDonald’s was only acting in a way that would maximize profit for the corporation. Their employees were being paid the federal minimum wage, therefore they were within the legal bounds. Paying employees as little as possible results in the highest possible profit. Although workers may not see the minimum wage as a fair wage, it is all McDonald’s technically has to pay them. An individualist would not see this issue as an unethical issue, but would actually applaud McDonald’s for trying to maximize their profits and maximize shareholders’ wealth.

Utilitarianism

Utilitarianism is an ethical tradition that directs people to make decisions based on the overall consequences of their actions (DesJardins). Those who believe in utilitarianism believe that happiness and pleasure are the only things that have true, essential value. Utilitarian’s put the happiness of every person as their goal to strive for, not just one person or certain people involved. If happiness for the entire community is achieved, then a corporation has done their ethical duty as a business. According to a utilitarian, the McDonald’s Corporation is not acting with the proper goal in mind. Clearly, the entire community is not happy, since there are protests and strikes happing as a direct consequence of their actions. The McDonald’s Corporation is coming out and saying that they are willing to try to help their employees and raise their wages, which would improve the overall happiness of their employees, but their actions are not making this happen. The McDonald’s CEO, Don Thompson, made a total of $9.5 million in 2014 (Yue). This is more 500 times the amount a food preparation and server employee makes in a year. Don Thompson certainly is happy with his salary, but he is only one employee out of the 1.9 million McDonald’s employees. Obviously a CEO’s job is much different than that of a food preparation and server, so their salaries should be different, but maximum happiness is not being achieved with the current salaries.

Kantianism
Kantianism is the theory that the fundamental ethical duty is to treat people with respect and as people equal to oneself. There are four basic principles of Kantianism; to act rationally, to allow and help people to make rational decisions, to respect people, and to be motivated by good will. Immanuel Kant was a German philosopher who came up with the term called the categorical imperative, which was the moral philosophy that evaluates a person’s motivations for their actions. Kant’s Law of Rationality shows us what is rational and therefore what is moral. The most important part of Kant’s categorical imperative was the formula of humanity. This formula emphasizes the respect that people should have for themselves as well as everyone around them, and that respect is essential to humanity. People should not be used as a mean of production and efficiency, but should be respected as an individual. According to the theory of Kantianism, McDonald’s is using their employees only to benefit the business and is not treating them with the respect that they deserve. Employees are being used only to maximize the profit of the business and are not being respected with a fair wage. McDonald's is being inconsistent and dishonest with their actions. The respect for their employees is not being shown and the individual needs for autonomy are not being met. What they are telling their workers seems to be motivated by good will, but saying something and actually doing something completely different is certainly not doing the right thing.

Virtue Theory

Don Thompson, (former)
CEO of McDonald's

Virtues, or “good-making features,” are the characteristics that allow things to function properly. Virtue theory does not focus on what an individual should do, but rather what type of person that individual is. There are four main virtues that a successful and ethical business or businessperson has to have. They are the virtues of courage, honesty, temperance, and justice. A virtuous company is one that has all four of these virtues in perfect balance. The McDonald’s Corporation is not a virtuous company. The virtue of courage is not apparent through the actions of McDonald’s. They did not have the courage to do what is right. They said they would do what is right by raising employees’ wages, but were not fulfilling this duty. Honesty is completely disregarded in this situation. Saying one thing and doing another is the epitome of dishonesty. The McDonald’s Corporation shows no temperance in this case. They not only have the unreasonable expectation that employees will work for a minimum wage, but show no self-control when telling the workers they support a wage increase, but actively work for the prevention of a higher minimum wage. Finally, McDonald’s shows that they do not have the virtue of justice. They may work for the production of quality foods and services, but do not do so with fair practices.

Justified Ethics Evaluation

In my opinion, the McDonald’s Corporation is being extremely unethical. I understand that profit is the main goal of a business and to achieve maximum profit a company has to operate with the most possible efficiency, so I do not see the low wages of the McDonald’s employees as unethical. The issue in this case is telling the employees that the corporation supports a wage increase, while actively pursuing the exact opposite. Paying millions of dollars to companies to lobby against the increase of the federal minimum wage is certainly not supporting a wage increase. The dishonesty between higher executives within the McDonald’s Corporation and the low wage employees should easily indicate that what is being done is unethical. If the McDonald’s Corporation was truly supportive of raising wages for their employees, then they should have immediately stopped funding the lobbyists that were vigorously fighting a minimum wage increase. They should support bills that would raise the minimum wage and take action in actually paying their employees more. If they did not support an increase in pay, then they simply should not have told their employees that they support such an action. Overall, the way the McDonald’s Corporation went about the issue was unethical and there were other ways it could have been handled.

Conclusion

Honesty is necessary in a successful relationship. The McDonald's Corporation was extremely dishonest with their employees. This exposes the true identity of the higher executives within the McDonald's Corporation. They do not show the respect that is needed between executives and workers. The disjoint between the McDonald's executives and the employees at the bottom of the totem pole is very apparent from this case. This disjoint could be resulting in a lack of productivity and efficiency that could be costly for the McDonald's Corporation in the end.

References

DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill Higher Education, 2009. Print.

Gongloff, Mark. "McDonald's CEO: 'We Will Support' A Minimum Wage Hike." The Huffington Post. TheHuffingtonPost.com, 4 June 2014. Web. 3 Oct. 2015.


Opfer, Chris. "As McDonald's Moved to Raise Workers' Pay, Its Lobbyists Urged Caution on Wage Hike." As McDonald's Moved to Raise Workers' Pay, Its Lobbyists Urged Caution on Wage Hike. Bloomberg BNA, 5 May 2014. Web. 3 Oct. 2015.    

Yue, Lorene. "McDonald's Cut CEO's Total Pay 31% Last Year." Crain's Chicago Business. Crain Communication Inc., 14 Apr. 2014. Web. 21 Oct. 2015.