That Big Mac may cost more thanks to the tight labor market
- McDonalds is charging more for its burgers and fries, Bloomberg reports. Earnings margins were down 150 points at the fast-food giant's U.S. restaurants. The cause is a tight labor market that's pushing up labor costs, creating inflationary conditions in what economists call a Phillips Curve. McDonalds' prices are 3% higher than they were this time a year ago, likely in response to this labor issue, Bloomberg says.
- Restaurants are still having trouble finding and retaining workers. According to Bloomberg, a record 787,000 jobs opened up in November that the hotel and food service industries are struggling to fill. With shrinking unemployment, the pool of workers employers would normally hire are harder to find.
- McDonalds is increasing wages and offering tuition assistance to attract job seekers and reduce turnover — which naturally adds to labor costs, as well.
The tight labor market shows just how much pressure employers are under to fill jobs. Food chains like McDonalds have put considerable effort into changing their image, raising wages and offering development opportunities through education and training.
Employers who have been reluctant to raise wages beyond the anticipated 3%, may need to consider raising wages or offering more in-demand benefits, such as flexible work schedules or paid leave, in order to keep up with the changing tides.
Employers must also better communicate such benefits changes, and many have opted to do so by wrapping the announcements more broadly into their branding. Employer brand and company brand, generally, have somewhat merged in recent years as more employers focus on widely communicating their employee value proposition in order to attract candidates.