Scoff at striking fast-food workers' demands for $15 an hour all you'd like, but one chain is already paying that relatively high minimum wage.
Is it a boutique burger joint in Michigan or Oregon that serves up $5 sandwiches? Nope. It's a tiny little outfit that calls itself McDonald's (MCD -0.15%), and it still turns a tidy profit in high-wage countries around the globe despite paying workers almost double what it pays American staffers.
The Atlantic reports that not only does McDonald's pay its Australian workers the equivalent of $14.50 an hour -- or double the U.S. minimum wage -- but Australia's Fair Work Commission just hammered out a deal between the company and its employees that guarantees workers up to a 15% raise by 2017. That's in a country where most McDonald's workers are already making more than the minimum to begin with.
That should confirm the fears of Americans already cautious about what a Big Mac would cost if worker wages increased, right? After all, that stack of beef patties, sauce, cheese, lettuce, onions, pickles and bread costs more than $1 extra in Western Europe, where McDonald's has to pay workers in France a $12 minimum wage, according to The New York Times.
In truth, McDonald's only wishes its fortunes were as great in the U.S. as they are in Europe. It earns far more revenue there than it does here, despite wages in Europe accounting for roughly 45% of the cost of its food, compared with 25% to 35% in the U.S. In Australia, meanwhile, customers are paying 6 cents to 70 cents extra per Big Mac.
So how does McDonald's survive in such high-wage environments? Much like in the U.S., it plays the game. In Australia, minimum wage for 16-year-old workers is only $8, which gives McDonald's incentive to higher younger workers. It also squeezes more productivity out of workers and does away with little redundancies like cashiers, who are replaced in certain instances by touchscreens.