• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

As Big Tech showers employees with perks to win the talent war, Nvidia built a nearly $5 trillion company by making people pay for their own lunch

2

MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

3

Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster

1

As Big Tech showers employees with perks to win the talent war, Nvidia built a nearly $5 trillion company by making people pay for their own lunch

2

MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

3

Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster
LeadershipMinimum Wage

Wal-Mart, Target have raised their minimum wage. Why not fast-food chains?

Claire Zillman
By
Claire Zillman
Claire Zillman
Editor, Leadership
Down Arrow Button Icon
Claire Zillman
By
Claire Zillman
Claire Zillman
Editor, Leadership
Down Arrow Button Icon
March 23, 2015, 12:59 PM ET
Striking McDonald's worker Abran Escarzaga, 31, protests outside McDonald's in Los Angeles
Striking McDonald's worker Abran Escarzaga, 31, protests outside McDonald's in Los Angeles, California, December 5, 2013. Organizers say fast food workers will strike in 100 U.S. cities, and there will be protests in 100 more, to fight for $15 an hour wages and the right to form a union. REUTERS/Lucy Nicholson (UNITED STATES - Tags: BUSINESS CIVIL UNREST FOOD) - RTX1656MPhotograph by Lucy Nicholson — Reuters
Add Fortune on Google for similar content.

The private sector minimum wage parade keeps marching on.

Last week, Target announced that it would increase pay for all its workers to at least $9 per hour starting in April. That announcement comes on the heels of one made by Wal-Mart last month and after similar moves by TJX—parent company of T.J. Maxx, Marshalls, and Home Goods—Gap Inc., and Ikea.

While retailers should be commended for paying workers more, the pile-on has brought attention to a key group of low-wage employers that have been noticeably absent from the discussion. Traditional fast-food restaurants haven’t made a peep.

That’s not to say fast-food employers have been free of pressure from their workers and the public to bump up wages. The so-called Fight for 15 campaign has repeatedly hounded fast-food chains—most notably, McDonald’s—for their low pay, erratic hours, and most recently poor workplace safety.

While worker advocates will tell you there’s no excuse for the fast-food giants’ wage policies, a few facts help explain why retailers have been able to move faster on the issue.

Hourly jobs in both the retail and food service sectors are certainly on the low end of the wage scale—retail sales workers make a median hourly pay of $10.29; food prep workers earn $9.28—but when you take into account how many individuals in each industry earn the federal minimum wage, food service workers have it worse. According to a report released in March 2014 by the Bureau of Labor Statistics, 4.3% of the hourly workers in the retail trade earned the federal minimum wage of $7.25 per hour or less (there are exceptions that allow employers to pay below the federal rate). Compare that to the leisure and hospitality sector, which includes employees who work in food and accommodation services. There, 19% of hourly workers are paid $7.25 an hour or less.

Put a different way, there are 477,000 workers in sales and related occupations whose pay is at or below the minimum wage, according to the BLS; in food preparation and serving-related occupations, there are 1,540,000 such people, even though the sales sector has 700,000 more hourly workers. When Wal-Mart made its wage hike announcement, this trend was put on display. The retail giant disclosed that 6,000—or less than 1%—of its 1.3 million domestic employees received the federal minimum wage.

In theory, retail stores also have an easier time raising wages because their labor costs—when compared to overall sales—are lower than at fast-food restaurants. In retail, labor costs represent 9% of total sales. In the more labor-intensive accommodation and food services sector, payroll costs account for 28% of sales.

“Generally speaking, if Target or Wal-Mart raises [wages] to $9 or $10, the labor cost increase that it entails is smaller than if McDonald’s or Burger King did the same,” says Arindrajit Dube, an associate professor of economics at University of Massachusetts Amherst. Those labor costs figures also mean that retailers can more easily pass wage increases along to customers if they wish, since worker pay represents a smaller portion of all goods sold.

Despite these factors, Dube expects the retailers’ recent wage increases to put pressure on fast-food chains to follow suit, the same way Wal-Mart’s pay increase prompted Target to make a change (even after Target Chief Financial Officer John Mulligan said in February that rivals’ wage raises wouldn’t sway the company to make similar changes.) “They’re all competing for the same workers,” Dube says. “There’s lots of crossover between employees in the bottom end of retail and restaurants.”

About the Author
Claire Zillman
By Claire ZillmanEditor, Leadership
LinkedIn iconTwitter icon

Claire Zillman is a senior editor at Fortune, overseeing leadership stories. 

See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in Leadership

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in Leadership

Trump’s 927-page disclosure is just a normal Tuesday for direct indexing and crypto wealth managers
InvestingDonald Trump
Trump’s 927-page disclosure is just a normal Tuesday for direct indexing and crypto wealth managers
By Catherina GioinoJuly 1, 2026
1 hour ago
How foodservice giant Sodexo is embracing AI and robotics to reshape the kitchen
NewslettersCIO Intelligence
How foodservice giant Sodexo is embracing AI and robotics to reshape the kitchen
By John KellJuly 1, 2026
7 hours ago
U.S. Polo Assn. CEO J. Michael Prince
SuccessThe Promotion Playbook
U.S. Polo Assn. CEO was told he wasn’t right for a promotion—so he ‘outworked’ anyone else who wanted the job for 6 months straight
By Orianna Rosa RoyleJuly 1, 2026
8 hours ago
Nikesh Arora, chief executive officer at Palo Alto Networks
SuccessJobs
CEO of $248 billion cybersecurity company says workers are about to face a ‘Darwinian moment’ thanks to AI: Evolve or get cut
By Emma BurleighJuly 1, 2026
9 hours ago
DHL plane being refuelled at airport by man in high-vis jacket
EuropeAviation
The Iran conflict saw jet fuel prices soar—when you use 1.88 million tonnes a year, how you respond really matters (just ask DHL)
By Sam ForsdickJuly 1, 2026
11 hours ago
I know how Gen Z can survive the ‘jobpocalypse’ because I built an AI company — in 2015
CommentaryCareers
I know how Gen Z can survive the ‘jobpocalypse’ because I built an AI company — in 2015
By Jeremy FainJuly 1, 2026
13 hours ago

Most Popular

As Big Tech showers employees with perks to win the talent war, Nvidia built a nearly $5 trillion company by making people pay for their own lunch
Big Tech
As Big Tech showers employees with perks to win the talent war, Nvidia built a nearly $5 trillion company by making people pay for their own lunch
By Marco Quiroz-GutierrezJuly 1, 2026
17 hours ago
MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year
Success
MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year
By Sydney LakeJune 25, 2026
7 days ago
Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster
Success
Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster
By Preston ForeJune 27, 2026
5 days ago
The Supreme Court's birthright citizenship ruling hands the U.S. economy a $7.7 trillion win
Newsletters
The Supreme Court's birthright citizenship ruling hands the U.S. economy a $7.7 trillion win
By Diane BradyJuly 1, 2026
15 hours ago
Elon Musk on MacKenzie Scott giving away $26 billion of her fortune: 'Sadly,' it makes the world a worse place
Success
Elon Musk on MacKenzie Scott giving away $26 billion of her fortune: 'Sadly,' it makes the world a worse place
By Sydney LakeJune 29, 2026
2 days ago
Current price of oil as of July 1, 2026
Personal Finance
Current price of oil as of July 1, 2026
By Joseph HostetlerJuly 1, 2026
11 hours ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.