Skip to comments.McDonald's Faces Teen Labor Shortage ("fewer teenagers working period")
Posted on 07/23/2007 5:02:41 PM PDT by fight_truth_decay
A new McDonald's Corp. commercial tells the story of Karen King, who began her career as a teenage crew member in the 1970s and rose to head the company's $10-billion Eastern-U.S. division.
The spots are meant to resonate with American teenagers, who are leaving the workforce in droves and leaving McDonald's with a labor crunch that threatens to take a bite out of its surging sales.
"It's a shrinking labor market, and we recognize less people will be available to hire," Ms. King says.
The declining number of teenage job-seekers presents a super-size challenge for McDonald's, where 40% of the top 50 managers including CEO James Skinner worked their way up from the cash register or fry vat, and which more than ever needs qualified workers to keep service from bogging down in an era of computerized cash registers and electronic ovens.
"There is a direct correlation between the quality of the crew and sales restaurants do," says Steve Bigari, a former McDonald's franchisee who now works with fast-food companies on labor issues.
With the number of teenage applicants dwindling, McDonald's has rolled out a new commercial emphasizing the opportunity for advancement at the company. For more photos visit McJobsChicagoBusines.
For years, McDonald's has manned its crews largely with teenagers. In the 1990s, 45% of its U.S. employees were under 20. Today it's 33% of the workforce, which totals 650,000 employees.
GETTING HARDER OUT THERE
It's not just that fewer teenagers are working at McDonald's fewer are working, period. Last year about 44% of American teens held jobs, down from nearly 60% in 1982. The reason isn't clear, but many attribute the shift to an intensified focus on academics and after-school activities.
Whatever the explanation, the trend scares fast-food operators. "Everyone I talk to in the industry says it's becoming harder and harder to maintain their operations standards given what is happening in the workforce," Mr. Bigari says.
About half the employees in the fast-food industry are between 16 and 25 years old. The number of jobs in the industry is expected to increase about 17% in the next decade while the number of workers in that key age group is expected to increase 0.3%.
McDonald's is trying to get ahead of the coming squeeze with its aggressive new recruiting campaign, launched in May and driven by the TV ads featuring Ms. King. The company also revamped the recruiting portion of its Web site to facilitate online job applications, which are routed to franchisees, who hire the bulk of McDonald's front-line workers.
Lurking behind the recruiting drive is another reality: McDonald's could ease its labor crunch by raising wages. But that's a last resort for the franchisees. Increased payroll costs come directly out of their pockets.
Steve Russell, McDonald's U.S. senior vice-president of human resources and chief people officer, says the company doesn't feel pressure to raise wages, which vary by restaurant but average about $7.35 an hour, 26% over the current federal minimum wage of $5.85.
TOUCH SCREENS AND NEW MENUS
At the same time it expands recruiting efforts, McDonald's is trying to be more selective about its hires. About half of its stores require applicants to take a short test designed to measure their experience and behavior patterns. Mr. Russell says the number of stores utilizing the test quadrupled last year and the company continues to "rapidly deploy it."
The increased scrutiny matches the rising sophistication of fast-food jobs. Burgers are no longer flipped on a griddle but cooked in an oven operated by an electronic timer. New menu items have forced kitchen staff to master new preparation techniques and have given order-takers more buttons to locate on cash registers with touch screens easy to use but often intimidating to workers uncomfortable with technology.
Fumbles with the equipment slow down order times a big turnoff for customers looking for a quick meal. That's why it's critical to find, and keep, qualified workers. An internal McDonald's study shows stores with higher-performing crews reduce turnover by 30% and increase sales by $200,000 annually.
"Now more than ever, we realize our people are the main drivers of our business," Mr. Russell says.
This week in Las Vegas, McDonald's is holding a meeting of 15,000 managers at which employment will be a primary topic of discussion.
Industry observers say McDonald's has done more than any of its national competitors to promote employment, even while it may pay lower wages than some regional and national chains, such as coffee giant Starbucks Corp.
The effort may be paying off. Last year, according to Mr. Russell, McDonald's reduced its turnover by 9%, matching the chain's increase in sales, which hit $21.6 billion. The company won't disclose its retention rate; the industry averages about 150% annual employee turnover.
But it remains to be seen how McDonald's will replace the teenagers who continue to drop out of the workforce.
"There is not a readily available supply of teenage workers lined up at the door begging for jobs," says Joni Doolin, founder of People Report, a Texas-based company that tracks employment data. "And the problem is not going away anytime soon."
If wages were too low, people wouldn’t work for them. But they do, so that PROVES the wages are reasonable. Sure, they could raise the wages, but why should they? The workers are still working, still willing to show up on time, and it keeps costs lower. Were they to raise wages, they would have to FIRE more workers (that’s what happens when you raise wages, this is empirical fact), and the price of burgers would go up. Then people wouldn’t buy them, then McDonald’s would once again FIRE more workers because of a reduced demand, and you’d be back in the same boat, just with less people working. (stole that paragraph from http://www.chinadaily.com.cn/opinion/2007-03/23/content_835150.htm cause I liked it..short and sweet)
Still the POWER LINES in the story above are : FEWER TEENAGERS ARE WORKING PERIOD!!! DING DING DING DING!
I was 19 and the store stock-clerk at 50 cents an hour.
That's why McBigBucks put pictures on their registers so the Non-English speaking illegals could run the registers.
Who would send their 17 year old daughter to work with a bunch of 40 year old men illegally in the country? Or even their 16 year old boy for that matter.
The last time my wife went to a McBigBucks they gave my wife the wrong order twice! They couldn't even punch the right picture on the register. She told me the person helping her spoke about 4 words of English.
No more! That's it!
I'll give McDonald's credit. They aren't begging for illegals, they recognize the value of a quality workforce, and they are looking for positive solutions to the problem.
Ted Nugent: Cultivating work ethic is vital for children, for America
Absolutely. We as Americans can work this out if we work together.
McDonalds has identified the problem, which is an increased emphasis on academics and after school programs. So instead of seeing it as a problem, they should embrace it as an opportunity.
For example, one of the biggest practical problems facing academically minded teenagers today is how to pay for college.
But imagine if McDonalds created an aggressive growth mutual fund for employees. In that way, the franchises would still pay about the same wage for work right then, but those who stayed with the corporation for some years would start to get ballooning benefits, at no extra cost to the franchise.
Using the corporations liquidity, they could get some killer yields from such a fund.
That would mean that while the franchise would continue to pay the typical wage, their take home pay would include the dividends from the fund, or it could be used as reinvestment.
While teenagers might like to spend their paycheck now, if they could get their paycheck, plus say 15% compounded interest later, it might be well worth their while to have their pay deferred.
And McDonalds might come up with a bunch of other low cost, for them, ways of providing their employees even more money if it was set aside for tuition.
The end result being that employees who began at the minimum age of 16 (in the US), could have about 2 years work to build up a substantial offset to their college expenses. And if they continued to work at McDonalds through college, at 4 and 6 years employment, there might even be enough incentive for them to continue with the corporation as a career.
If that was the case, it would be very much to the advantage of McDonalds to offer continued support through selected post-graduate degrees, such as in business and accounting.
And for those who weren’t on the academic track, such a mutual fund would still boost their paycheck to much more than the minimum wage, but without stressing the franchises.
How loyal would their employees be if they were getting 50% more than minimum wage, far more than any comparable job would pay? It would start to drain employees from other restaurant chains.
At times, there can be no socially accepted comment.
The minimum wage is recalculated yearly based on a cost-of-living adjustment for workers age 16 and older.
14- and 15-year-olds may be paid 85 percent of the minimum wage ($7.93 x 85% = $6.74/hour).
“(BTW: I worked at Blockbuster instead).”
I’ll assume you were one of the few who know how to alphabetize the titles... :)
More McDonald's franchises will have to adjust, by enticing teenagers to work for higher wages, perhaps resort to illegal immigrants, or some other measures.
It is still going to be the Market that determines the survival of their Business. I do not have a problem with the demise of McDonald's.
They sell milkshakes with no milk in them. Well, that was so a while back. I do not know if it is still true.
The very first time I ate at a McDonald's, a hamburger cost less than a dime and it was a better product.
I have to agree with you.
Currently working in an area where excess income is the norm, I see lots of teenagers running around having a good time, with no job.
Mom/Dad hands them the money. For what? Grades.
How about them learning the other kind of grade...the one that comes from the ‘school of hard knocks.’
They need both in order to make it.
Back when Huizenga still owned the company, we had to stay until EVERY FRIGGIN' TITLE, was lined up straight on the shelf. With the mess the store would be in, we would sometimes get out at 3AM on Saturday.
Loved the free rentals, however.
THat’s what I did...to start with. Soon I was promoted to the bakery department. I made pies, cakes, muffins, rolls, etc. It was way better than a fast food joint. Before the buffet/cafeteria, I worked at burger king for 2 months. I couldn’t get along with the supervisors at a place like that. We hated eachother.
They worked me long hours at the buffet though. While in highschool I was working 35 hours per week, or whatever the max allowable was back then without being considered full time. That was alot for a 16 year old going to school every day from 8 to 3:30.
People must have very low expectations for McDonald's crew quality, because my experience has been that if this were really true, the majority of McDonald's I have been in since I came back to the States in 2004 should be bankrupt.
Great idea, except most kids today can't spell "deferred", and if they could, they would accuse us adults of trying to spoil their fun by making them put something away for the future.
McDonalds was my first ever “real” job, at age 16.
I’m still trying to get the grease out of my hair.
At Charley’s restaurant in the Minneapolis Airport, I had the opportunity to see a true professional fast food worker. An older man in front of me was struggling with his tray due to Parkinson’s. I helped him a little, but then the manager said “Sir, your luggage looks pretty heavy. This young lady (referring to an employee) will carry your tray to your table for you. It was great. She offered help and blamed the luggage, not his infirmity.
Charley’s Corporate offices got a letter from me commending her.
That’s a disgusting story, but it reminds me of how much I miss the taco joints in San Diego. I grew up in East County.