After several starts and stops, the U.S. established the modern national minimum wage in 1938, at $0.25 per hour. Since 2009, the national minimum wage in the U.S. has been $7.25 per hour, with 29 states setting the minimum wage higher than that mandated by the government. The issue is a contentious political issue, both on the national and local levels.
But the thing about minimum wage is it's just that: the bare minimum organizations need to pay workers. And some organizations are beginning to realize that the classic model of paying as little as necessary does not lead to higher profits; in fact, some companies--such as Trader Joe's and Costco--have proven that paying higher wages results in greater profits.
McDonald's, one of the top companies in the Fortune 500 ranking, recently announced it would raise wages and offer benefits to 90,000 employees in its corporate-owned stores. The plan is to increase wages to at least $1 more than the local minimum wage, bringing the average worker wage to $9.90 per hour, and, by 2016, to $10 per hour.
“We know that a motivated work force leads to better customer service, so we believe this initial step not only benefits our employees, it will improve McDonald's restaurant experience," said McDonald’s CEO Steve Easterbrook, as reported by The New York Times. Investing in employees is one part of what Zeynep Ton, Adjunct Associate Professor of Operations Management at MIT Sloan refers to as the "The Good Jobs Strategy.”