TIME Labor

Why McDonald’s Wage Hike Won’t Help Most Of Its Employees (Yet)

A sign stands outside of a McDonald's restaurant in San Francisco on Feb. 9, 2009.
Justin Sullivan—Getty Images

Just 12% of McDonald's employees could see a bigger paycheck

Facing declining sales and a growing protest movement against its labor practices, McDonald’s announced Wednesday it’s boosting hourly wages for hundreds of thousands of workers. But the change won’t actually affect most of the men and women who wear a McDonald’s uniform.

McDonald’s employees affected by the pay raise will see their hourly earnings rise to at least $1 above the local minimum wage, a rate that will work out to an average pay of at least $10 per hour by the end of 2016. However, the raise only applies to U.S. locations that are owned and operated by McDonald’s itself.

Most of the world’s Big Macs are made at franchised restaurants, properties that McDonald’s owns or leases but hands over to independent businesspeople to operate in exchange for rent and a 4% cut of the restaurant’s sales. Franchised restaurants make independent hiring choices and set their own wages. Because of this business model, just 12% of the 750,000 workers at U.S. McDonald’s locations will qualify for the wage boosts — or the paid vacation time the fast food chain is also implementing.

The announcement, which new McDonald’s CEO Steve Easterbrook called an “initial step,” drew the immediate ire of Fast Food Forward, a union-backed group that’s been organizing a series of one-day fast food worker strikes that started in 2012. The group is planning fresh protests for Thursday, decrying McDonald’s pay increase as a “PR stunt.”

“McDonald’s needs to step up to the plate,” Fast Food Forward director Kendall Fells said on a conference call with reporters Wednesday, noting that the vast majority of workers weren’t receiving raises. “We’re going to show McDonald’s that this movement won’t stop until we get what we deserve.”

That McDonald’s chose to make a public statement about its new wage policy illustrates how quickly discussions about low-paying jobs have shifted recently, says Dave Sherwyn, a law professor at Cornell University’s School of Hotel Administration. That change in the public conversation has been largely driven by those pro-union groups, who, as much as they accuse McDonald’s pay raise of being little more than a savvy public relations move, have themselves done more to raise publicity than actually threaten the daily operations of the country’s fast food chains.

“This is a pretty unique situation,” says Sherwyn. “I can’t imagine if McDonald’s, Burger King or anyone had done this five years ago, they would have made a big announcement about it. It just wasn’t in the public conversation.”

MORE Fast-Food Strike Progress Measured in Pennies, Not Dollars

The spotlight will now be thrown on the franchise owners, who will be watched closely to see if they follow the lead of McDonald’s corporate office. That’s partially because the strikes have helped more consumers learn how McDonald’s franchise structure works, something that might not have been clear to your everyday customer just looking for a Big Mac with fries.

“The franchise arrangement, not obvious to everyone, will now be more obvious,” says Jefferson Cowie, a professor of labor history at Cornell University. “Pressure will boil up from below, putting pressure on the franchises to follow suit with the corporate policy on wages.”

McDonald’s wage increase comes just as the company’s legal obligations to its franchisees are coming under intense scrutiny. The National Labor Relations Board began hearings this week to determine whether McDonald’s should be considered a “joint employer” along with franchise owners. Such a designation could make McDonald’s responsible for hiring practices, wage levels and labor violations at individual restaurants, fundamentally upsetting its lucrative franchise-based business model — a model shared by many of its rivals, too. About 60% of all U.S. fast food restaurants are franchise establishments, according to a 2007 study the U.S. Census Bureau. If the labor board rules McDonald’s is a joint employer, it could spell the end of the franchise system as we know it.

 

TIME Money

Stanford Offers Free Tuition to More Students

Stanford And Berkeley Rank Among Top 3 Universities In The World
Justin Sullivan—Getty Images People walk through the Stanford University campus on May 22, 2014 in Stanford, California.

Students whose parents earn less than $125,000 a year get a free ride

Stanford University will offer a free ride to any student whose parents make less than $125,000 a year, University officials recently announced in an expansion of its financial aid program for the coming school year.

“Our highest priority is that Stanford remain affordable and accessible to the most talented students, regardless of their financial circumstances,”Stanford provost John Etchemendy said.

The simple rule-of-thumb was revised from the previous year’s benchmark, $100,000 in family income. Eligible students are expected to contribute $5,000 to tuition using part-time wages, though they will not have to borrow money to meet that goal.

Without financial aid, Stanford students pay upwards of $65,000 a year in tuition.

TIME Companies

Salesforce CEO Gave an Employee $50,000 To Help Leave Indiana

Salesforce.com's Dreamforce 2014 Conference
Tim Mosenfelder—Getty Images Marc Benioff delivers the keynote speech at Salesforce.com's Dreamforce 2014 Conference at Moscone South on October 14, 2014 in San Francisco, California.

The company has been leading the charge against the Religious Freedom law

Salesforce is putting its money where its mouth is.

Not only is the cloud computing company leading the charge of a corporate boycott against Indiana following the passage of the controversial religious freedom law, but it is paying employees to relocate from the state, some to the tune of $50,000.

“I just got an email on the way to the studio from another employee who said, ‘Look, I don’t feel comfortable living in this state any more, you have to move me out,'” Marc Benioff, Salesforce CEO, told CNN. “I gave him a $50,000 relocation package and said, ‘Great, you’re clear to go.'”

Salesforce did not immediately respond for comment.

Critics argue the Religious Freedom Restoration Act allows business owners to refuse service to LGBT customers due to religious beliefs. On Thursday, state lawmakers announced changes to the law, clarifying that it will not allow businesses to discriminate against gay Hoosiers.

Following the passage of the initial legislation last week, Benioff tweeted, “We are canceling all programs that require our customers/employees to travel to Indiana to face discrimination.”

Other businesses have taken a stand against the law as well.

[CNN]

Read next: Dear Indiana: Christian Love Embraces Those on the Margins of Society

TIME Companies

This Is How Long Your Business Will Last, According to Science

And the answer is somewhat surprising

It’s a big question, and one that nearly every entrepreneur and economist grapples with: how long do businesses generally survive?

A group of scientists appear to have at least partially unlocked the answer, with a somewhat surprising result: publicly-traded companies die —through acquisitions, mergers, bankruptcy or other reasons — at the same rate irrespective of how well-established they are, or what they actually do.

The magic number, a new study from scientists at the Santa Fe Institute in New Mexico reveals, is about 10 years.

The study, published in the journal Royal Science Interface and conducted by three researchers, was led by then-undergraduate fellow Madeleine Daepp under the guidance of Marcus Hamilton, Professor Luis Bettencourt and Distinguished Professor Geoffrey West.

“We gave her this basic idea, and she did the heavy lifting,” Hamilton, a postdoctoral research fellow at the institute, told Science Daily.

Daepp, now a graduate student at the University of British Columbia, analyzed Standard and Poor’s Compustat — a database of every publicly traded company since 1950 — using a statistical method called survival analysis. What she and her advisers found is that a company’s mortality rate was not affected by it’s past performance or even its products.

“It doesn’t matter if you’re selling bananas, airplanes, or whatever,” Hamilton said.

The reason behind their findings remains beyond their study’s scope, but the researchers hypothesize that the biological world’s systems and competition for resources might provide some sort of insight.

[Science Daily]

TIME policy

Twitter, Yelp, eBay CEOs Speak Out Against Religious Freedom Bills

Newest Innovations In Consumer Technology On Display At 2014 International CES
Ethan Miller—Getty Images Twitter CEO Dick Costolo speaks during the Brand Matters keynote address at the 2014 International CES at The Las Vegas Hotel & Casino on January 8, 2014 in Las Vegas, Nevada.

Critics say the laws could allow discrimination against LGBT citizens

Executives at several large technology companies are banding together in opposition to a controversial new religious freedom law in Indiana and a similar bill in Arkansas that critics say could open the door for businesses to discriminate against LGBT customers.

“Religious freedom, inclusion, and diversity can co-exist and everyone including LGBT people and people of faith should be protected under their states’ civil rights laws,” reads the joint statement signed by Twitter CEO Dick Costolo, Square founder Jack Dorsey, Yelp CEO Jeremy Stoppelman and eBay CEO John Donahoe, among others. “No person should have to fear losing their job or be denied service or housing because of who they are or whom they love.”

The group called on state legislatures nationwide to make sexual orientation and gender identity protected classes under state laws designed to protect religious freedoms.

Controversy over those laws erupted last week after Indiana’s legislature passed such a law in the state, while Arkansas’ legislature did the same soon afterwards. Indiana Governor Mike Pence, who signed his state’s law, said this week he’s pushing lawmakers to “fix” it and ensure it doesn’t allow for discrimination. Other business leaders across many different sectors have previously expressed concern about Indiana’s law, with some threatening boycotts if the rule isn’t amended.

Read next: Arkansas Governor Asks for Changes to Controversial Religious Freedom Bill

TIME Companies

McDonald’s to Raise U.S. Workers’ Hourly Wage to $10 By End of 2016

A McDonald's sign is seen outside one of its restaurants in Joliet, Illinois on March 26, 2015.
Jim Young—Reuters A McDonald's sign is seen outside one of its restaurants in Joliet, Illinois on March 26, 2015.

But it won't apply to workers employed by McDonald’s franchisees, which run almost 90% of its U.S. restaurants

While fast-food workers across the country plan protests over their wages later this month, employees at McDonald’s-owned restaurants can expect pay hikes starting this summer.

The fast-food giant will raise the average hourly rate for workers at the U.S. restaurants it owns to $9.90 from $9.01 starting July 1, while those wages will climb to $10 per hour by the end of 2016, The Wall Street Journal reported Wednesday. The company will also allow those employees to earn up to five days of paid vacation every year following one year of employment.

One catch is that the new wages will not apply to fast-food workers employed by McDonald’s franchisees, which run almost 90% of the company’s U.S. restaurants, WSJ reported. Franchise owners are able to set their own policies when it comes to wages. As it stands, roughly 90,000 McDonald’s workers will see a pay increase starting this summer.

U.S. fast-food workers are planning a one-day strike as part of a two-year campaign that seeks a $15 hourly wage as well as the right to unionize. Those protests are planned for April 15.

The wage hikes also come one month after Steve Easterbrook took over as McDonald’s CEO following the departure of Don Thompson. The company has dealt with worsening financial problems in recent years, thanks to declining sales and a loss of market share, all of which Fortune magazine detailed in an article last fall.

This article originally appeared on Fortune.com.

TIME consumer goods

This Is About to Become Your Favorite New Drink

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Chris Stein—Getty Images

Interest in premium brands is on the rise

Bacardi is jumping onto the bourbon bandwagon with its acquisition of a premium Kentucky distiller. But the bandwagon it has been riding since 1862 is picking up speed itself: Even as volume sales of rum are expected to decline, dollar sales are expected to grow, according to a new report, thanks mainly to rising interest in premium brands.

Bacardi on Monday announced it would acquire the maker of Angel’s Envy bourbon, giving the fourth-largest spirits maker its first foothold on the bourgeoning American bourbon market. The brand is owned by Angel’s Share Brands and Louisville Distilling Co. Its flagship port-finished bourbon is among the fastest-growing brands in a market that has seen eye-popping growth: total bourbon sales have increased 35% in the United States over the past five years, and 50% worldwide.

Bacardi is late to the party. It owns the staid, mainstream Dewar’s Scotch, and some whisky-based liqueurs, but until now has had no bourbon brands or any American whiskeys of any kind. But the bourbon trend doesn’t seem to be abating, and though Angel’s Envy is expected to move just 65,000 cases this year (not bad for a company launched in 2011), the company is building a new distillery in Louisville to be completed in 2016. That will take capacity to 800,000 cases.

Meanwhile, rum might be the new bourbon, as drinkers worldwide continue to seek out higher-end hooch. While total volume is expected to fall by about 1.7% between this year and 2014, most of that shrinkage will be at the low end of the market, according to a new report from just-drinks/IWSR Insights. Leaving the cheap stuff out of the equation, volumes will increase by more than 5.5 million cases, to 64.5 million, all of it premium priced.

Just as with premium and small-batch bourbons, “aspirational drinkers” are driving these trends. Rum has been somewhat late to the game because it has had to overcome its image as the booze of frat-boy party monsters and Jimmy Buffett fans. But the industry, most definitely including Bacardi itself, has been working to change that image through — and this is a word uttered entirely seriously by industry people — “premiumization.” Bacardi in 2013 vowed to “premiumitize” the whole rum category, with particular attention to premium brands as well as flavored varieties and spiced rums, all of which have seen sales take off over the past couple of years.

Not that rum will necessarily displace bourbon and other craft whiskeys in terms of cultural cachet. But drinkers are bolting for the high end across all categories. Still, rum has its work cut out for it. In 2014, Ed Pilkington, head of global marketing for Diageo’s vodka, rum, and gin brands, declared that rum had “lost its soul,” and had “fallen behind,” thanks to those aforementioned frat boys.

At the same time, rum was taking off in Europe, even as sales were slowing just about everywhere else. Those trends, according to the new report, are now spreading elsewhere, thanks in part to introductions of products like Bacardi’s high-end Gran Reserva Maestro de Ron, as well as flavored rum’s like its Bacardi Mango Fusion.

TIME

5 Money Habits of the Filthy Rich You Can Learn Now

How to save and invest your way to seven figures

Think it’s impossible to save a million bucks? It’s not. Fidelity Investments took a look at the 401(k) portfolios of its clients to see if those in the million-dollar-plus club have characteristics that make them stand out from the crowd.

Surprisingly, being super-rich wasn’t one of them. Although the average annual earnings of people with more than $1 million in their 401(k) was a substantial $359,000, Fidelity found that a number of these people had reported earnings of under $150,000.

As of the end of last year, more than 72,000 Fidelity clients had 401(k)s with more than $1 million in them — that’s more than double the number who had reached that monetary milestone just two years ago. Sure, investors across the board have benefitted from the stock market’s recovery, but the most retirement-ready people also displayed some specific saving and investing habits that helped them reach their goals.

They go slow and steady. “They really took a long term approach… took most of their careers to get there,” says Fidelity retirement expert Jeanne Thompson. The average age of Fidelity’s 401(k) millionaires is just under 60, and have been in the workforce for 30 years. It’s also worth noting that many of the people with the healthiest nest eggs also started saving for retirement early. “It’s not like it happened overnight,” Thompson says.

They max out their contributions. Fidelity found that million-dollar investors contribute roughly 14% of their income towards their 401(k)s — $21,4000 a year, on average. Now, this is above the annual amount workers under 50 are allowed to contribute — those workers are capped at contributing $18,000 a year in 2015 — but the average age of Fidelity’s million-plus 401(k) clients skews about 10 years higher than that. In other words, the most aggressive retirement savers seem to ramp up their contributions once they get the legal go-ahead to sock away more. By contrast, those with portfolios under $1 million contribute only $6,050 a year.

They don’t rely on target date funds. Target date funds have been pitched as a kind of “set it and forget it” option for investors, but a peek into the portfolios of the people who accrued $1 million or more shows that they don’t rely on them entirely or even primarily. As of the end of 2014, about 40% of these investors’ portfolios is in domestic equities, another 12% is in company stock and 6% is in foreign equities, on average. Only 10% of the average portfolio is allotted to target date funds.

They stay in equities. “To some extent, if you’re invested in cash you’re only going to have what you put in,” Thompson says. “Many people may be in retirement for 30 years or more,” she points out, so people might want to reevaluate if or when switching to a more conservative allocation is right for them. “As people are working longer and living longer, many will hold higher equity allocations,” she says. “You still have 30 years your money has to last…If you go too conservative too early you might not keep up with inflation.” On average, about three-quarters of the holdings of millionaire 401(k) clients are in equities — and remember, these are investors with an average age of around 60.

They don’t panic. “The key is when the markets go down not to panic,” Thompson says. Although it can be scary watching those numbers go down, selling at a loss only makes it harder to recover when the market eventually recovers. “They did bounce back, and so they’re were able, as equities rose, to ride the upswing,” Thompson says.

TIME Autos

Cadillac Unveils Luxury Sedan That People Might Actually Want

2016 Cadillac CT6
Cadillac The 2016 Cadillac CT6

After a four-year-absence from the luxury sedan market, Cadillac has a new flagship brand

Cadillac unveiled a new, flagship sedan on Wednesday, the CT6, marking the company’s long awaited re-entry into the luxury sedan market.

Cadillac has been noticeably absent from that segment ever since it discontinued production of the DTS, its last full-sized sedan, in 2011. With the CT6, the automaker hopes to tap into a fast-growing luxury sedan segment, fueled by China’s growing demand for prestigious American brands.

2016  CT6

The CT6 has a 400-horsepower V-6 engine and an aluminum chassis that puts it in the same weight class as its midsize sedans. The roomy interior includes some high-end touches including a 10-inch touch screen, a Bose 34-speaker sound system and seats with five separate massage settings.

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