Shareholders Commend McDonald’s Commitment to End Subminimum Wages as Model for Restaurant Industry
McDonald’s departure from the National Restaurant Association over its refusal to abandon support for subminimum wages for tipped workers sets the standard for others to follow.
NEW YORK, NY, Wednesday, September 24, 2025– Shareholders in McDonald’s ($MCD) were encouraged by the company’s announcement last week that it was leaving the National Restaurant Association (NRA) over the trade association’s continued efforts to support subminimum wages for tipped workers.
The investors have long advocated for an end to the subminimum wage and engaged companies to promote the adoption of a living wage as a human right recognized in multiple international treaties and frameworks, such as the Universal Declaration of Human Rights, the Preamble of the International Labour Organization (ILO) Constitution, and the UN Sustainable Development Goals (SDGs). This commitment is also reflected in ICCR’s Living Wage Investor Statement, with the support of $4.5 trillion in assets under management and advisement.
McDonald’s CEO, Chris Kempczinski, cited “an uneven playing field” that allows casual-dining restaurants, bars, and other establishments in many states to pay a subminimum wage of $2.13 per hour to tip-earning workers. McDonald’s employees and many other fast food restaurant employees aren’t eligible for tips. “If you are a restaurant that allows tips or has tips as part of your equation, you’re essentially getting the customer to pay for your labor,” Kempczinski said.
Said Saru Jaramayan of One Fair Wage, which advocates for a phasing out of the subminimum wage and tips to a minimum wage of $15 across the industry, “McDonald’s break with the National Restaurant Association exposes what we’ve been saying for years: the subminimum wage for tipped workers is indefensible. It is unfair to workers, a legacy of slavery that was created to allow restaurants to hire women of color for free, forcing them to tolerate economic instability and harassment to feed their families from tips. But it is also unfair to employers — not just businesses like McDonald’s but thousands of small businesses across the country that do not ask customers for tips and are required to pay their workers a full minimum wage with tips on top. The National Restaurant Association, led by corporate restaurant chains like IHOP and Denny’s, has fought to preserve this unjust, two-tiered wage system that disproportionately harms low-wage workers and shields big chains from paying their fair share. It is time to close the loophole and ensure every worker earns a real minimum wage with tips on top directly from their employer.”
Given an ever-growing national labor shortage exacerbated by current immigration policies, more and more companies are facing calls to increase workers’ wages to improve retention and recruitment. According to an analysis by the Center for American Progress, in the eight states where the subminimum wage was eliminated, workers and businesses in tipped industries have done as well as or better than their counterparts in other states. The U.S. federal minimum wage has remained stagnant at $7.25 an hour since 2009. Given cost-of-living increases, a worker earning the federal minimum wage today has effectively received a 28% pay cut. Investors believe wage increases for the lowest earners can aid in addressing systemic risks, such as income inequality and gender and racial disparities in the U.S. labor market that can have long-term societal and economic impacts.
“Research suggests that paying a living wage for all businesses is a long-term investment that can yield significant business benefits by addressing broader risks that impact the overall health of our portfolios,” said Caroline Boden of Mercy Investment Services. “We applaud McDonald’s for its leadership and call on its competitors to follow suit and abandon the antiquated and discriminatory subminimum wage, and call for companies to support a living wage for all.”
“McDonald’s bold step to reject subminimum wages sets a powerful example,” said Kevin O’Neal-Smith, Director of Impact at Adasina Social Capital. “Real leadership means saying yes to equity and living wages for all. When companies invest in living wages, they build stronger teams, improve employee retention, and lay the foundation for a resilient and thriving business. This is a meaningful step forward for wages and labor rights, but there’s still a long way to go—not just for McDonald’s, but for the entire industry. Our vision is an economy where no one is left behind, and every worker is valued, respected, and earns enough to thrive.”
Said Nadira Narine, ICCR’s Director of Strategic Initiatives, “While we applaud McDonald’s for standing with workers in its decision to leave the NRA over its position on subminimum wages for tipped workers, we expect its lobbying at all levels of government on health and safety and ‘know your rights’ training, for example, to reflect this same protective stance towards workers. As an industry leader, McDonald’s must model best practices on worker rights to the benefit of all stakeholders.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on LinkedIn, Bsky and X.
CONTACTS:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility (ICCR)
201-417-9060 (mobile)
smcdermott@iccr.org
