Dive Brief:

• The ongoing pressure by activists and some economists for retailers, fast-food restaurants, and others to pay a higher minimum wage got a boost from Wal-Mart Stores last week. But McDonald’s, which like Wal-Mart has been criticized for working conditions and pay, says it’s a terrible precedent. 

• The struggling fast-food chain told investors Wednesday that as higher wages catch on, its profits will suffer because it will be forced to pay more to attract employees. And Wal-Mart does indeed seem to have ignited a wage race, with TJX Companies announcing a hike in the wake of the news.  

• McDonald’s in its statements also anticipated that bad-for-business boycotts and demonstrations on wages and other employment issues would also ramp up in light of Wal-Mart’s action, which affects a half-million of the retail giant’s workers.

Dive Insight:

McDonald’s certainly doesn’t need anything that could hurt its business, and higher wages do mean higher costs. Indeed, that’s true for Wal-Mart, too, which will see its “revenue generated per employee,” a measure beloved by investors, inevitably fall.

But the chain may be missing the mark, at least in the long term. The company is struggling under pressure from intense competition, menu issues, and a failure with younger consumers. Many of those younger consumers, in fact, actually favor companies perceived to pay and treat workers well. In any case, fighting on the labor front will do little to address the chain’s essential problems.

Add to that, the National Labor Relations Board in December took the unusual step of naming the chain’s corporation in wage and working condition complaints even for franchise-owned stores. 

And the movement to a higher minimum wage is escalating apace, with several cities and states mandating increases that surpass not only the federal minimum but also the unilateral increases established by Wal-Mart Stores, Gap Inc., and others.