(Mc)Wages Around the World

It can be tough to compare wages around the world. While lots of people could be called iPhone assemblers or auto workers or t-shirt makers, depending on the country, factory conditions, time off, the work day, all really differ.

Not for McDonald’s.

At a Hamburger University campus in Illinois, China, Russia, Tokyo, Munich, London or Brazil, you can get a similar education. And, at your local McDonald’s, no matter where, you follow the same 600 page operations manual.

McDonald’s consistency made it easy for Princeton professor Orley Ashenfelter to do an international wage comparison. The following chart (p. 36) is from his NBER Working Paper #18006 for an article that appears in the American Economic Review for April 2012. Dr. Ashenfelter used his data from 60 nations for 2007 because it preceded the Great Recession. Exchange rates for the US dollar are also for 2007.

• The first column lets us compare the hourly wage for a McDonald’s crew member among different countries and regions.
• The second column tells us each nation’s or region’s multiple of the US wage.
• The last two columns convey purchasing power. With BMPH equaling McWage divided by the Big Mac price, you can see that an hour of work will buy almost 2 1/2 Big Macs in the US but only close to one third of a burger in India.

Our Bottom Line: Just for starters, we can see that indeed there are very low wage and high wage countries. We can compare China to the US and, for Western Europe, see the impact of government policy on wages and purchasing power.

I first read about Dr. Ashenfelter’s study in economist Timothy Taylor’s blog and then in the original NBER working paper. More information about Hamburger University is here, and here.