Yesterday, the UK minimum wage was £6.70 an hour. Today, covering workers 25 and older, it rose to £7.20 while for 2020, the target is £9.
As a result, the 26 minutes of work needed to buy a Big Mac before the hike will drop to 18 minutes in 2020. When it takes less work to buy more Big Macs, we can say that your standard of living has gone up.
What a Minimum Wage Will Buy
For people earning a minimum wage, how much you need to work to buy a Big Mac depends on where you live. Below, the Financial Times has done some comparing for us. Do note that the UK hourly minimum wage is now £7.20:
Looking at specific cities, UBS did a similar study. Slightly different from FT, their wage data was based on a weighted index for 15 professions. I’ve copied a section of their table for the Big Mac, bread, rice and an iPhone 6:
Our Bottom Line: Standard of Living
Then, moving from a nominal wage to a real wage that accounts for inflation, we can compare yearly changes and (hypothesize) economic progress. Comparing real wages in U.S. manufacturing for a 40-hour week in 2007 to comparable workers’ real wages in 1890, we would see that, “…weekly earnings would be 50% higher today than they actually are if work hours had not declined so dramatically since 1890.”
In other words, working less we can earn much more (and can buy more Big Macs)…and that is what a rising standard of living is all about.