Big Macs per hour
Over the past decade or so, average wages for the low-paid have done relatively well, as shown by David Autor of MIT and Arindrajit Dube and Annie McGrew of the University of Massachusetts Amherst. They emphasise the role of people switching to better jobs as a mechanism for boosting pay. But what happened to pay for the same work? More recently, Ernie Tedeschi of Yale Law School has found a similar trend by constructing a Low Wage Index, which tries to strip out the effects of changes in industries, occupation, sex or education on the numbers. Still, it will always be tough to be sure that the numbers are really describing pay for the same work, and not simply differences in tasks or even skills. Ashenfelter and Jurajda argue that the standardisation of entry-level jobs at McDonald’s means they can offer clean answers, particularly when comparing wages across different parts of the country. If Washingtonians earn higher McWages than Mississippians, it is probably because of where they live, not because they are particularly proficient at squirting sauce. As well as gathering wages, the academics collect local Big Mac prices, as a blunt proxy for local living costs. Their measure of average “Big Macs (earned) per Hour” grew by about 1 per cent a year towards the end of the 2010s, then shot up by a supersized 14 per cent between 2020 and 2021. (This is more dramatic than anything seen by the earlier researchers.) But since then it has stagnated, and in 2023 even fell slightly as wages did not keep up with Big Mac prices. The gains were not equally felt. Whereas in Maine average Big Macs per hour for entry-level employees grew by 45 per cent between 2016 and 2023, in Mississippi the measure rose by a paltry 3 per cent over the same period. Overall, inequality between places rose a lot from 2016 to 2021, and only fell back a little over the next couple of years.
Source: Soumaya Keynes in FT