Business, Economics and Jobs

The right to afford a Big Mac?


People sit on top of a McDonald's restaurant to watch a May Day rally in central Istanbul on May 1, 2012. Tens of thousands of workers gathered on an iconic square in the heart of Turkey's biggest city to observe the holiday, also known as International Workers' Day.


Bulent Kilic

It's been called "burgernomics." The calculation of a country's relative economic status using the price of a burger — say a McDonald's Big Mac — as the indicator.

For years The Economist has published its Big Mac Index as a lighthearted way to compare the valuation of currencies using a widely available item. But Princeton's Orley Ashenfelter took the concept a step further last month, zooming in on McDonald's workers around the world to determine exactly how many hours they must work to buy one of the Big Macs they so lovingly prepare.

The range of results is fascinating: Japanese workers can on average purchase three Big Macs for every hour they work. Workers in China, however, can afford only about a half a Big Mac per hour.

And the divide between "developed" economies like the US — with a score of 2.41 Big Macs per hour — and "developing" economies like those in Latin America — .35 Big Macs per hour — and the Middle East — .39 Big Macs per hour — is quite pronounced.

The effect is that a lot of these workers never eat a Big Mac at all. It's simply too expensive, if perhaps also not everyone's idea of a gourmet meal. In real terms, lower Big Mac scores translate to a lower quality of life in terms of housing, education, medical care and of course, food. 

But the world is changing. As GlobalPost has reported in our series, "Worked Over: The Global Decline of Labor Rights," countries like China, India and Russia have started to push wages up, leaving the lowest paying manufacturing, agriculture and service jobs for Vietnam, Bangladesh and the United Arab Emirates. Meanwhile labor advocates everywhere find themselves in a perpetual tug-of-war with employers, trying to protect workers from cuts as international "free market" competition squeezes profit margins.

Though workers' buying power has sunk across most of the world since the start of the economic crisis, workers in Russia and China are finding their labor earns them more Big Macs — and whatever other commodities the rising middle classes might desire.

Meanwhile Latin America has shown modest improvement in its ratio, Ashenfelter's analysis shows, reflective of stabilizing economies, increasing exports and renewed international investment.

From Nicaragua to South Africa to Brazil, however, a major percentage of the population works outside of the "formal economy," performing work of all kinds without government benefits or job security. These are the workers who aren't part of Ashenfelter's Big Mac Index at all.

But Ashenfelter says McDonald's represents a kind of consistency and dependability that makes it so attractive in emerging markets. Sanitary food, a predictable menu, cultural cachet and now, hiring like crazy.

"It wouldn't surprise me if [China has] a million people working in McDonald's in two quarters," he said. "Of course it's at a certain wage level, and it lets you have some idea of how productive a country is. And probably more importantly, whether it's growing." 

Stories of sinking wages, lost benefits and disappearing rights are a reminder that such growth, if left unchecked, carries a steep human cost.