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What Burger Flipping Tells You about the US Economy

9 August, 2024

In her August 9, 2024 Financial Times opinion piece “What burger flipping tells you about the US economy”, columnist Soumaya Keynes (yes, a relation of John Maynard Keynes) discusses a new study co-authored by Štěpán Jurajda (CERGE-EI) and Orley Ashenfelter (Princeton University) just accepted by The Review of Economics and Statistics (REStat).

The study (and the opinion piece) looks at the evolution of wages for the low paid in the US fast food industry, specifically at McDonald's restaurants. 

Using data from 2016-2023 covering most US counties, the researchers examined the so called McWages (the hourly wage of McDonald’s Basic Crew to be specific) in relation to the Big Mac Index which measures the purchasing power of these wages.

According to Jurajda and Ashenfelter, the standardized task content of these entry-level jobs at McDonald’s restaurants means that the basic crew wages present an opportunity for consistently comparing wages across different US local labor markets. The authors arrive at the conclusion that there is substantial geographical variation in wages for the same work across different parts of the US, and that this regional inequality keeps growing, a sort of an anomaly in a free internal labor market where one would expect wages to equalize as a result of workers with a particular skill set moving where wages are higher.

To read the full article, please go to https://www.ft.com/content/ce655006-f2dd-4e7a-8c34-b0029a335004.

To read the full paper, go to https://www.cerge-ei.cz/pdf/wp/Wp785.pdf.