How McDonald's workers are benefiting from the Big Mac inflation
If you are a fan of the Big Mac, you may have noticed that the price of this iconic burger has gone up significantly in the past year. According to the Big Mac Index, which tracks the price of a Big Mac across different countries, the average price of a Big Mac in the US rose 7% from 2020 to 2021, reaching $5.15. In some places, such as Darien, Connecticut, a Big Mac meal can cost as much as $18.
But while customers may be unhappy with the higher prices, there is a positive side to this story: McDonald's workers are making more money than they used to. The main reason behind the fast-food inflation is not the rising cost of food, but the rising cost of labor, according to Eric Gonzalez, a senior analyst covering the restaurant industry for KeyBanc Capital Markets.
"Labor inflation is sticky," he said, meaning that once wages go up, they are unlikely to go down. This is good news for the millions of workers who rely on fast-food jobs for their livelihoods. According to the Bureau of Labor Statistics, the average hourly wage for food preparation and serving workers in the US was $13.28 in December 2021, up 12.1% from a year earlier.
Moreover, some states and cities have raised their minimum wages above the federal level of $7.25 per hour, which has not changed since 2009. For example, Seattle has a minimum wage of $17.27 per hour, San Francisco has $16.32 per hour, and New York City has $15 per hour. These higher wages can help workers cope with the rising cost of living and improve their quality of life.
Of course, higher wages also come with trade-offs. Some fast-food chains may pass on the costs to consumers by raising prices or reducing portions. Some may also cut back on staff or hours, or invest in automation or digital ordering to reduce labor costs. Some may face lower profits or even losses if they cannot attract enough customers willing to pay more.
But despite these challenges, there is evidence that paying workers more can also benefit businesses in the long run. Higher wages can reduce turnover, improve productivity, enhance customer service, and increase loyalty and morale among employees. These factors can help fast-food chains gain a competitive edge and retain customers in a crowded and dynamic market.
So next time you order a Big Mac, remember that you are not only paying for a burger, but also for the people who make it possible.
Sources:
: https://www.cnbc.com/select/big-mac-index-what-you-need-to-know/
: https://finance.yahoo.com/news/yes-big-mac-meal-may-125700259.html