The McJob index

See one McDonalds, you've seen them all, and that's useful to economists

The Economist's famous Big Mac Index now has a sister: the McJob index.

The idea behind both is that the fast-food chain, which operates in hundreds of countries world-wide, deliberately tries to provide one of the most consistent experiences for customers of any company. You can't compare a restaurant in london with a dim-sum stand in Hong-Kong, but you can compare McDonalds' in both to each other.

With the Big Mac Index, that takes the form of looking at the price of Big Macs – one of the items guaranteed to be on every menu worldwide – and comparing across nations. The most recent examination found that the price of Big Macs in Switzerland was over 60 per cent higher, in dollar terms, than it was in the US, which implies that the Swiss franc was heavily overvalued.

Via Tim Taylor comes news that Orley Ashenfelter, an American economist, decided to hunt around (warning: .doc link) for a similar comparator at the other end of the chain; not produce, but labour. And again, McDonalds provides the answer. Work in one, and you're likely doing the same job you would be in any other branch around the world:

There is a reason that McDonald’s products are similar. These restaurants operate with a standardized protocol for employee work. Food ingredients are delivered to the restaurants and stored in coolers and freezers. The ingredients and food preparation system are specifically designed to differ very little from place to place. Although the skills necessary to handle contracts with suppliers or to manage and select employees may differ among restaurants, the basic food preparation work in each restaurant is highly standardized. Operations are monitored using the 600-page Operations and Training Manual, which covers every aspect of food preparation and includes precise time tables as well as color photographs. . . As a result of the standardization of both the product and the workers’ tasks, international comparisons of wages of McDonald’s crew members are free of interpretation problems stemming from differences in skill content or compensating wage differentials.

Ordinarily, the results would be much the same as the Big Mac Index, and tell us more about the relative strengths of countries currencies than anything else. But Ashenfelter also compares those wages to the cost of a Big Mac in the same country, to work out how many Big Macs Per Hour the "crew members" (that's the official terminology, apparently, of the Good Ship McDonalds) earn. That should tell us about the relative value of low skilled labour in the various countries examined. Here are his results:

What's really interesting about the figures is how well they map onto the overall productivity of the countries. There's an almost 1:1 ratio between the average output per hour in the country and the wage paid:

Note that this compares nationwide output per hour, not the output per hour of the actual McDonalds employees. That metric wouldn't vary much at all, since all the workers are trained the same way and using the same tools. Which makes this a fantastic demonstration of the fact that it's the market, not the company, which sets the wages. Places with low productivity have low wages, which McDonalds takes advantage of. Just because they then train their employees into high productivity workers, doesn't mean they'll start paying them the more.

A flooded McDonalds in Bangkok. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.