It's a specific quirk of the country's wage system. In an email, Greg Bamber, a professor at Australia's Monash University who has studied labor relations in the country's fast food industry, told me that as a result, McDonald's relies heavily on young workers in Australia. The country allows lower pay for teenagers, and the labor deal McDonald's struck with its employees currently pays 16-year-olds roughly US$8 an hour, not altogether different from what they'd make in the states. To start, some Australians actually make less than the adult minimum wage. Mickey D's and tack it onto the price of a sandwich, you'd expect customers to be paying at least a dollar more. If you were to simply double the cost of labor at your average U.S. According to the The Economist, Aussies have paid anywhere from 6 cents to 70 cents extra for their Big Macs compared to Americans over the past two years, a 1 percent to 17 percent premium. That said, not every extra dollar of worker compensation seems to get passed onto the consumer. Note Western Europe way out in the upper-right hand corner, with its high McWages and high Big Mac prices. In the United States, industry analysts tend to peg the figure a bit lower-labor might make up anywhere from about a quarter of all expenses at your average franchise to about a third.* But generally speaking, in countries where pay is higher, so is the cost of two all-beef patties, as shown in the chart below by Princeton economist Orley Ashenfelter. Academic estimates have suggested that, worldwide, worker pay accounts for at least 45 percent of a Big Mac's cost. So how exactly do McDonald's and other chains manage to turn a profit abroad while paying an hourly wage their American workers can only fantasize about while picketing? Part of the answer, as you might expect, boils down to higher prices. France, with its roughly $12.00 hourly minimum, has more than 1,200 locations. The company actually earns more revenue out of Europe than than it does from the United States. The land down under is, of course, not the only high-wage country in the world where McDonald's does lucrative business. On July 24, the country's Fair Work Commission approved a new labor agreement between the company and its employees guaranteeing them up to a 15 percent pay increase by 2017.Īnd here's the kicker: Many Australian McDonald's workers were already making more than the minimum to begin with. So there's a certain irony that in Australia, where the minimum wage for full-time adult workers already comes out to about $14.50 an hour, McDonald's staffers were busy scoring an actual raise. In doing so, they added another symbolic chapter to an eight-month-old campaign of one-day strikes that, so far, has yielded lots of news coverage, but not much in terms of tangible results. Last week, fast-food workers around the United States yet again walked off the job to protest their low pay and demand a wage hike to $15 an hour, about double what many of them earn today.
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