Trying to understand the McWages Gage

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Today’s Blog Post

Trying to understand the McWages Gage

Coffee time in the morning at McDonald’s doesn’t change much. Men line up early to order the same thing they order every morning. In fact it is so familiar that the gals behind the counter at any given time pretty well know what the man will order.

The man comes in at the same time each morning. The girl behind the counter is on the same shift each morning. A personal contact is made where she gets to know exactly what he likes or doesn’t like on top of his regular order.  Like one guy ahead of me always wants the wax tissue with his muffins, others don’t. The gals know him and his small wish for the paper!!!

From what I have seen so far it also helps the server taking the order to have a little variety in what they do also.

On top of that I am sure that the servers also play a small head game within themselves by guessing what the person will order… like… is this a “small coffee and a muffin” person or a “big meal” guy? 

It has to happen in order for the server to not go absolutely mad… because of the sameness all the time different each different shift.

In the middle of all the sameness the other day – kaboom – the server messed up the mind of the guys just in front of me in the line.  The guy told her the familiar order that he always has… and kaboom… it happened.

He passed her the same change that he always pays for his order each morning.  She responded, “Sorry sir, the price has gone up, it is now $2.15.”

He stumbled and looked confused, then reached into his pocket to get more change.

Later sitting at a nearby table he grumbled at the price increase and the change to his morning. He spoke to me of his displeasure over everything going up and his pension not being increased at all!

Then we switched over to the fact that so much was now being made in China instead of here in Canada.  He wanted to know my thoughts on why this was happening. 

My simple answer was that we all wanted it cheaper than what the items could be made for in Canada.  And China was the logical place to order something that costs less.

My second answer is that we all buy huge amounts of things each year for Christmas(and other times) and China is the one country that recognizes the great greed (and need) that our people have… and they can answer it.

Then I started to think - BUT what would happen if Chinese laborers received the same wages that the Canadians did?  What would the prices be then?  And if the wages were the same and the shipping stayed the same – we would pay even more than what we would for the same thing made in Canada.

A foolish and unkind thought followed.  “It sure is good that the Chinese don’t get the same wage that we do!”  If they did get paid the same we wouldn’t have anything to feed our greed and need.

Not long after being engaged in the conversation with my McDonald’s morning friend I heard of the international way that is used loosely to determine what wage comparisons can be made.

Believe it or not it is through McDonald’s pricing and its staff’s salaries.

Take a look at this chart below.

You will see that it takes so many minutes of work to buy a McDonald’s hamburger. In India it takes the server at the Indian McDonald’s about 195 minutes to buy the same thing that a Canadian McDonalds server can get for 20 minutes of work. The Canadians per hour pay is much higher than that of his or her Indian counterpart.

They have found that the goods that are used in all the McDonald’s settings are the same with them using some local ingredients and importing the other ingredients. With these factors being almost all the same and the prices being very close to the same as well… the only difference is the price of the salaries.

McDonald’s owners in India likely make much more than the owners in Canada… if the amounts of orders are the same in each community… i.e. the volume of the morning coffee drinker is the same… and the amount of burger orders are the same.

One thing you will know that the main customers in the McDonald’s restaurant are people like tourists and others familiar with its menu.

They do not sell Tandoori burgers in India. The product is the same around the world in every country… so that tourists will flock to the familiar.

Hmmm?  This is interesting.  It is also interesting that the wages in India and China have both gone up by about 8% each year over the past while.

I wonder if I will be able to afford Christmas and my gift giving requirements will be next year?

I know that my pension has not gone up at all. It is fixed and solid at one level.  At least it has not gone down – yet.

McWages – gage? Hmmm?

~ Murray Lincoln ~

www.murraylincoln.com

Resources:

http://econfix.wordpress.com/2012/04/30/mcwages-minutes-to-earn-a-big-mac-economics/