What Macca’s reveals about our living standards – and how to get a free lunch

July 24, 2026 — 5:00am

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An economist walks into a McDonald’s store. He scans the menu for its prices, asks the worker behind the counter how much they are paid, orders a burger, then plugs the numbers into a database.

It sounds like the start of a joke, but it’s actually the process behind a famous tool called the Big Macs [Earned] Per Hour index, which any of us can contribute to (and be paid for in the form of a free Macca’s meal! Stay tuned to find out how).

Princeton University economics professor Orley Ashenfelter has travelled the world visiting McDonald’s stores. Occasionally, as he did last week in his visit to the University of Western Australia, Ashenfelter travels for other purposes … such as to share the findings of his Macca’s runs over the years.

Many of us are familiar with “real wages”. It’s the measure used to determine the “purchasing power” of our wages: how much we can actually buy with the money we earn. It’s especially important when measuring our wages over time. Why? Because inflation – or price rises – can eat away at the value of our income.

If you get a pay rise of 5 per cent one year, you might be tempted to go treat yourself, perhaps to a celebratory burger. But if the prices you’re paying for things such as food and petrol have also climbed 5 per cent that year, you would effectively be no better off. You might feel richer temporarily, but when you go to get yourself that once-a-year burger – and go to pay – you might not feel so McHappy any more.

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This is a problem Australians have faced for several years. Of course, it’s not like most of us are suffering price shock specifically from burgers, which probably make up a tiny share of our overall spending, but prices more broadly have climbed faster than our pay for several years after the pandemic.

Wage growth finally started outpacing inflation........

© The Sydney Morning Herald