Past event
Department of Economics Seminar with Professor Stepan Jurajda, CERGE-EI The US McWage Structure and McMonopsony
Abstract: Thanks to standardized work protocol and technology of McDonald's restaurants, the hourly wage of McDonald's Basic Crew enables wage comparisons under near-identical skill inputs and hedonic job conditions. We document large and growing geographical wage differences in standardized jobs using data covering most U.S. counties during 2016-2023. Before the Covid-19 pandemic, there was no real McWage growth where minimum wages stayed constant, but the pandemic wage increase, which diminished the importance of minimum wages, was stronger in these areas.
Does monopsony power affect entry-level high-turnover jobs available to workers of all education levels? We answer this question by studying whether wage rates of McDonald's Basic Crew react to an exogenous wage increase at a large near-by employer. Our analysis leverages pre-existing distances between Amazon centers and McDonald's restaurants and the 2018 introduction of the Amazon $15 minimum wage. We find that McDonald's restaurants in areas with a nearby Amazon center do react to the Amazon wage hike by raising their wages, consistent with monopsony power, but only if they are in close proximity to an Amazon center.