But What Does it Mean?

Readers know that I subscribe to the WSJ, and I do so because I expect it to maintain reasonably high standards for reporting on economic and financial matters. I mean – Wall Street, right?

WSJ manages to disappoint me on that score regularly. There is an Opinion column in today’s issue with this headline:

In Defense of the McDonald’s Cheeseburger

It’s cheaper than it was in 1948, when gauged on a sandwich-per-hour basis.

Um…..sandwich-per-hour basis? What the heck does that mean?

So of course I read the column to find out, and here is what it means to the writer, one Faith Bottum. The key paragraph from the article says this:

A cheeseburger in 1948 cost 19 cents, while the federal minimum wage was 40 cents an hour. Today Mac-Menus reports the price of a cheeseburger at around $3.89, depending on region. And McDonald’s workers average $12 to $14 an hour (with California’s minimum wage for fast-food workers at $20). Even with the lower average wage, that’s 3.1 cheeseburgers an hour today, as opposed to 2.1 in 1948.

Ok, so 40/19 = 2.1 and 12/3.89 = 3.08, or roughly 3.1.

That is Ms. Bottum’s arithmetic, clearly. What does that mean? She says it means a cheeseburger is cheaper than it was in 1948. I don’t think so….

If you want a read on whether a McD cheeseburger is cheaper for a buyer than it was in 1948, then you compare the rise in the price of a cheeseburger over the relevant time period with the rise in the general price index, known as the CPI. Or, even better, you compare the cheeseburger price rise with how much the average or median earnings of a worker have changed over that time period.

Doing the CPI calculation is easy. The US CPI stood at 24 in 1948 and at 330 at the start of 2026. So, the CPI went up by a factor of 330/24 = 13.75 over the relevant period, while the price of a cheeseburger went up by a factor of 3.89/0.19 = 20.47.

Sorry, Faith. From the viewpoint of a consumer, a McD cheeseburger has gone up in price at a much higher rate than the prices of consumer goods in general, making it a less good deal than other things a person might spend their money on, relative to what it was in 1948.

(Yes, I know, very few people who bought McD cheeseburgers in 1948 are still around to do so today. I did not pick that year, Ms. Bottum did.)

Ms. Bottum ends her little piece with this:

Maybe this is why I’ve always had a fondness for the fast-food chain and its cheeseburger. It’s both delicious and a pretty good bang for your buck.

Well, you may be fond of them, Faith, but your numbers do not support ‘good bang for your buck’.

Now, the calculation she presents is not useless, it just doesn’t tell us anything about the relative cheapness of a McD Cheeseburger today vs 1948. It does tell us something from the perspective of McD as a profit-seeking company.

In 1948, McD had to sell 2.1 cheeseburgers to pay for one hour’s wages for an employee. In 2026 it has to sell 3.1 cheeseburgers to cover one hour’s wages. That’s what Bottum’s numbers tell us, and I doubt that makes McD happy in any way. The reason for that is that the hourly wage McD must pay for its workers has gone up by a factor of $12/$0.4 = 30, much higher than the increase in the CPI over that period, which we calculated above as rising by a factor of only 13.75.

It’s actually kinda simple. If the wage you gotta pay workers by law goes up a lot, then you are gonna have to sell more stuff and/or at a higher price to pay that wage.

Ain’t economics fun?

Full Disclosure: My first-ever-real-job (paid by cheque, tax withholding, etc.) in 1968 was at McD’s. I earned $1.20/hr, and I recall a hamburger being $0.49 and a cheeseburger $0.59. On a busy Friday supper hour, there would be 15 or more pimply-faced teenagers in the restaurant cranking out burgers and fries to feed the masses. You will never see that many youngsters working in a McD’s at one time today.