McDonald's Can't Figure Out How Its Workers Survive on Minimum Wage
theatlantic.com
theatlantic.com
Why the core claim is wrong:
McDonalds explains that this is not a projection of the typical McDonald's worker's financial situation (which would be useless unless it was particularized to e.g. "Do you have children?", "Do you have a spouse? Do they work?", "Do you own? Rent? Live with parents?", etc -- all answers which vary quite consequentially across the McD's workforce). Rather, it is a simple example of "This is what a budget looks like. You add income together on the top, then subtract expenses. Here's an example filled with fake data:"
From the horse's mouth:
In an effort to provide free, comprehensive money management tools, McDonald’s first used the Wealth Watchers International budgeting journal when this financial literacy program launched in 2008.
As part of this program, several resources were developed including a sample budgeting guide, an instructional video and a web resource center that had additional tools and information.
The samples that are on this site are generic examples and are intended to help provide a general outline of what an individual budget may look like.
Those are the sorts of things that get an explicit line-item, and don't get blurred into discretionary spending, lest you establish a 'budget' that completely collapses the moment the ostensible subject of the budget fails at living as a monk.
Further, the intent of the outline is rather orthogonal to the stark math that it illuminates. Even with the most ridiculously optimistic assumptions[1], the budget throws a spotlight on the fact that one person effectively can't live on a full-time minimum-wage job.
The closest they could aspire to, is to have a bunch of roommates and tread water until an unexpected expense throws them into debt.
[1] two jobs, single person (making low rent plausible), a car from 'somewhere' that's only costing $150 a month in combined payments/repairs/maintenance, farcical insurance costs, etc.
Does anyone expect there's a family/kid/own vs rent answer that results in a more-plausibly-livable budget for a full-time, minimum-wage worker? Absent "live with parents" at which point the job is, as stated elsewhere, essentially an unpaid internship.
People only look at the output, the wage or the price, and they blame that on the businessman. It's surprising to see that on Hacker News. Start a business, especially in the physical world like retail, and you will immediately see the one hundred different ways in which government hamstrings you, taxes away the money you would have preferred to pay as compensation, and then saddles you with the blame as the mustache-twirling top hat.
Ask yourself this: is there any business which has ever taken anywhere as much of your paycheck as the US government? Where is all the money going, after all?
Or as proof, simply go to the breakdown of each line item and ask what it would be without tax, regulation, or "monetary policy". For example: does 60% of a post-IRS/tax paycheck going to rent sound like the fault of McDonald's or the Bernanke? A runup in real estate (rental and purchase prices) is the desired and intentional effect of Fed policy.
http://mobile.bloomberg.com/news/2013-06-19/bernanke-faith-i...
Bernanke said that “one important difference now is that
people are more optimistic about housing” and surveys show
they expect prices to climb further.
“And that, you know, compensates to some extent for a
slightly higher mortgage rate,” he said.
Home prices in 20 metropolitan areas soared 10.9 percent
in the 12 months through March, the biggest gain in seven
years, as residential real estate is also bolstered by an
influx of institutional buyers, limited supply and an
improving job market, according to S&P/Case-Shiller index
data released May 28.> "Of course, minimum wage workers aren't really entirely on their own, especially if they have children. There are programs like food stamps, Medicaid, and the earned income tax credit to help them along. But that's sort of the point. When large companies make profits by paying their workers unlivable wages, we end up subsidizing their bottom lines."
Disagree. The article is clearly of the opinion that McDonalds was forced to assume a 2nd income in order for any sample budget to be feasible.
Sure, you could always squeeze a few dollars out of rent & cable, but balancing any monthly budget on an income of $1,105 is quite difficult - particularly for those who have never earned higher and had the chance to accrue property, goods and appliances.
The real question is why someone making only $1K post-tax had an apartment that costs $600 a month.
And before you say that someone making so little should move to a rural area where their minimum wage will amount to a higher standard of living, let me point out that NYC has McDonald's too.
7.25/hr is not a living wage. http://www.fastfoodforward.org/en/
also, when you say 7.25/hr is not a living wage, I think you have to take into account the location. In NYC you are right. However in many parts of the world this would be considered a very good wage. Cities generally deal with this by raising the minimum wage within the city, something I think is a very good policy.
Btw, in my original example I wasn't living in a rural area.
http://www.bls.gov/cps/minwage2012.htm
Raise the cost of McDonald's to hire unskilled workers, and make it more likely that they will invest in things like the automatic hamburger maker.[1] Then there will be fewer jobs overall.
McDonalds only even functions under your assumption if we assume that the employee has another support system that makes the job more a 'character building exercise' than an actual job.
Which is to say that you seem to be suggesting McDonalds cashiers are more similar to kids volunteering with a non-profit; helping a massive corporation sell hamburgers at an otherwise-unsustainable price, rather than ladling soup, clearing lots or rebuilding homes for the needy.
I have no idea what McDonalds pays locally (DC metro), but I can think of several local jobs that are available to young/unskilled workers that beat the minimum wage ($7.25 in VA).
Even the dog walkers at the local doggy day care start at $10+. Doesn't get much more unskilled than that.
Or, find a way into a union job, like UPS driver. It won't make you rich, but it's steady work. Usually takes starting part-time, or working the Christmas rush, but the jobs are there. Only real requirement is a mostly clean driving record.
You can certainly think of McDonalds jobs as internships, but that's not how many in the workforce view them.
Very few people view them as permanent, that's for sure.
Many of my friends started out in fast food as teenagers. None still work there. Among my family, one went to fast food and moved up to management quickly.
Turnover is the name of the game with McD's, that's the assumption for most (and staying at the same minimum wage job is the exception for most).
Oh? They often end up being quite permanent, so I'm not sure how you're drawing that conclusion.
> Many of my friends started out in fast food as teenagers.
So did mine, but that's apples and oranges. The adult workforce is more relevant to this discussion. This is one particular area where geographic distribution is important. The average age of minimum wage establishments does tend to rise in lower income areas.
>staying at the same minimum wage job is the exception for most
Yet, remaining stuck in minimum wage is more common than we seem to be willing to accept.
Why is it ok that minimum wage is unlivable?
[1] http://www.practicalmoneyskills.com/mcdonalds/documents/McD_...
Their minimum-wage employees are expected to do physical and mental labor for 302 hours a month (75.5 hrs/wk) to earn a grand total of $2,060, while people such as Mitt Romney literally don't have to do any labor to earn $1,075,000 in carried interest (and only carried interest, that doesn't include capital gains or anything else) during the same month [1].
[1] http://money.cnn.com/2012/01/24/news/economy/Romney_tax_retu...
I also don't think that the outcome would necessarily be the same if the 20-year-old cashier and a 20-year-old Romney were to somehow change places. In life, we constantly face choices, and while unchosen circumstances play some role in who we are (I will never be a professional basketball player or a ballerina), we are not predetermined. Ahead of each of us, at every moment, is a forking path. The future does not exist yet.
Seriously, what is this world coming to... When did people stop working so hard, but rather coveting their neighbors house?
Unfortunately that's increasingly no longer the case.
When did people not covet their neighbors house? This sounds like canned tea party rhetoric.
The facts will certainly support a widening gap between the wealthy and poor in our (US) society. Will they also support this alleged paradigm shift in working class mentality?
Looking at the man's resume, combined with the fact that he has run multiple political campaigns - including one for POTUS, which is no cake-walk - tells me the guy is a pretty hard worker.
I'm not going to comment on the "fairness" of the relative wages, but implying that a McDonald's employee and Mitt Romney are equally productive, or work equally hard, is nonsense regardless of your political stance.