McDonald's Tells Its Employees to Sign Up for Food Stamps
theatlantic.com
theatlantic.com
This seems like a very good thing; all the more so given that Mcdonald's disproportionately employs minorities and individuals with low levels of education -- both groups which historically encounter "paperwork challenges" in accessing government services.
If McDonald's arbitrarily raised wages, could they do that without increasing the costs of their products? Would that then make them less competitive against the horde of other fast food shops, and therefore reduce their sales dramatically in what may (or may not, I really don't know) be a hyper-competitive industry.
These are the types of considerations I'm sure are important.
Revenue US$27.56 billion (2012)
Operating income US$8.60 billion (2012)
Net income US$5.46 billion (2012)
Total assets US$35.39 billion (2012)
Total equity US$15.29 billion (2012)
Employees 1,800,000 (2013)Without raising price, some franchises could eat[1] that extra cost; some would probably have to close shop.
[1] Boom. Zing.
Also, the rise in prices doesn't have to be that large to cover the increase in pay.
"From that humble start as a small restaurant, we're proud to have become one of the world's leading food service retailer in 118 countries, with more than 34,000 restaurants serving nearly 69 million people every day."[1]
So an average store would serve ~2000 people a day. (69,000,000 / 34,000 = 2029.4)
I don't know exactly what the workforce looks like, but it's probably something like 4 cashiers, 2 cooks, 2 helpers, and a manager. If we assume we don't need to pay the manager more then that's 8 employees per store that we want to have a higher pay.
The big mac value meal is $5.69. Let's say the average customer buys that. [2]
2000 customers per day * $5.69 = $11,380 in revenue in a day. I'd bet it's more, but that's a start.
If we have 8 employees working for 16 hours a day (different employees at different times, of course), and we want to raise their wages $3 per hour, how much more do we need to charge?
Well, if we want to keep our profit margin the same then we'd need to earn an extra (8 employees * 16 hours * 3 dollars) $384 a day.
So, we'll need to charge each customer $0.20 more per order. ($384 / 2000 customers per day).[3]
So, really. Is changing the price of the big mac meal to $5.89 really going to change McDonald's market position? Is it going to make eating at mcdonald's that much more expensive that people will stop going? Is there any real impact on anybody but their employees?
I'm sure there's an error in those calculations somewhere, but the general idea is that it doesn't take much of a price increase to cover the pay for employees.[4] This is what drives me crazy about these companies. Walmart moves so much merchandise that if they raised the prices on all of their prices by a nickel they could probably afford to pay everyone a living wage.
[1] - http://www.mcdonalds.com/us/en/our_story.html [2] - in the USA, of course. [3] - there may be some other costs to paying employees more for the business, but I can't think of any off-hand. Also, the amount of tax collected per transaction would be higher as well, so not only does society benefit from having less people on public benefits, but it takes in more money overall that it can use for other things (in places where fast food is taxed, of course (is that everywhere?)). [4] - Another problem with this simple calc is that not all stores are average and many don't do anywhere near 2000 customers a day in business. They probably employ less people, but it's something to keep in mind.
If not, what's the difference between a publicly funded healthcare system and a publicly funded food stamp system?
Food on the other hand, costs a non-variable amount and is relatively inexpensive.
The two examples you give are not at all similar.
Anyone in canada is able to take advantage of the publicly funded doctor. The system is purposely setup to cover every canadian. Only low income Americans are eligible to take advantage of SNAP and Medicaid. The system was originally designed to help people for relatively short periods of time when they are between work that pays them enough to not need the assistance. In fact, part of the reason many people dislike these programs are due to the mythical "welfare queen" that stays on programs like these for years and chooses not to get a better job because that would mean no longer getting the free (to her) assistance.
If every American was eligible to be on food stamps for their entire life, then there wouldn't be a difference. But that's not how food stamps are designed nor how they work.
It's actually a little surprising that the concept is not given more attention, at least in countries with socialised health care. It would be a very hard sell in the US.
Part of the problem with giving a basic income is how much to give people due to variances in the cost of living. Someone in east san jose or oakland will need much more money than someone in East Nowhere, Midwest to acquire the same things.
I'm not saying that can't be solved and then done, but it will be complicated and as you mentioned a very hard sell.
EDIT:
Food stamps could totally be designed to be a long term program that every american is eligible for. One way would be through a tax deduction/refund. It would need to be more than a refund, though, to cover instances where people don't have enough taxes to use the entire deduction. Also, it assumes people would be smart enough to use it for food and not big screen tv's.
I think extending the current program to everyone would do a better job of ensuring everyone has access to food than just giving money. The current program basically gives you a credit card every month that can only be spent on certain food items (eg no alcohol). Sending those to every family once a month (or allowing it to be picked up from a dmv-esque office for people without an address), would ensure that people have access to food (there are already measures in place to prevent someone from selling their foodstamp card for money). heck, if you wanted to get fancy, you could even allow/extend the card to be spent at restaurants.
Social Security, SSDI, Welfare, WIC, EITC, SNAP, section 8, etc
The fact it would result in higher SS payments to old folks would likely make it widely popular as well, as well as the removal of Minimum Wage.
I have no illusions about this: additional revenue will be required. Also many federal employees will be let go if you do this. They handle minutia around all these programs that could be replaced.
>Basic Income would probably decrease SS payments to existing retirees
Some existing retirees, the >3k a month ones perhaps. Many people are retiring far earlier, and in the 1800ish area. Those will likely see increases (remember, this has to replace section 8 as well).
Studies have shown the price increase would be around 2-5% for most industries who had to provide a living wage.
No one who works 40 hours/ week or more in the US should be living below the poverty line.
This is why people should not fight against a decent minimum wage, because otherwise all taxpayers are subsidizing the below-standard income.
Yes, your items might cost a penny more in the store.
What's the cause and what's the effect?
http://www.theatlantic.com/business/archive/2013/03/cheap-ea...
Actually, this article appears to be saying the opposite of what you think it's saying:
FTA:
The short answer is that relative food costs are low and falling fast for everybody -- but they're not falling for the poor. In 1984, the poorest Americans spent 16 percent of their income to eat. The median-income family also spent 16 percent of its (slightly higher) income on food. And the rich spent the least. In the last three decades, food's share of the family budget has fallen for all but the poorest families, where it's stayed the same.
So... poor people are spending _more_ on food than the rich? Whatever way one interprets this article, I don't think it can be used to to prove anything in regards to affordability of food for the poor and what else they may have sacrificed to pay for food.
http://www.webmd.com/food-recipes/features/cheap-healthy-15-...
http://www.workingmother.com/food-nutrition/cheap-and-health...
http://www.fitbie.com/slideshow/20-ridiculously-cheap-and-he...
Low-income, probably low-education & stressful-job(s), not enough motivation/energy after coming home from work to cook a proper meal or get exercise. Personally, I think they can't afford it in ways that go beyond just money...
_____ways that go beyond money____
stressful-job(s) = not enough motivation/energy to cook. Multiple jobs probably means get home, just in time to take a 3 hour nap, take shower and head out to the next job. Forget about any meaningful attendance at the local gym. Assuming it's even safe enough to be at said gym during after-work hours in a low-income area.
low education = Not knowing just how damaging junk food really is.
http://www.slate.com/articles/arts/everyday_economics/2007/0...
Your statement is true, but mainly because very few people in the US are actually starving. What they are doing is living on poor diets.
There certainly seems to be some kind of correlation between low income on obesity, but the contributing factors are complex. Individuals and families living on low incomes may lack ready access to fresh food ("food deserts") due to high transport costs and/or there being no nearby shops that sell it, may not have equipment to prepare food, may live in areas where opportunities for exercise are limited due to crime or lack of facilities. Poor education about nutrition and lack of role modes can also be important factors.
I'd urge you to read the short article "Poverty and Obesity in the U.S." [1] from the American Diabetes Association. Quote:
"How is poverty linked to obesity? It has been suggested that individuals who live in impoverished regions have poor access to fresh food. Poverty-dense areas are oftentimes called “food deserts,” implying diminished access to fresh food (7). However, 43% of households with incomes below the poverty line ($21,756) are food insecure (uncertain of having, or unable to acquire, sufficient food) (7). Accordingly, 14% of U.S. counties have more than 1 in 5 individuals use the Supplemental Nutrition Assistance Program. The county-wide utility of the program, as expected, correlates with county-wide poverty rates (r = 0.81) (7). Thus, in many poverty-dense regions, people are in hunger and unable to access affordable healthy food, even when funds avail. The double-edged sword of hunger and poor availability of healthy food is, however, unlikely to be the only reason as to why obesity tracks with poverty."
The American Society for Clinical Nutrition has a paper from 2004 titled "Poverty and obesity: the role of energy density and energy costs" [2] that goes into a lot more detail. From the abstract:
"A reduction in diet costs in linear programming models leads to high-fat, energy-dense diets that are similar in composition to those consumed by low-income groups. Such diets are more affordable than are prudent diets based on lean meats, fish, fresh vegetables, and fruit. The association between poverty and obesity may be mediated, in part, by the low cost of energy-dense foods and may be reinforced by the high palatability of sugar and fat. This economic framework provides an explanation for the observed links between socioeconomic variables and obesity when taste, dietary energy density, and diet costs are used as intervening variables."
I would urge you to look into this subject more carefully and, considering some of your other comments in this thread, to avoid resorting to crude and misleading stereotypes of people living in poverty.
[1] http://diabetes.diabetesjournals.org/content/60/11/2667.full
Of course, this is the perfect illustration of how you'd expect natural evolution to respond to lack of evolutionary pressure on something. If you "solve" the hunger problem, thereby eliminating dietary evolutionary pressure, people will no longer worry about it at all, leading to "dumb problems", like this one. If we solve this problem, by, say, forcing every food to contain vitamin K, C, D and things like Iron, evolution will find new problems.
Anecdotal time: This is going to make me look like a fool, but I'll tell this story anyway. I sorta knew hamburgers and fast-food were bad for you, but it wasn't until after I earned my BS CompSci that I realized just how bad. And I only realized it because of a game called Dance Dance Revolution. As you can see in my youtube channel on my HN profile, I was kinda hardcore about that game. One day, I didn't have time to eat my usual meal containing mostly rice. I went to BurgerKing and got a Double Whopper with cheese and fries. Ate all of it, waiting about 1 hr, then went to the arcade to play. I ran out of energy so fast I couldn't believe it and my day was ruined. After that I went home and did research on what athletes eat & general balanced diet for energy.... then I saw Food Inc. That was how I learned what to eat and is the only reason I'm not 300lbs+ today.
School does not stress these points nearly enough. In fact, I had this discussion with co-workers less than a month ago. We concluded that American schools purposely avoid effectively teaching 3 things so that most will fall into the trap of the credit-debt, junkfood & diet fads and easy manipulation by the media.
1. Finances
2. Health & Fitness
3. Critical Thinking
I don't think it's as simple as "Well, they choose it. They're fools". Nobody wants to be in poor health.... nobody wants to be poor & suffering...
Your response is to nit-pick about the dollar amount the cost of food contributes to the cost of living and whether the minimum wage can provide that amount, presumably in an attempt to mislead incautious readers into believing that the minimum wage is sufficient to cover the total cost of living, when in fact it is not (it is only sufficient to cover some components of that cost).
That would be a fundamentally dishonest thing to do, so I'm certain you won't be doing that here, yes?
Minimum wage, while once above the poverty line (assuming a 40 hour work week), has not risen with inflation, so it is now well below the poverty line.
People loafing around while getting food stamps does not really exist in the USA for a decade or more now.
The government brings this constant drip-drip of poisonous rhetoric about scroungers, when what's really happening is the ultra-rich are scrounging from the middle class to subsidise their empires while keeping the poor mentally broken and unable to form a political force. I should really start some sort of PR campaign, there's an election next year.
Nice try but the toffs are one step ahead of you and are banning such political campaigns in an election year: https://en.wikipedia.org/wiki/Transparency_of_Lobbying,_Non-...
https://secure.38degrees.org.uk/page/m/74c04b7f/2d565a2f/521...
Campaigns could fall within regulation if they: -promote policies which, for whatever reason, are associated with one or more political parties or candidates – such as housing, welfare, a referendum on EU membership, wind farms or HS2.
As you might imagine a huge range of campaign groups and charities are up in arms about this.
Sure minimum wage should be better, but ask yourself: how often do you leave a tip at a fast food?
The idea that you can shame companies into action doesn't work - it might in one or two cases, but people quickly forget, and there are too many companies to target anyway.
Many businesses have problems like this, like coal power plants that dump CO2 into the air. They don't have to pay the costs of dealing with their actions. Tobacco companies don't have to pay for health care when people get sick from their product. This shifts part of the cost of doing business onto someone else, thus distorting their market.
I then visited the US, and was surprised to find a completely different group of employees at fast food chains. The staff seemed to be older, more permanently in the fast food industry, and often seemed like they had been beaten down by the daily drudge of many years.
Poor bastard. I always wondered what happened to him and I hope he got back on his feet.
People dye trying to sneak into this country through shipping containers and makeshift rafts and he's already here and unable to weigh the endless options he has. From Target to Walmart, Kmart to Macy's, Taco Bell to Burger King, Gas Stations to Jiffy Lubes... I'm sorry, I just can't feel sorry for him. There's too many other people in worse situations, in worse countries, who deserve more sympathy.