McDonalds’ Suggests a Budget for Employees . . .
Partnering with Visa, McDonalds’ Suggests a Budget for Employees which Ironically Shows in the End Just How Impossible It is to Get by on the Minimum Wage. The budget does not include gasoline, food, or heating expenses and incorporates $20/month for Healthcare Insurance.
Besides skipping certain expenses and skimping on others; to meet the income levels portrayed in the budget, McDonalds suggests associates to work not one but two jobs. A full time job at McDonalds and a part time job elsewhere totally 62 hours per week (if the worker resides in Illinois where the minimum wage is $8.25/hour). If perchance, the worker resides in one of the other 48 states; the total hours needed to hit the suggested income level jumps to 74 hours/week due to a lower minimum wage (the equivalent of a second full time job). The same as Wal-Mart employees, McDonalds associates will end up seeking public aid to get by because of low wages.
If you recall Spencer’s post of Labor’s Share; Spencer pointed out how Productivity Gains have been heavily skewed towards Capital and away from Labor (wages) since the seventies. The CEPR provides a graph with a another take on Productivity Gains when compared to Real Minimum Wage. When compared to Productivity Gains, Minimum Wage has trending downward.
In earlier posts, Edward Lambert addresses the loss of real wages and the potential impact on the economy. As we can see, the only real option to avert another collapse is to raise labor’s share of income. This is not likely as businesses are even now fighting an increase in just the minimum wage. Businesses are trying to maximize their profits and do not want to raise labor costs. Yet this objective of theirs is going to kill the economy. The time bomb is ticking.
If you remember in the PPACA Healthcare Debate:
McDonalds was one of the restaurant employers (Papa Johns, Olive Garden, Applebys, etc.) stating the excessive cost of the PPACA would force them to cut workers hours to <30 hours to avoid providing healthcare insurance (doing so would not alleviate restaurants from penalties as the PPACA looks at total hours worked and not just employees working >30 hours). To my point, McDonalds is advocating >30 hours at its restaurants in its budget and also providing healthcare insurance(?) which by law has to be minimally equivalent to the least costly PPACA Bronze Plan. It would be interesting to see if McDonalds could provide healthcare insurance similar to the Bronze Plan at $20/month. If the plan is not the equivalent, a McDonalds associate could go on the State Exchanges and get a Bronze Plan with all of the free preventative care for ~$97/month (215% FPL – single 21 yr. old Adult) after subsidy. McDonalds would pay a penalty if full time workers sought insurance outside of McDonalds and onn the exchanges. Workers, however, under 30 years and those unable to find affordable insurance are exempt from the mandate and could purchase substitute catastrophic coverage (ACA – Standardizing Health Plans). Perhaps too, this is McDonalds strategy for providing healthcare insurance (catastrophic) to much of its workforce who are <30 years old and working within the PPACA.
If a person is earning
Below the cost of living
And is not dead
Then someone, somewhere, is paying the difference.
Lets say MacDonald’s is paying half their staff half the cost of living. A generous assumption, I think. This means that the other quarter million McD employees are still alive by the support of others. How much support? Back-of-envelope says it is at least 250,000 x $15,000 or roughly $4 billion indirect subsidies to McD’s, every single year.
Who provides the “subsidies?” In dribs and drabs, they are paid by parents and relatives, other businesses whose bills are not paid or who lose owed money to bankruptcies, by charities and volunteers struggling to provide supports (in the least efficient manner imaginable,) and the “taxpayer,” covering emergency health care, primary education, welfare, prisons, and the rest of the safety net. Plus, the workers themselves pay into these “subsidies” through reduced health and lifespan.
Oh, McD’s pays some taxes in the US. But, $4B? I doubt it.
run
thank you for this. i like it because it provides some details and specifics and doesn’t get lost is useless, and alarming, generalities like “increase labor’s share.”
businesses need to pay a living wage. the minimum wage should be a living wage. and that should include enough to pay for medical insurance and retirement insurance.
i could understand a struggling startup paying a low wage to a “starting” worker glad to get enough to meet just the days needs. but McDonalds is not a struggling startup.
If indeed they did not understand the “30 hour” rule, that tells us something about how big business and politicians “think.”
On the other hand, as Rusty reminds us, the Obama health care plan may be too complicated to be a reasonable answer to the the health care problem.
Coberly:
The budget for those on minimum wage is an interesting topic. I workd for a VP, who is a Christian, and who spent much of her life advising others on how to live their’s to the point of giving financial advise to struggling young couples. This is someone who is in that upper 3% of the households making >$300,000 annually. I know she led a hard life growing up as taken from her stories on “how she made it on her own” . . . (sound familar?). We crossed verbal barbs occasionally which did not endear me to her. Bible thumping Ohioan. I think she was even more pissed at me because Obama swung Ohio. I just smiled . . . I think the cost side of the budget is important, important enough to know what is going out the door realistally. At least then you know whether you can make it based on expenses. Where I think this budget falls flat is it is coming from McDonalds, a company like Wal-Mart which thrives on paying minimum wage to many of its employees.
STR works in or close to the industry and so he has an ax to grind. I have yet to see a commercial insurance plan defined in a few pages. The last one I saw was about an inch thick. If you do not define what is covered and not covered, insurance companies will take it to the next step and define it arbitrarily to favor themselves. We already have this today.
Noni
i think your basic point is correct. But i could “live” on the thousand a month… at least without anyone else paying the difference.
What I find shocking about the McD budget is first that it assumes the worker will have another job… this is life on a treadmill. And second the items in the budget suggest further the way workers are exploited by “rents”, literally in the case of housing, but also in the case of “insurance.” And what the budget leaves out, and what it includes, suggests that the people writing it were careless to the point of shadenfreude in their imagining of what it takes to “live”.. a hundred dollars for cable, nothing for groceries?
This will go into the case books as a really really bad idea.
Coberly,
Living on $1000 a month is like thinking the cost of a car is limited to gas and oil. The cost of living must include the initial “purchase price “of a human being, plus non routine costs like emergencies, plus all the extras we take for granted yet never include in our budgets. Just because large chunk of,your whole-life cost of living was paid by your parents decades ago, does not mean it doesn’t exist.
Gotta dash, my post-retirement part time job is calling me.
Noni
Here’s the link to the pdf giving the details of how one survives on sub-standard wages.
http://www.practicalmoneyskills.com/mcdonalds/documents/McD_Journal2.pdf
Note that the file is about 30 pages, half english and half spanish. Nice of McDonalds to make this valuable information available to its multi-lingual employee group. The gas and other incidental expenses are noted in weekly spending money. Check pages 9 through 12 of the pdf.
$30 for gas won’t allow for too much driving, but if you’ve got to hold two jobs and they’re within waling distance of each other you won’t have time to drive very much any way.
Thanks Jack . . .
Here’s the weekly spending on incidentals, if gas and groceries can be thought of as incidental.
Day one:
Check/groceries/$40
Day two:
Cash/gas/$30
Cash/soda/$2
Day three:
Cash/Movie rental/$3
Day four:
Debit Card/groceries/$20
Day five:
Debit Card/groceries/$11
Day 6:
Cash/gas/$20
Check/prescription/$15
Day seven:
Cash/B-day gift for Nora/$15
Weekly total: $156
Sample Weekly Summary
Weekly Total of Expenses…………………………………………….$156______
(Add daily totals)
Average Daily Expenses…………………………………………..$23______
(Weekly total of expenses divided by 7)
Daily Spending Money Goal………………………………….$25_______
(Your Daily Spending Money Goal from page 6)
Under/Over Budget per day…………………………………..$+2_______
(Daily Spending Money Goal minus Average Daily Expenses)
“A plus (+) sign next to your number would show that you
had an average savings of that much per day. A minus (-)
sign next to your number would show that you overspent
by that much per day. There are 365 days a year, and
any savings times 365 will be a worthwhile goal. For
example + $10 would show that you’re on track to save
$3,650 by the end of a year, and – $10 would show that
you’re on track to be in debt $3,650 by the end of a year.”
So some how a McDonald’s emploiyee ends up with $3,650 in savings at the end of the year. That the weekly expense budget is ludicrous is glossed over. I was mistaken about the weekly gas expense. The budget allows for an additional $20 on day five. That’s $50 per week on gas. Note that the weekly grocery expenditure is $71. That should buy a small family enough pasta and rice to get by. I guess they can use ketchup on the pasta.
noni
you were in too much dash to understand what i was saying. and no, my parents didn’t pay all that much for me: blue light special at K mart. almost as good and a whole lot cheaper.
“Blue light special,” like Calvin and Hobbes? Chuckle.
But when you add up the cost of raising a kid to adulthood, plus the thousands of hours of unpaid labour that make up part of your cost, (and mine,) a company paying $8 an hour for a healthy, sound employee who can read, write, add and subtract, reason and compromise and function, is an amazing bargain. And of course, the first rule of bargaining is to loudly proclaim that you are getting a terrible bargain. “$8 an hour? How shall we survive?” while clutching their corporate chest in a mock heart attack.
But just remove half those cheap workers from McD’s and watch the whole corporate giant collapse like a Macy’s parade balloon with a slow leak.
Coberly wins for sneaking in the Calvin and Hobbes reference…I STILL miss those two.
Noni
I agree with you entirely. I thought I even made that point. My other point was that , for a limited time only, it is possible to “live” (note the quotes) on an income of 1000k per month. I think this is important to realize, so that you are not demanding more than is reasonable.
You don’t think you are, but lacking anything specific it is hard to understand you to mean anything more than “tax the rich.”
I think a minimum wage that is a living wage is doable, if presented “rationally” and with as much regard for the opinions of employers as you think you have for the needs of workers. Note, “regard” does not mean you agree with them. It probably does mean that you really understand they … some of them… may really believe themselves.
Jim A
yep. me too.
Gene Nichol, law professor, among other duties, at UNC-Chapel Hill, dug into the poverty numbers here in NC, in part to rebut one of our elected officials who said there is no real poverty in NC, the Census Bureau skews the figures to make it look that way. (Uh-huh, and the black helicopters are overhead).
Anyway, here are some of the figures he cited. Note, the Mickey D wage would not get you in an apartment in Jacksonville, NC. (How in the hell a family of four survives on less than $12,000/yr is beyond me.)
About 185,000 people live in Onslow County. In Jacksonville, its largest city, over 30 percent of the work force is active-duty military. So Onslow’s unemployment rate is not as pronounced as some Eastern North Carolina counties. Its poverty rate is often a shade better than the state average.
Still, 22 percent of kids (about 10,000) in Onslow County live in households with incomes under $23,000 a year for a family of four. For black, Latino and Native American children, it’s about 4 in 10. Over 10 percent of Onslow County children live on less than half of that: $11,500 for a family of four.
In three Jacksonville elementary schools – Northwoods, Hunter’s Creek and Clyde Creek – about 70 percent of students qualify for the free and reduced-price lunch program. The Onslow County School System reports that more than 350 of its school kids are homeless.
Likely as the result of (well-earned) military housing allowances, rents are quite high. The median monthly rental is $858, compared with $744 for the rest of the state. Housing experts indicate that even substandard mobile homes cost over $700 a month. Given the dominance of low-wage civilian jobs, affordability is a potent problem. Of the 23,000 occupied rental units in the county, 9,000 dwellers pay more than 35 percent of household income for rent alone.
Daphany Hill, director of Jacksonville’s Eastern North Carolina Human Services agency, reports that others don’t fare even that well. “Last winter, we opened our waiting list” for federal housing assistance, she said. This doesn’t get you housing help, of course. That may take years. But it gets you on the list.
Read more here: http://www.newsobserver.com/2013/05/25/2915490/digging-into-districts-desperation.html#storylink=cpy
Sandi:
Even in the early seventies when I was stationed there at Camp Lejeune, Jacksonville and the surrounding area was not well off. The best paying job for divorced young women with kids was working in the bars, serving up 3.2 beer, and flirting with the Marines as we got drunk. A Sergeant’s pay then was ~$425 a month and not bad after 3 years. A lot of young PFCs who got $110 and were married lived off based in the little trailers. I do not know how they did it. I told my wife back then; if I stayed in for another 4 years, I would not have married her. It was a hard life for them and she would have done better.
Rents are high because no one wants to live on base. More Marines are making a good wage as opposed to what I was paid. It has to be even tougher on the townies.
If you look at Kaiser Foundation for Poverty by State and who would qualify for expanded Medicaid in NC, 29% of the population live below 138% FPL. The elected yokel may think there is no one in extreme poverty; but, he is probably living in Chapel Hill (it was pretty nice when I was hanging aroound there). http://kff.org/other/state-indicator/population-up-to-139-fpl/ Distribution of the Total Population by Federal Poverty Level (above and below 139% FPL)
If you look at population below 100% FPL, 21% of the population lives in poverty. http://kff.org/other/state-indicator/distribution-by-fpl/ . Going up to 138% FPL for Medicaid just adds another 767,000 citizens.
Just more stats Sandi that don’t mean a damn thing as no one reacts to them. In Michigan, we have our own home grown idiot who will vote against raising Medicaid – Michigan State Senator John Hune.
Dale,
Yes, of course employers have to be part of the discussion regarding minimum wage levels. However, your comment implies that some how they have not been. Wage discussions are as old as work and employers have always maintained that any increase in wages is uncalled for and too expensive to support. That’s the historical picture. The question isn’t what anyone has to say about minimum wage. The focus has to be on requiring employers to pay enough so that their employees do not continue to be a drain on the social services of our society. If employees qualify for food stamps because of low wages then those wages are too low because we are then all subsidizing that employer. The same can be said of any basic cost of survival. And having to work a 70 hour week inorder to survive also suggests that wages are below an acceptable level.
Employers have only one response to these discussions and we’ve been listening to their perspective for ever. That’s how they stay at the top. They talk, we listen and they do as they please.
run,
The thing is, it doesn’t really matter what the stats say. We are confronted by an ideological wall, and facts be damned! The legislator in question is from Onslow County, and probably wouldn’t be caught dead in that liberal bastion, Chapel Hill. (Which is still an oasis, even as it’s grown too big for my taste, and where I worked for 8 years.). I’m quite sure he’s probably a State or Duke fan, to boot.
I’m willing to guarantee that if you took the doubters to the trailer parks and homeless shelters in any of our 100 counties, and pointed out those in need, the conversation would suddenly shift to, “Well, they’re just too sorry to work.” (Sorry being Southern for “worthless”). In fact, when they decided to ditch the unemployment insurance extension this session, (which was brought on by Republican legislators in good times saying we had to “cut those poor business’s taxes, leading to a shortfall when the waste matter hit the whirling blades), some pointed to “why should we pay people not to work?” as their argument to cut the amount and length of time one can collect. Nevermind that there are 3 people for every job opening.
My husband was born and raised in Michigan and was 30 years with a Michigan company that came south to “escape the unions and OSHA”. They also had plants in Mexico and Brazil as early as the 1970s. They no longer exist. But that’s a whole other story.
As long as they can keep the working people hungry, or better yet, desperate, they know their profits are safe. If they could bring back legal slavery, they would. They have nearly achieved it in some areas now. Unpaid internships, anyone?
Sandi:
Keep hitting them with the facts. There are people out there who will listen.
Bill
PS on wages.
A few years ago, the gal who runs our county’s Economic Development Commission, was trying to recruit a company that would barely be paying minimum wage. She stood up at a Rotary Club meeting and gushed about how these jobs would be so good for our people – they could buy new cars and they could buy homes, etc. To which one local mayor replied, “Hell, no, they won’t. They’ll be living in Mr. …………’s run down trailer park.” There are several what would be considered slum landlords in the county. Some of their “holdings” would make a rat think twice before moving in.
Sandi:
You appear to be intelligent. Challenge their redneck asses. When one of them throw down the glove, pick it up as it is an opportunity to show how sill they truly are. I am doing such now with our State Senators who will not expand Medicaid. It is just plain stupid not to do so. http://angrybearblog.strategydemo.com/2013/07/medicaid-expansion-in-michigan.html#comment-204367
Run,
Oh, I do, believe me, I do. LOL. People who know me wonder why my car hasn’t been keyed at the local mall.
Jack
I agree completely. My point was not to agree with the bosses, but to understand that some of them at least believe what they are saying, so it’s necessary to start by not scaring the hell out of them with radical and sudden demands they can’t understand and will drive them into the arms of the politicians Sandi and Run describe.
On the other hand we have a constant contributor here who appears to be some kind of small business owner, and we all know it is useless to talk to him about anything.
I think we need a minimum wage that is a living wage. I think we need adequate affordable housing. I think we need better schools. I think we need to end fraud as the standard business model among especially the banks, I think we need government run… pay as you go … insurance for health care and unemployment… well, we need a lot of things. I think these are doable, but made far less doable by the kind of simple minded hate rhetoric i see coming from the left… rhetoric that matches the simple minded hate rhetoric coming from the right.
Sandi
apropos of some people near where you live, i never said they didn’t have worm eaten brains. thing is, it doesn’t do any good to talk as if they all did. it riles em and makes em even more stubborn.
and here in a state where they vote democratic nine times out of ten it is easy to find people who will say the same thing your neighbors say, only without the charming accent.
The suggestion min-wagers work two jobs is especially galling as managers of low wage earners increasingly demand their wage-slaves be available on call 24×7. Referring to the growing trend for “just-in-time” labor.