McDonald's Can't Figure Out How Its Workers Survive on Minimum Wage(theatlantic.com)
theatlantic.com
McDonald's Can't Figure Out How Its Workers Survive on Minimum Wage
http://www.theatlantic.com/business/archive/2013/07/mcdonalds-cant-figure-out-how-its-workers-survive-on-minimum-wage/277845/
35 comments
That explanation doesn't pass the sniff test, as what budget lumps groceries, fuel, clothing and entertainment into 'spending money'?
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.
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.
The other bit that is glossed over in the article: the reason why these artificial prices and wages are what they are. Why are McDonalds' margins so low? Employees are triple taxed (corporate, income, and then sales tax). Why is the price of real estate so high? Bernanke is printing $85 billion per month to drive up housing prices, and zoning and housing regulations drive up the price of building and make it impossible to build highrises (a key reason for high costs in the Bay Area). Why do these jobs even exist in high cost areas? Indirect government subsidies in the form of food stamps and other transfer payments. Why is McDonald's paying directly for health insurance rather than giving that in salary to the employee and having them buy on the free market? A massive web of healthcare regulations, including the tax advantage of employer-provided healthcare.
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...
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.The most interesting part of the article was almost an after thought:
> "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."
> "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."
> ...it's based on a mistaken premise.
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.
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.
It seems like McDonald's was providing an additional service for its low pay workers, so it seems a bit rude for the Atlantic to jump on them. Clearly it is difficult to live on $1K/m but I'm sure its possible -- I've done it myself ($300/rent $60/utils $180/food $150/books). Eventually I saved up and bought a car for $700.
The real question is why someone making only $1K post-tax had an apartment that costs $600 a month.
The real question is why someone making only $1K post-tax had an apartment that costs $600 a month.
The fact that you think that your student budget is applicable to single parents is laughable. $600 is really low for rent in a lot of places.
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/
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/
I fail to see where in the original article it mentioned any costs relative to parenting. So turning this to talk about the costs of single parenting seems a non sequitur.
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.
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.
This attitude reeks of privileged condescension.
Who is making minimum wage?
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.
1: http://www.gizmag.com/hamburger-machine/25159/
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.
1: http://www.gizmag.com/hamburger-machine/25159/
I guess my assumption has always been the McDonalds cashier isn't a career, it's a way to enter the job force, earn some money, and move on. This seems to reenforce that perspective. I'd liken McDonald's to an internship... either you like food service and move into management/supervisory positions, or you move to another job that pays better.
But how exactly can you "earn some money" if such a job can barely cover half the costs of living, in a trivially-false contrived example?
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.
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've always thought the same thing.
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.
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.
This probably varies a bit by area, but you might be surprised at how many minimum wage employees will remain in minimum wage positions.
You can certainly think of McDonalds jobs as internships, but that's not how many in the workforce view them.
You can certainly think of McDonalds jobs as internships, but that's not how many in the workforce view them.
> 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).
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).
> Very few people view them as permanent, that's for sure.
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.
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.
The problem with this is that a very large number of jobs become 'not a career.' Eventually there just aren't jobs to move on to. There are only so many managers needed, only so many stores.
Why is it ok that minimum wage is unlivable?
Why is it ok that minimum wage is unlivable?
I don't think anyone is saying it is "ok", but if you increase the minimum wage to something "livable", eventually it will be profitable for employers to start automating those jobs out of existence (for example, with automated burger making machines at MCD). What is the solution to that? Lower living costs so that minimum wage is livable? Forbid automation?
What happens when there aren't any supervisor positions to move into, and there aren't any jobs that pay better?
Weirdly the pamphlet anticipates slightly lower heating costs for their Spanish language employees? [1] It's a $30 line item vs. a $50 line item on the English spending plan.
[1] http://www.practicalmoneyskills.com/mcdonalds/documents/McD_...
[1] http://www.practicalmoneyskills.com/mcdonalds/documents/McD_...
I wonder if that is on purpose or just an error.
McDonald's expects their full-time, minimum-wage employees to work a second job just to survive!
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...
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...
Huge assets are at stake in large organizations, and experienced leaders are crucial for their continued success. If I had a lot of money at stake in a company, I would divest as fast as I could if someone were to suddenly replace its CEO with a 20-year-old McDonald's cashier.
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.
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.
I fail to see what Mitt Romney has to do with this. Care to explain what exactly you're proposing?
That free-market capitalism sometimes produces unjust results, I assume?
Looks like someone that is jealous of a rich person.
Seriously, what is this world coming to... When did people stop working so hard, but rather coveting their neighbors house?
Seriously, what is this world coming to... When did people stop working so hard, but rather coveting their neighbors house?
The point is presumably that it's rather unfair. That MR isn't really that many times more worthwhile than a McDonalds employee but that there are perverse incentives or a bad opportunities structure or something that, so to speak, is there to keep people down.
Brainwashed by the American Dream. You too can have all this one day! Just work hard and keep your nose to the grindstone!
Unfortunately that's increasingly no longer the case.
Unfortunately that's increasingly no longer the case.
How does earning interest qualify as "work"?
75 hours a week isn't hard work ?
> When did people stop working so hard, but rather coveting their neighbors house?
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?
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?
Oh ya, Mitt, the epitome of a hard worker.
Do you say this for any reason outside of not agreeing with him politically?
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.
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.
Some people have the power to tilt the system in their favor, some do not.
Now imagine if we tried to solve the problem of unemployment the way libertarians want: by abolishing minimum wage restrictions altogether. If minimum-wage jobs dropped in wages by as little as 25%, their employees would have to work for 100 hours a week in order to survive - as the price of labour at the bottom of the market goes down, the demand has to go up as people are forced to work longer. The libertarian proposal makes no sense and yet they carry on making it.
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.