McDonald's 'budget advice' to employees shows difficulty of fast food wages
After criticism ensued, $50 was added for the heat bill. (Source: practicalmoneyskills.com)
(RNN) - McDonald's is known for low wages almost as much as it's known for burgers. That's why when the fast food chain recently helped released a budget guide that inadvertently showed how difficult it is to live off a McDonald's wage, the internet raged at the irony.
In a section of Visa's Practical Money Skills website sponsored byWeight Watcher's International and McDonald's, the Practical Money Skills Budget Journal aims to instruct people how to "take control" of their money by doing things like setting budgets and writing down expenses. In one section of the guide, it advises people to "spend less money than you make" – reading like any other common sense guide to budgeting.
The controversy was ignited because the guide offered a sample budget with a hypothetical income of about $24,720 per year, which is $3,000 less than the median wage in the U.S. for a 40-hour workweek. But for McDonald's employees to make that amount, they would have to work nearly 80 hours a week.
The sample budget assumes the person is working two jobs. The first job net income is $1,105 a month and the second job net income is $955 per month. With most McDonald's franchises paying hourly employees at or near minimum wage, an employee would have to work 35 hours at $7.89 per hour (64 cents per hour more than the federal minimum wage, which 31 states use) at the first job, and 30 more hours at the second job.
Working 75 hours per week at two McDonald's level wage jobs, one has $2060 per month (assuming it is after taxes). The budget guide then goes on to give samples of monthly expenses coming out to $1,310 but does not include food, heat, and only $20 per month for health insurance. Initially, it didn't include heat, either. But $50 was set aside for that expense after criticism ensued.
"I don't quite know what they were thinking," said Slate.com columnist Matthew Yglesias. Pointing out that the budget 75 hour workweek allows $27 per day to cover the excluded items, he says, "Fortunately, McDonald's promises its crew members free uniforms and free or discounted food so during the heat-free summer months you're in good shape."
"The line for healthcare is $20 a month, which is enough to pay for a bottle of aspirin - and a couple of days of health-insurance coverage each month," Gross said.
And Laura Northrup of Consumerist.com says the budget simply leaves out too much to be considered a realistic budget.
"Besides leaving out gas, heat, car maintenance, and remotely realistic medical expenses, it leaves out clothes, entertainment, furniture, various kinds of personal hygiene, furniture, charitable and religious giving, cleaning supplies, and groceries," Northrup said.
Gross also argued that the budget was condescending because it assumed people on extremely tight budgets do not know how to budget.
"People who live on chronically low incomes know all about budgeting," Gross said. "And the best way to improve employees' financial standing doesn't require the construction of a Web-based tool. Employers just have to pay them a little more."
Despite the criticism, the budget is a reality for many people around the country who might have to work average of 16 hours per day to make ends meet – although if they have kids and work a schedule like that, childcare would be another glaring omission in the budget.
However, the criticism is warranted, considering the omission of so many necessities.
The guide also does not take into consideration the reality for many McDonald's employees. In one of the financial tips to save money, the guide advises employees to set up direct deposit for their paychecks or get their checks deposited on a payroll card.
But a former McDonald's employee sued a franchisee for not offering direct deposit and forcing them to get their wages only through payroll debit cards that had several fees attached, including $1.50 for ATM withdrawals, 75 cents for online transactions, and a $10 inactivity fee after 90 days.