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The McDonald’s Monthly Budget

July 17, 2013

mcdonalds-archesFollowing up on yesterday’s post on McDonald’s use of payroll cards, today Think Progress reported that McDonald’s has teamed up with Visa to launch a website to help is employees more effectively make ends meet. Now, that’s not an easy thing to do when you make an average of $8.25 an hour…and remember, that’s an average, meaning many (or more likely most, given higher wages at the upper end of the scale and the lower bound of the federal minimum wage of $7.25 an hour) employees actually make much less than that.

As Think Progress points out,  the sample monthly budget (pictured below) is laughable in a number of respects.

Working at the federal minimum wage, the budget assumes employees work a full, 40-hour work week at McDonalds (earning $1,105 per month), and are employed in a second job netting $955 per month. Again, assuming the individual earns minimum wage in both positions, they are working 40 hours per week at McDonald’s and 32 hours per week at a second job, for a total of 72 hours per week.

The budget assumes a $600 per month for housing, $150 a month for car payments, and includes other basic expenses (car/home insurance, cable/phone service, electric, and “other”). It also includes a generous $800 in monthly spending money. That’s $27 per day to cover food, gas, heating, and other basic expenses.

Now, you may argue that such a budget is unworkable…and you’d be right! I’m not aware of any health insurance plan providing coverage for $20 per month. And $600 per month in housing may cover it in smaller communities or areas with lower rental costs, but to call it a “mortgage” is laughable. In more expensive markets, $600 per month won’t even touch rent.

The McDonald’s budget/education site concludes by telling readers, “You can have almost anything you want as long as you plan ahead and save for it.” But such advice relies on a fictitious conception of life in the working class.

The CEO of McDonald’s earned $8.75 million last year. Assuming no time off, it would take the average McDonald’s employee one million hours—more than a century—to earn the same amount. McDonald’s CEO earned almost $730,000 per month, or $168,000 per week, or $33,654 per day, or $4,207 per hour.

The gap between executive and worker compensation in the United States has increased sharply since the 1960s. In 1965, the CEO/average worker compensation ratio stood at about 20:1. By the late 1980s, it stood at 58/5:1. After spiking in the late 1990s (reaching a peak of 411:1), it declined to about 230:1, more than ten times the rate of the 1960s.

By comparison, the pay gap at McDonald’s (a mere 100 to 1) seems radically low. But in an economy where the average McDonald’s employee would have to work one million hours to earn what the company’s CEO earns in a year, there are deeper problems. As Nobel Prize-winning economist Joseph Stiglitz recently pointed out, high levels of income inequality are bad not just for the poor but for everyone, as high inequality tends to stifle economic growth. While disagreeing with Stiglitz’s specific arguments, Nobel Prize winning economist Paul Krugman also argued that “inequality is a major reason why the economy is so depressed.” And a 2011 International Monetary Fund report found that cutting inequality actually increased economic growth.

So as fast food workers rally for higher wages in Chicago, New York,  Seattle, Washington DC,and elsewhere, we should remember the broader questions that these strikes raise. As Josh Eidelson blogging at The Nation observed, “fast food’s low wages, precarious employment and emotional labor are increasingly representative of the larger economy.”


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One Comment
  1. Morgan permalink

    A joke. NOtice there is no line item for food or groceries….guess you can’t afford to eat on this budget

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