The other day I saw a video produced by an organization that is lobbying Congress to raise the minimum wage. It showed a page from the McDonald's web site that was apparently for their employees, attempting to give helpful budgeting advice. Here is a link to the video. The organization that created the video is called LowPayIsNotOK.com, and you can see the video there, too (click on the link at the top of the page.) I did not sign their petition, however, because it required me to give them my cell phone number, and that is one thing I will not provide. Instead, I'm writing this blog.
Under income, the budget listed not one, but two jobs, with the first job totaling $1105 per month and the second job totaling $955. It was not clear which of these incomes was supposed to be from the McDonald's job. The total income was listed as $2060 per month. I'm assuming that is take home pay.
Let's look at the income for a moment. Federal minimum wage (per hour) in the United States is $7.25 (pictured). There are a few states that have a state minimum that is over the federal guidelines, Washington state being the highest, at $9.19. A number of states have a minimum of $8.00, including California. Several states have a minimum that is lower than the federal wage. In general, these lower minimums apply to smaller businesses, so larger businesses in these states must go with the federal minimum. About five states have no state minimum, which means that the federal guidelines apply.
In states with the federal minimum, the vast majority of workers at McDonald's make around $7.75 an hour. A few of the "manager" positions earn a little over $8.00 up to about $9.50. A very few higher level employees make more than that.
The total salary was listed as $2060 per month. Let's say you made that much money as a gross salary. This works out to $24,720 per year. If you are single with no kids, your tax for the year (at least some of it would be withheld) would be $1762 for the year. If you are head of the household (single or married) your tax is $797 for the year. You would have to have 1 child in order to pay no tax at all for this salary amount.
The McDonald's budget plan figured the following expenses:
savings $100 (This is so unrealistic, it's not funny.)
rent or mortgage $600 (This may be true for someone living in a rural area in the South or the Midwest, but if you are living in a city, this is just not accurate. According to the Living Wage Calculator, housing in Sioux Falls, South Dakota, runs from $508 to $891, on average. But if you live in Brooklyn, New York, for example, you pay anywhere from $1129 to $1672 per month, so you would be forced to have at least a couple of roommates.)
car payment $150 (I'm not sure what kind of car you could afford, but my guess is that it would be a "beater," and probably unreliable in the long term. The McDonalds budget does not figure in the cost of gas for the car, a very serious omission. The Living Wage Calculator says a person in Sioux Falls, SD, would need $306 - $748. Since buses are few and far between, and things are pretty spread out in Sioux Falls, you really need a car. If your car payment were really only $150, then you would still need $156 for gas. There goes your savings.)
car & home insurance $100 ( I think my car insurance is about $45/month, and my renters' insurance is maybe $15/month, so this is fine, but since McDonald's didn't figure in gas money, you'd use any extra money at the gas pump.)
medical insurance $20 (Oopsie, this won't do. According to the Living Wage Calculator, medical expenses average $120 a month for singles, and up to $405 if you have 3 kids in South Dakota. If you live in Brooklyn, NY, expect to pay an average of $136 to $418 per month. Keep in mind that the vast, vast majority of minimum-wage workers are not employed full-time, for a reason. The reason is that their employers don't want to underwrite health insurance. It's well-known that people without insurance have to pay much more than those with insurance, so the out-of-pocket cost for a simple doctor visit is astronomical. Obamacare should help with this, but healthcare for the least-paid workers is always going to be a problem.)
heating $0 (That's right. Zero. I'm not sure what they were thinking, but apparently, they think there are no McDonalds stores in any state that has winter weather. Or something. Now, in the North, the least expensive apartments do include heating in the rent, but then again, your rent is probably not going to be only $600.)
cable/phone: $100 (This may be about right, as long as you don't do a lot of texting on your phone.)
electricity: $90 (Well, my electric bill is around $75, and I'll bet it costs way more in Brooklyn, New York!)
other $100 (Um, let's see.. what have we not listed, besides gas for the car? Oh, gosh yeah, food! Water, clothing, child care, and school supplies for the kids. If you have kids, they tend to grow, so clothing and shoes are a big issue. You may be able to get by with the same clothes from year to your, but your kids can't.)
OK, so basically, McDonald's goofed, big-time. Even with two incomes totaling $2060 per month take-home, you cannot really make ends meet, especially if you are single and have kids.
Oh, kids. Let's take a look at that: Child-care in South Dakota is estimated at $408 for one child, $679 for two kids, and $950 for three kids. In Brooklyn, New York, those figures run from $788 to $2,288. So yeah, the McDonald's budget is way out of line.
Council member Vincent B. Orange (D-At Large) responded to Wal-Mart's threat this way: "The question here is a living wage; it’s not whether Wal-Mart comes or stays. We’re at a point where we don’t need retailers. Retailers need us."
Good for you, D.C. Council! You don't need three Wal-Marts anyway! :-/
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