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McDonald’s : Why You Can’t Live on Minimum Wage

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So I’m going to start my tenure here with a controversial issue within the Libertarian Party, and one I’m often viewed as being on the wrong side of by my own party, and that’s minimum wage.  Many Libertarians are against a minimum wage, arguing that it’s an overreach of government, that the free market will work itself out.  Personally, I challenge these Libertarians to pick up a history book, or maybe take a class.    I am not a “pure free market” type of Libertarian myself.    As something of a student of history I’ve read about the damage it’s done from right here in our own backyard in New England, with the Triangle Shirtwaist factory fire to the Ludlow Massacre in Colorado and all in between.  No matter where you look throughout history, the free market has time and again proven that the poorest among us need protection from the strongest and wealthiest. Having established that I’m a fan of the idea of a minimum wage, the next thought naturally is: how much?  Well, it’s recently been brought to the attention of the political community that McDonald’s has collaborated with VISA to put together a budgeting manual for their employees: whose 440,000 employees earn an average wage of 7.63 an hour.  While most budgets are of little interest to most people, this one has caught some attention because to the analytic eye it seems to prove the point that McDonald’s political enemies have been making for a long time: minimum wage is NOT a “living wage”.  Here’s how:

McDonald's New Budget, fresh off their site
McDonald’s New Budget, fresh off their site

There’s the infamous budget.  Now let’s talk about it for a few minutes.  First you’ll notice right off the bat, that based on 160 hours a month (40 hours per week, times 4 weeks) McDonald’s has this employee making 6.90 per hour.  Whether or not this is after taxes, I don’t know.  Let’s assume so.  You’ll also notice that’s at their FIRST JOB.  The budget pretty much immediately admits that you cannot live solely on a full time paycheck, that in order to survive you must get a second job.  Furthermore, if you assume you’re making 6.90 per hour at your second job also, you’d be working just under 35 hours per week.  A total of 75 hours per week.  Perfectly reasonable right?  Let’s see what kind of rewards that hard work earns you. Right away you notice savings, which we will determine after subtracting necessary expenses from the income later, when we do our realistic budget.  Moving on to rent, personally my place is only 2 bedrooms and double the rent of $600.  I do agree that you can find a place that you could split with someone and each pay $600, or maybe some hole in the wall studio for $600 a month, but that’s about it.  And that’s in Providence.  What if this person lived in NYC, or Boston? Moving on to the car payment.  Again, my car payment is 60/week for 240/month.  This calls for 150/month.  There MAY be cars out there that cheap, but I don’t know of them if there are.  And as for the insurance, my wife is a 28 year old female with no accidents and her rate on her own is $200/month.  Double the budgeted rate here. Health insurance at 20/month is absolutely laughable.  I have no idea where this person gets their health insurance, but the average cost of health insurance for a single coverage policy according to statisticbrain.com is $5,615 a year-or $468 a month.  In other words more than 23 times as much as budgeted for here.  Another site shows me a lower average, but still over 9 times the budgeted amount here. Heating varies per region and season.  In New England in the winter heating costs can run as high as 200-300 a month, but in the summer the bill can be as low as a dollar a day, even lower.  In this budget you’re working 75 hours a week and probably under your covers in bed most of the rest of the week though, so we’ll let the 50 a month number slide.  Cable and phone is probably fair, and electric probably fair for a single person.  “Other” might be internet, laundry, whatever, 100 a month is fine I suppose.  So we end the expenses with 1310 going out (including the savings, because who wants to stay in this life?).  Depending on what number we use for insurance as opposed to the 20 cited in this budget, that total expense number is anywhere from 350-600 short (100 on car insurance, 90 on car payments, and 160-400 on health insurance) and even without that 350-600 already more than $200 more than you’d make working full time at one job.  I guess they weren’t joking about needing that second job.

Now this says you’ve got about $750 left to spend, but we already know at least $350 of that is gone, so we’re down to about $400 at best.  Did anybody notice anything missing in the expenses?  How about groceries?  Does this person eat, or do they just take home scraps from the fryalators?  What about gas, so they can get to and from their two full time jobs?  Nearing $4 a gallon in some places of the country, and presuming an average distance of 16 miles from work (both jobs, and yes I did just randomly google that) and a round trip commute to each, 5 times a week for a total of 64 miles driven each working day, that’s 320 miles per week.  If this employee could afford a car that got 25 miles per gallon, they’d be buying 13 gallons a week at $4 per gallon for $62 a week just to get to and from their jobs.  Not a huge number, but when we make that monthly it turns into $242 per month, and saps up all but $158 of your “disposable income”.  Aaaaaand, we still haven’t talked about food really. DailySpendingJournal

McDonald’s goes on to provide not only a daily spending journal, but a suggestion on how to spend that extra $39.50 per week.   In that spending plan they outline $71 in grocery expenses (apparently this person doesn’t like to eat very much), putting our imaginary worker $31.50 in the hole every WEEK just to eat like a pauper. And all of this is assuming that you’re working two jobs for a total of 75 hours per week at just under $7 an hour TAKE HOME.  Not even pre-tax.  And we haven’t even gotten to anything.  Take your kids bowling?  Pfffff, please.  Go out on a date?  Good luck not spending anything.  You better hope she’s paying.  Have a child?  No way.

This is why a minimum wage of $7.25 an hour is simply not acceptable in today’s world.  It’s nearly impossible to live on two adults making $10/hour each and living together, splitting expenses, forget one adult making $7.25.  If you work a full time week, you should be able to go home and enjoy yourself.  At least be able to afford to turn on the heat for an hour or two and read a book, or rent a movie, or something.  Under McDonald’s ideal budget for their employees however, they not only don’t have time to do that, they couldn’t afford the book even if they found it at a dime store. Remember that the next time you go to McDonald’s, think you’re having a rough day, and take it out on the worker behind the counter.  If they don’t eat that day they make $3 a day after reasonable expenses to work an average of 10.5 hours a day, 7 days a week.   I don’t think I need to say anymore.  Vote to increase the minimum wage.  That’s all.

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Robert D. Cobb
Founder, Publisher and CEO of INSCMagazine. Works have appeared and featured in places such as Forbes, Huffington Post, ESPN and NBC Sports to name a few. Follow me on Twitter at @RobCobb_INSC, email me at robert.cobb@theinscribermag.com

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