McDonald’s trips badly on balancing fast food worker budget

In a financial planning guide for its workers, McDonald's accidentally demonstrated just how difficult it was for fast food employees to manage to live on their paycheck.

In what appears to have been a gesture gone wrong, McDonald's recently roped in Visa to create a financial planning site for its low-paid workforce. What came across from the exercise was the gross incapacity of the planners to figure out how a fast food employee could survive on a minimum wage income.

The $1,105 figure that the fast food chain used was roughly what the average McDonald's cashier earning $7.72 an hour would take home each month after payroll taxes, on a 40-hour week. The budget included $955 from a second job at normal fast-food pay.

The federal minimum wage is $7.25 an hour, though, 19 states and the District of Columbia set theirs higher.

Among other ridiculous assumptions are - the hypothetical worker does not pay a heating bill.

According to commentators, utilities may have been clubbed in the $600 a month rent, though at the end of 2012, average rent in the US was $1,048.

Apart from gas and groceries that were bundled into $27 a day spending money, the worker also had access to $20 a month healthcare. McDonald's basic health plan costs for employees is $12.58 a week, but that was if they had been with the company for a year. For others it is $14.

Commentators also point to the absence of budget line items for children, heating in the winter and, food. They further point out that health care at a mere $20 per month was probably not even true in 1993, forget 2013.

Finally, what absolutely took the cake and coke for absurdity was the fictional worker holding two jobs – something of an impossibility, since many McDonald's franchises are known for not committing to schedules much in advance, which essentially ensured employees needed to give a full-time commitment in return for part-time wages.

Commentators point out that McDonald's workers suffered financial woes for the simple reason that their salaries all but doomed them to a life of poverty. They say if the minimum wage had kept up with gains in worker productivity, it would be more than $20 an hour today.

They further point out that most people were falling behind, even as The New York Times reported CEO pay was up by 16 per cent in 2012, the Bureau of Labor Statistics reported that wages slid 3.8 per cent in the first quarter of 2013, the largest decline on record.