McDonalds helps it's employees budget! (Irony)

[Zaune]

This time two years ago, I was renting a room in a fairly decent suburb of Washington, D.C. for $575 a month. Utilities included. To be fair, it was literally a room, with shared bathroom access with the other three tenants on the floor, and a family living downstairs that sublet their house. But it wasn't a bad place to live, for a graduate student bachelor or someone with similar expectations.

That's actually about $150 a month more than what I'm paying for a similar arrangement here in England, but I'm in a tiny village in the depths of the Greater Milton Keynes area rather than a suburb of the capital.

[Simon_Jester]

Right. Point is, that $575 a week figure wasn't completely idiotic, and hell, at the time my actual cash takeaway income was less than I'd have made working 40 hours a week at McDonalds, though the benefits were infinitely better.

[ChaserGrey]

The problem I have with the budget is that it misses one of the biggest things I didn't understand when I entered the workforce: payroll taxes and how they affect take-home pay. In the US, each worker's share of Social Security and Medicare taxes is automatically deducted from their paychecks.

So in fact you won't get (hours) * (hourly rate), you will get (hours) * (hourly rate) - deductions. Together they come to roughly 6% of wages, so you can take about $120 off our sample employee's pay. Puts a serious dent in the bottom line. 'Twas an unpleasant surprise for young Mr. Chaser back when he got his first paycheck, and it'd be worse for someone actually depending on that paycheck.

[Losonti Tokash]

I'd like to know where the hell you get health insurance that's $20 a month.

Medicaid.

Does Medicaid in Indiana charge a premium? It sure doesn't here.

[Simon_Jester]

The problem I have with the budget is that it misses one of the biggest things I didn't understand when I entered the workforce: payroll taxes and how they affect take-home pay. In the US, each worker's share of Social Security and Medicare taxes is automatically deducted from their paychecks.

Someone who is already an employee and presumably getting paid would hopefully at least know about this. It's not exactly hard to budget around- you just budget your after-tax income, rather than your theoretical-gross-income-you-never-see.

[Broomstick]

I'd like to know where the hell you get health insurance that's $20 a month.

Medicaid.

Does Medicaid in Indiana charge a premium? It sure doesn't here.

Indiana Medicaid charges a co-pay.

The Healthy Indiana Plan, which covers some of the same demographic that is otherwise ineligible for Medicaid and those just above that demographic on the fiscal ladder, charges a premium of 2-5% of one's monthly income.

[Losonti Tokash]

Here, some people get a copay, and even some of them don't pay it if they have a managed care plan. For those people it ranges from $1-3. But Nebraska Medicaid doesn't charge a premium.

[Korto]

Yeah, well it looks to me like McDonald's is trying to accomplish two aims here. Help their employees, and create good PR, with the main emphasis on the second. They're trying to make what they pay look good and reasonable. So they're taking some pretty rosy assumptions. Any of these assumptions in isolation could no doubt be defended, it's when you stick them all together it starts to look ridiculous.

I'm going to assume the $7-$8 / hr is accurate, because I really couldn't be arsed to check it. ($7 an hour? Really? )

As pointed out, the rent can, in some places, be true.
Zero dollars for heating is not unreasonable, if you live in the right place. It's what we pay, because we don't use heating, we put on a jumper if we're cold. But we live somewhere that doesn't see frost, even in the depths of winter.
Apparently you can, possibly, get health that cheap. If you live in the right area.
Folding food into discretionary spending is definitely disingenuous, and Esquire, if you can't come up with a pretty reasonable average of your food bill, then you fail at budgeting. Yes, it varies, but so does phone, power, and heating. "Dating" is not part of your food budget, it's entertainment.

Far as I see, the biggest fail of this thing is that even with the rosy assumptions, and someone working a 40hr week, they still need their hypothetical employee to have a second job. Just to survive.

[fuzzymillipede]

It's entirely possible to get by on a McDonald's budget, as long as you make certain adjustments to your life. Drop the car and rent a room within walking/biking distance from work. Get a cheap prepaid phone plan. Drop the cable/internet. Don't eat at restaurants. Don't have children unless you can afford them.

You would be amazed how little you can survive on if you do that sort of stuff.

[Mr Bean]

It's entirely possible to get by on a McDonald's budget, as long as you make certain adjustments to your life. Drop the car and rent a room within walking/biking distance from work. Get a cheap prepaid phone plan. Drop the cable/internet. Don't eat at restaurants. Don't have children unless you can afford them.

You would be amazed how little you can survive on if you do that sort of stuff.

You still fucked the instant you get sick. Get sick? Get fired, now your job is not in walking distance anymore since you don't HAVE a job.
More importantly there's no road up. That's as far as you go since your always meeting needs never ever to put anything away.

[fuzzymillipede]

You still fucked the instant you get sick. Get sick? Get fired, now your job is not in walking distance anymore since you don't HAVE a job.
More importantly there's no road up. That's as far as you go since your always meeting needs never ever to put anything away.

Sure there is. Follow my advice and I'm sure you could cut costs to under $800/month. Forget the second job; you can still save money with only one McDonald's job. Save up for a few years, then go part time and get an associate degree from a community college. Then you can get a job that pays more than McDonalds. If you're a badass you can even do it while working full time.

[Broomstick]

I'm going to assume the $7-$8 / hr is accurate, because I really couldn't be arsed to check it. ($7 an hour? Really? )

$7.25/hour is the US Federal minimum wage.

Unless you're in a job that traditionally gets steady tips, like a waitress/waiter. Then it's like $2.15/hour, with the expectation you'll make up the difference in tips (if you don't your employer is supposed to make up the difference between what you're getting and $7.25/hour but in reality that seldom happens).

[Broomstick]

Sure there is. Follow my advice and I'm sure you could cut costs to under $800/month. Forget the second job; you can still save money with only one McDonald's job. Save up for a few years, then go part time and get an associate degree from a community college.

How the FUCK are you going to pay for college on that budget? Seriously? You can't.

[fuzzymillipede]

How the FUCK are you going to pay for college on that budget? Seriously? You can't.

I agree, unless you can get a scholarship or want to go into debt. But that's why I said community college.

Here's the fees for my local community college:
http://www.ccac.edu/default.aspx?id=137210

It's around $1,800/semester. If you saved $300/month then in six months you've saved enough to pay for a semester. An associate degree is two years/four semesters so it would take two years to save enough to pay for the degree. Some states such as California have far lower tuition at community colleges, making it easier.

[Mr Bean]

I assume you will be shoplifting your books and materials as that is anther 100 per course which increases your save time to 2,200 per semester and no matter what your going for one of your required classes is going to have the 400$ worth of required books. And that's buying second hand.

[fuzzymillipede]

Then save for eight months/semester instead of six. Or get a government loan and pay it back once you get your better than McDonald's job.

[Terralthra]

Or apply for a Pell Grant, which are almost always approved for low-income adults, and are usually 3 years' worth of semesters and worth between $600 and $800 per semester. In California, low-income students can also apply for a fee waiver (pdf link) which makes attending free.

[Korto]

$7.25/hour is the US Federal minimum wage.

That's pretty bloody terrible. Australia's minimum wage

Currently the full-time minimum wage is $16.37 per hour or $622.20 per week. This means that most employees in the national system shouldn't get less than this.

Casuals covered by the national minimum wage get an extra 24% ($20.30 per hour).

That's for adults. Juniors get less, at 16 you're paid $7.74. So that places my expectations.

Unless you're in a job that traditionally gets steady tips, like a waitress/waiter. Then it's like $2.15/hour, with the expectation you'll make up the difference in tips (if you don't your employer is supposed to make up the difference between what you're getting and $7.25/hour but in reality that seldom happens).

Which is a completely alien system to us, where we assume someone is properly paid and a tip is for unusually good service. As long as the system works, it's fine I suppose.

Fuzzy, you're assuming a young person with no commitments, able to get a place near where he works, etc. What happens if that person has children? Can't find a cheap nearby rent? Needs some kind of social life for their sanity? What happens if they're late 30's and laid off from their redundant manufacturing position? Your example suffers the same problem as the budget, it opts for the rosiest scenario.
I know it's possible for a young single person to survive on that. I did for many years on less, but I was on the fucking dole. I've got two kids now. It wouldn't be possible.

[Terralthra]

I'm going to assume the $7-$8 / hr is accurate, because I really couldn't be arsed to check it. ($7 an hour? Really? )

$7.25/hour is the US Federal minimum wage.

Unless you're in a job that traditionally gets steady tips, like a waitress/waiter. Then it's like $2.15/hour, with the expectation you'll make up the difference in tips (if you don't your employer is supposed to make up the difference between what you're getting and $7.25/hour but in reality that seldom happens).

It seldom happens because waiters and waitresses rarely make less in tips than it takes to make up the differential and more on top. Not that the low wage is fair.

[fuzzymillipede]

Fuzzy, you're assuming a young person with no commitments, able to get a place near where he works, etc. What happens if that person has children? Can't find a cheap nearby rent? Needs some kind of social life for their sanity? What happens if they're late 30's and laid off from their redundant manufacturing position? Your example suffers the same problem as the budget, it opts for the rosiest scenario.
I know it's possible for a young single person to survive on that. I did for many years on less, but I was on the fucking dole. I've got two kids now. It wouldn't be possible.

Bad things that screw up the rest of your life can happen to anyone. Just because they can doesn't mean you can say that the future of the typical McDonald's worker has to be hopeless. And it seems to me that most McDonald's workers are young and single. Many even live with their parents, which should make getting that associate degree that much easier.

[Broomstick]

That used to be the case - more and more McDonald's employees are middle-aged or older. They aren't young and single. They might have health problems where the lack of medical insurance would be a serious, serious problem. If you already have a degree but got it 30 years ago and need retraining you will not find getting aid for a new degree so easy to obtain (the assumption being, apparently, that people with degrees never become long-term unemployed, or need retraining when their profession is rendered obsolete by advancing technology).

Again - you're proposing a rosy/best-case scenario.

[Elheru Aran]

The $20/month for health insurance is a fucking joke. The only way you're going to get something like that is Medicaid. More realistically, expect to be paying 200-300 a month, depending on family size. At Taco Bell I paid about $100/biweekly for insurance for my wife and I.

Let's use my TB job for an example, as it's a similar food-service position. I started at 7.50/hr; 3 years later, I was up to 8.50. I worked on average around 35-37 hours, and trust me when I tell you restaurant managers will be put under HUGE pressure to never let any employee go overtime (>40 hrs). If they notice that you're getting up to 39.5 hours, they'll tell you to go home even if you're in the middle of lunch rush.

I went without insurance for a year or so until I had a bad fall on ice. Final cost of that-- ~$2500? Might have been closer to 2000, but either way, it was not a sum I could afford to pay, and I didn't finish paying it for two years.

After insurance plus tax deduction (only Federal and Social Security, as I was in Tennessee at the time-- no state income tax in TN), I generally took home around $300-350 a paycheck. This is working nearly full time, mind you. That adds up to around 600-700 a month. Not 1105. Not 955.

With my current job at Home Depot, a good ~$220-250 comes out of my paycheck every two weeks thanks to insurance, taxes, and various deductions. This is out of a ~$500 paycheck. There is no way that we could make it without my wife's job.

Bear in mind that Home Depot's employee health insurance is excellent and the company has a good benefits package... but still.

'spending money' and 'savings' are a joke at this level. You're lucky if you can scrape together enough to buy birthday presents or go somewhere every now and then.

[fgalkin]

I am honestly not seeing what the problem is here. This isn't supposed to be an actual budget of a McDonalds employee, it's a SAMPLE budget. They could have put any numbers they wanted in there and it wouldn't change the fact that it's not supposed to be a real budget. However, as a budgeting tool, it is actually pretty useful, so...

Have a very nice day.
-fgalkin

[Simon_Jester]

As a way to provide financial planning advice to people who lack even basic financial planning skills, it's a good thing.

As a commentary on the life of the American lower class, it is a stench in the nostrils of the Lord. Sure, it is possible to live like this, but it all falls apart very quickly if anything goes wrong. There's no margin for error, there's no room for improvement, there's no plan to get out of the situation except "pray."

In the long run this kind of thing is by necessity intolerable, especially since it has things like "don't have kids, you can't afford them" written into it. What is the realistic plan for someone who starts in a job like this, if they want to have children while they're still biologically capable of it?

[Broomstick]

In the old days, when I was young, the typical McDonald's employee was a high school kid, or one just graduated from high school, or early college. And for that demographic, where they really are just starting out, still have parents to help them out, etc. they are OK jobs. A LOT of people had McDonald's as a first or early employer. It was used as a stepping stone, to get some work experience, then people moved on to (presumably) more lucrative jobs.

Now, more and more, it's a full grown adult, or middle-aged adult laid off from corporate America, or a retiree, working at McDonald's. And for those demographics no, it's not a great job and it's not likely to be a stepping stone to anything better. It becomes a societal waste-heap, where "surplus" people go to eek out a few more years.