The McDonald’s sample monthly budget plan for its lowest-paid workers looks like this: $1,105 in income from a first job and $955 in income from a second job. On the expenses side, the first item listed is savings, at $100, followed by $600 for mortgage or rent, $150 for a car payment, $100 for car and home insurance, $20 for health insurance and $50 for heating.
On the face of it, McDonald’s appears to be offering its employees a thoughtfully prepared package of financial planning tools. But according to Anthony Ogorek, a Buffalo, N.Y.-based certified financial planner and fee-only advisor, the McDonald’s monthly budget is completely unrealistic for American life in the 21st century.
“It’s actually sort of a silly exercise,” said Ogorek, who serves as director of the national board of the National Association of Personal Financial Advisors (NAPFA). “When you look at monthly expenses in the real world, one of the greatest expenses is food. There’s no food line item here, just monthly spending money. It’s silly that the No. 1 item is savings. A car payment of $150 is minuscule. We would all love to pay health insurance for $20, but I don’t know where that happens. In Buffalo, we would love to pay $50 a month for heat.”
McDonald’s Offers a Monthly Budget Plan for Workers
The McDonald’s monthly budget plan (left), which includes income from a second job, reflects a serious problem in the U.S.: many American workers aren’t earning enough to be the sort of consumers who can drive the economy forward. Indeed, Friday’s employment report shows that U.S. job growth may be on the upswing, but it also underlines a disturbing trend: most of the new jobs created these days are McJobs.
Friday’s good news was that the U.S. added 162,000 jobs in July and brought the unemployment rate down to 7.4% from 7.6% in June, according to the Department of Labor. The bad news was that 85,000 of those new jobs came from retail trade, food services and drinking places, which usually pay by the hour.
Glassdoor.com, which offers an inside look at McDonald’s wages posted anonymously by employees, reports average hourly salaries as low as $7.68 per hour for crew members and as high as $10.44 per hour for assistant managers as of July 30. In comparison, Friday’s Department of Labor report shows that average earnings for hourly workers currently total $23.98. (The federal minimum wage has been $7.25 per hour since July 24, 2009, according to the DOL.)
That means that a McDonald’s crew member who works 40 hours a week for 50 weeks would earn an annual salary of $15,360, or $1,280 per month. U.S. Department of Health and Human Services guidelines set the poverty level for 2012 at $23,050 in total yearly income for a family of four. With those kinds of wages on offer, it’s perhaps no surprise that thousands of fast-food workers in seven cities including New York and Chicago last week went on strike to demand a pay raise to $15 an hour.
To be sure, low-paying service jobs make planning a monthly budget look like a near impossibility, and never mind planning for big purchases or retirement investments.