Tuesday, August 13, 2013

Test-Driving the McDonald's Budget in Bristol

Recently McDonald's Corporation put up on their company website a helpful little pamphlet designed to help their millions of minimum-wage employees with household budgeting.  It's created a bit of a backlash, mostly because it was so startlingly unuseful  and out of touch with reality.  My guess is that the people who created that budget don't actually have to live on it. 

Now my personal budget, besides being none of your business, is not much like the McDonald's budget.  However, when we interview clients at Faith in Action we ask detailed questions about their monthly expenses.  So I've got a pretty good idea what the minimum you can get by on in Bristol is.  Therefore I thought I'd give the McDonald's budget a whirl--edited for the realities of my small town.

First off, for the purposes of the exercise, let's assume I'm a young adult, single, with no children and a high-school degree.  The McDonald's budget has me working two near-minimum-wage jobs, one for 35 and one for 30 hours per week.  In Bristol I don't think this would fly.  Your average fast-food restaurant hereabouts only hires for 25 hours a week--I assume so they don't accidentally over-schedule anyone into "full-time."  So let's give me 25 hours per week at one job, and say I get lucky and pick up 15 hours a week somewhere else.  This might be rare, but I'm a go-getter.  But I'm also new, so minimum wage.  That gives me $290 per week; $1256 per month.  Of course there will be some deductions taken out, but I'll be generous and give me $1250/month to work with.

McDonald's suggests "savings" as the first line item in monthly expenses.  Let's get real here and leave that for last.  Mortgage/rent--McDonald's puts down $600. In Bristol I know I can find substandard housing for $400/month, which I'll happily accept.

Car payment:  McDonald's lists $150.  That'd be a pretty lousy car by most standards, so it feels right.  We'll go with $150 too.  McDonald's has car and home insurance as $100/month.  I'm not going to bother with renter's insurance, but I will get car insurance, bare bones, for $60/month. 

McDonald's leaves off gasoline.  Guess the execs get it for free.  I'm not going to drive my beater very far, but I do have to get back and forth to both my jobs.  We'll go $80/month.

If my car breaks--and it will--I'll dip into the savings I haven't got yet for repair.

McDonald's lists health insurance as $20/month.  I'm honestly not sure what they're smoking here.  I just Googled it, and read that the IRS says that in 2016, the cheapest health insurance that would cover a family of four to the extent required by the new universal coverage law would cost $20,000 per year.  Extrapolated, that would cost my solo hypothetical person over $400/month.  Another post says that $20/month would only get me accident-only coverage.  I can find a student plan with a high deductible and capped coverage for $75/month.  I'll take that one.

McDonald's lists heating ($50) and electric ($90) as separate entities.  Here in the South, we usually heat with electric heat pumps, so I'll combine these two.  A monthly charge of $140 is probably low for my substandard apartment, but I'm feeling lucky so we'll go with that.  McDonald's says $50 for cable/phone/internet.  I can get basic cable, internet, and phone for $80/month in Bristol.  But things are starting to look a little tight in my hypothetical budget.  I'll skip cable, use the internet for free at the library, and get a basic cell phone (cheaper than a landline, because I don't have to pay startup costs) for $40/month.

How about water/sewer/trash pickup?  McDonald's skips that, but in my city it's sometimes included in the rent, sometimes not.  Water and sewer won't be less than $40/month.

Now to the big one that McDonald's leaves out:  food.  I can't decide if they're figuring anyone who works 65 hours a week at McDonald's will just eat most of their meals there (according to another quick Google survey, some McDonald's give a free meal per shift, others give meals for half-price) or if they just aren't thinking at all. 

I checked, and it turns out that at my income level I'm not eligible for food stamps in either Virginia or Tennessee (Bristol straddles the state line).  The absolute maximum food stamp benefit for a single person is $200/month, so let's assume I spend that much on food, plus an additional $20/month for non-food grocery items such as shampoo and toilet paper.

Clothing?  I guess I shop at Goodwill.  McDonald's doesn't have a line-item for this category, but a girl's got to wear something.  I'll give myself $5/month to go wild.  And, you know, I really do want to save something.  I'll stash $10/month under my mattress (I haven't got a bank account) for a rainy day, or for when my cheap car breaks, whichever comes first.  Oh, shoot, I forgot laundry.  I haven't got a washer and dryer, so I have to go to the laundromat.  One load per week, washing and drying, adds $10/month to my bill.

When McDonald's adds their hypothetical budget up, they list $100/month for "savings" and $100/month for "other."  Their 65-hour per week worker then gets a total of $750/month for "spending money."  Presumably this does include the items they left out:  food, gasoline, water, clothes.  Still, it's more than I've got left.  I'm down to $20/month, which, as the McDonald's calculator helpful points out, is a whopping sixty-six a day.