McDonalds: "What, my peon, you don't work two full time jobs?"

[Syt]

Posted the stuff in the monthly expense thread, but Atlantic has summed it up best, so here's a bonus topic about Evöl Korpöräte AmeriKKKa:

http://www.theatlantic.com/business/archive/2013/07/mcdonalds-literally-cannot-imagine-how-its-workers-would-survive-on-the-minimum-wage/277845/

McDonald's Can't Figure Out How Its Workers Survive On Minimum Wage

In a financial planning guide for its workers, the company accidentally illustrates precisely how impossible it is to scrape by making minimum wage.

Well this is both embarrassing and deeply telling.

In what appears to have been a gesture of goodwill gone haywire, McDonald's recently teamed up with Visa to create a financial planning site for its low-pay workforce. Unfortunately, whoever wrote the thing seems to have been literally incapable of imagining of how a fast food employee could survive on a minimum wage income. As ThinkProgress and other outlets have reported, the site includes a sample budget that, among other laughable assumptions, presumes that workers will have a second job.



As Jim Cook at Irregular Times notes, the $1,105 figure up top is roughly what the average McDonald's cashier earning $7.72 an hour would take home each month after payroll taxes, if they worked 40 hours a week. So this budget applies to someone just about working two full-time jobs at normal fast-food pay. (The federal minimum wage is just $7.25 an hour, by the way, but 19 states and DC set theirs higher).

A few of the other ridiculous conceits here: This hypothetical worker doesn't pay a heating bill. I guess some utilities are included in their $600 a month rent? (At the end of 2012, average rent in the U.S. was $1,048). Gas and groceries are bundled into $27 a day spending money. And this individual apparently has access to $20 a month healthcare. McDonald's, for its part, charges employees $12.58 a week for the company's most basic health plan. Well, that's if they've been with the company for a year. Otherwise, it's $14.

Now, it's possible that McDonald's and Visa meant this sample budget to reflect a two-person household. That would be a tad more realistic, after all. Unfortunately, the brochure doesn't give any indication that's the case. Nor does it change the fact that most of these expenses would apply to a single person.

Of course, minimum wage workers aren't really entirely on their own, especially if they have children. There are programs like food stamps, Medicaid, and the earned income tax credit to help them along. But that's sort of the point. When large companies make profits by paying their workers unlivable wages, we end up subsidizing their bottom lines.

[Richard Hakluyt]

They missed a trick. With a 3rd job paying $1000 a month the worker wouldn't need a home at all and would have $2400 a month spending money, the rich bastard! 

[Valmy]

Well fortunately when you are working 80 hours a week you will never have time to spend that $800.00 and thus the savings will really pile up.

[Syt]

http://www.theatlantic.com/business/archive/2013/10/audio-mcdonalds-tells-its-employees-to-sign-up-for-food-stamps/280812/

Audio: McDonald's Tells Its Employees to Sign Up for Food Stamps

http://www.youtube.com/watch?v=olUsgn-Ubh0

For the past week, labor groups have been publicizing a new study that finds the federal government spends roughly $7 billion a year on benefits like food stamps and Medicaid for fast-food workers. Taxpayers, they say, are subsidizing the industry's profits.

In other words, Burger King is a Welfare Queen.

Now, activists have followed up with a nifty little PR stunt in the form of the video above. It's an edited recording* of a staffer on the McDonald's employee helpline explaining to a restaurant crew worker how they can sign up for food stamps, among other government benefits. 

"McDonald's doesn't want to pay its workers more," the clip concludes. "Instead, it wants you to pay its workers more."

Just as there's nothing technically wrong with McDonald's telling workers they'll probably need a second job, there's also nothing technically wrong with fast-food companies explaining how to get federal benefits. And yet, here we have a terrifically profitable international corporation refusing to raise wages while acknowledging that it pays too little for its workers to comfortably survive.

And videos like this one aren't going to change its attitude. There too many incentives for fast food chains, and especially individual franchise owners, not to up what they pay. McDonald's, Dominos, Taco Bell and their ilk compete on rock bottom prices. It's a hot, greasy war fought with $5.99 two-topping pizzas, $1 beefy burritos and $5, 20-piece McNuggets. The battle to keep meals cheap is so fierce that McDonald's was willing to spend years battling its own franchisees over its dollar menu—a one-buck double cheeseburger was worth a measly 6 cents profit at some stores—until finally giving some ground this week. And while McDonald's has proven it's capable of making a profit abroad while paying workers $15 an hour or more, in the end, the recipe for success usually includes higher prices.  Fast food restaurants in the U.S. aren't going to risk emulating it and losing customers to the competition.

What that means is this: If you think low-wage workers deserve a raise, there are three realistic routes. First, you can support changes to labor laws that might make it easier to organize sprawling, franchised chains like McDonald's. Second, you can double down on federal government's role in redistributing wealth, and perhaps push for a more generous version of the Earned Income Tax Credit, which boosts the after-tax earnings of low-wage workers and has proven to be a great tool for fighting poverty. Which is to say,  you can accept that the fast food industry will pretty directly benefit from U.S. welfare policy, and hopefully employ more workers as a result. Or finally, you can support a higher minimum wage and possibly risk some number of job losses. 

*Upon request, a labor group spokeswoman provided me with an unedited copy of the recording, which she asked me not to post because it included some of the caller's personal information. The edited version struck me as a fair but much shortened representation of conversation.

http://www.theatlantic.com/business/archive/2013/08/the-magical-world-where-mcdonalds-pays-15-an-hour-its-australia/278313/

The Magical World Where McDonald's Pays $15 an Hour? It's Australia

Last week, fast-food workers around the United States yet again walked off the job to protest their low pay and demand a wage hike to $15 an hour, about double what many of them earn today. In doing so, they added another symbolic chapter to an eight-month-old campaign of one-day strikes that, so far, has yielded lots of news coverage, but not much in terms of tangible results.

So there's a certain irony that in Australia, where the minimum wage for full-time adult workers already comes out to about $14.50 an hour, McDonald's staffers were busy scoring an actual raise. On July 24, the country's Fair Work Commission approved a new labor agreement between the company and its employees guaranteeing them up to a 15 percent pay increase by 2017. 

And here's the kicker: Many Australian McDonald's workers were already making more than the minimum to begin with.

The land down under is, of course, not the only high-wage country in the world where McDonald's does lucrative business. The company actually earns more revenue out of Europe than than it does from the United States. France, with its roughly $12.00 hourly minimum, has more than 1,200 locations. (Australia has about 900). 

So how exactly do McDonald's and other chains manage to turn a profit abroad while paying an hourly wage their American workers can only fantasize about while picketing? Part of the answer, as you might expect, boils down to higher prices. Academic estimates have suggested that, worldwide, worker pay accounts for at least 45 percent of a Big Mac's cost. In the United States, industry analysts tend to peg the figure a bit lower -- labor might make up anywhere from about a quarter of all expenses at your average franchise to about a third.* But generally speaking, in countries where pay is higher, so is the cost of two all beef patties, as shown in the chart below by Princeton economist Orley Ashenfelter. Note Western Europe way up there in the upper-right hand corner, with its high McWages and high Big Mac prices.



That said, not every extra dollar of worker compensation seems to get passed onto the consumer. Again, take Australia. According to the The Economist, Aussies have paid anywhere from 6 cents to 70 cents extra for their Big Macs compared to Americans over the past two years, a 1 percent to 17 percent premium. If you were to simply double the cost of labor at your average U.S. Mickey D's and tack it onto the price of a sandwich, you'd expect customers to be paying at least a dollar more.

Why don't they?

To start, some Australians actually make less than the adult minimum wage. The country allows lower pay for teenagers, and the labor deal McDonald's struck with its employees currently pays 16-year-olds roughly US$8-an-hour, not altogether different from what they'd make in the states. In an email, Greg Bamber, a professor at Australia's Monash University who has studied labor relations in the country's fast food industry, told me that as a result, McDonald's relies heavily on young workers in Australia. It's a specific quirk of the country's wage system. But it goes to show that even in generally high-pay countries, restaurants try to save on labor where they can.

It's also possible that McDonald's keeps its prices down overseas by squeezing more productivity out of its workers. Researchers studying the impact of minimum wage increases on American fast food chains in the Deep South have found that while restaurants mostly cope by their raising prices, they also respond by handing their employees more responsibility. It stands to reason that in places like Europe and Australia, managers have found ways to get more mileage out of their staff as well.

Or if not, they've at least managed to replace a few of them with computers. As Michael Schaefer, an analyst with Euromonitor International, told me, fast food franchises in Europe have been some of the earliest adopters of touchscreen kiosks that let customers order without a cashier. As always, the peril of making employees more expensive is that machines become cheaper in comparison.

Finally, McDonald's has also helped its bottom line abroad by experimenting with higher margin menu items while trying to court more affluent customers. Way back in 1993, for instance, Australia became home to the first McCafe coffee shops, which sell highly profitable espresso drinks. During the last decade, meanwhile, the company gave its European restaurants a designer make-over and began offering more localized menus meant to draw a higher spending crowd.

So if President Obama waved a magic wand tomorrow and raised the minimum wage to $10 or $15, does this all mean that U.S. fast food chains would be able to cope? "Were that to happen overnight, it would be a hugely traumatic process," Schaefer told me. After all, virtually every fast food franchise in the country would have to rethink its business model as their profits evaporated. But as the international market shows, the models are out there. It would certainly mean more expensive burgers. It would almost definitely mean fewer workers, as restaurants found ways to streamline their staffs, either through better management or technology. And it might mean fewer chains catering to the bottom of the market.

But in some people's eyes, it might also be worth it.

___________________________
*Ron Paul, president of the food industry consulting firm Technomic, told me that as a rule of thumb fast food franchises assume labor will make up 30-to-35 percent of their expenses. As Columbia Journalism Review's Ryan Chittum noted last week, McDonald' s reports that worker pay makes up about 30 percent of expenses at its corporate-owned restaurants. He also dug up a handy chart from Janney Capital Markets, which estimates that labor makes up 26 percent of all expenses for an average McDonald's franchisee.

[Ideologue]

Australia is better than America?  Jesus wept.

[HVC]

Ya, but everything is super expensive in Australia. Chicken or the egg argument can be as to whether things are expensive there because wages are high are wages are high because everything is expensive.

[dps]

Jeez, the average rent in the US is over $1000 a month?  I thought the $600 in the sample budget was high until I read more of the article.

[Neil]

Australia is better than America?  Jesus wept.

The Empire is generally preferable to the traitor state.

[Ideologue]

Ya, but everything is super expensive in Australia. Chicken or the egg argument can be as to whether things are expensive there because wages are high are wages are high because everything is expensive.

It's probably because of the added transportation costs due to road wars.

[DGuller]

Ron Paul now works for fast food industry? 

[The Brain]

How many people work 2 jobs at the same McDonald's?

[Berkut]

I simply do not understand this issue.

Where is it written that a job serving french fries ought to pay a salary that someone can live comfortably on?

When did that assumption become the paradigm to judge this kind of stuff on?

I certainly never expected that to be the case - when a job at minimum wage is the best you can get, you aren't living alone, you have roomates to share expenses, and they probably have shitty jobs as well, and you guys all live in some shitty apartment and think "Wow, my job sucks I really should get a better one so I can afford a car and a non-shitty apartment and won't have to put up with these assholes anymore".

A full time job flipping burgers at McDonalds doesn't pay enough to live an "average" lifestyle? No fucking shit! That is why you should aspire to a bit more.

It isn't why we should just ignore the market rates and decide everyone must make enough to live an average lifestyle with a far below average job.

[Berkut]

And btw, when I was working in the restauraunt business...I was working two jobs. Only way to make ends meet.

And it sucked, so I got a job as the manager instead. Much better pay.

[Sheilbh]

I think it's a disgrace that people in work should need benefit money.

Berk's right that a minimum wage isn't going to pay for an 'average' life and that's fine. But it should be sufficient to cover the minimums. It shouldn't include, according to that study, $1 billion of state money going to people in employment on food assistance.

I mentioned in the tax thread but I think that in the UK and, apparently, in the US we've nationalised pay rises for those on low incomes. The money from employers is stagnating and instead they're depending on benefits that we're all paying for. In effect it's a massive subsidy to companies who don't pay their employees enough.

It isn't why we should just ignore the market rates and decide everyone must make enough to live an average lifestyle with a far below average job.

That's not the point though. There's a sort of minimum lifestyle that you can have in most developed countries. My view is if you're working you should be able to afford that off your wages alone because welfare system should be those who can't work or aren't in work. Instead you've got, according to that study, over 50% of fast-food employees receiving some form of benefit to reach that minimum life that we guarantee even the feckless and lazy far less those working poor who want to do more than sit on the dole.

I kind of agree with the conservative idea that there's something enervating about being on long-term welfare. To be on it while working is even worse.

[Admiral Yi]

I think it's a disgrace that people in work should need benefit money.

Don't working folks in the UK get various benefits?

"In work?" 

But it should be sufficient to cover the minimums.

Why?

A franchise owner is willing to pay someone $7.25 an hour to flip burgers.  Many people are currently willing to flip burgers at that wage.  Why should we tell them they cannot?