The golden arches opened up a can of worms when it tried teaching its employees about financial planning.

by theintrospectivemaster

The fast food giant McDonald’s partnered with Visa in order to develop some financial planning resources in which to provide their workers.

The title of this resource program is called “Practical Money Skills: For Life“. The resource includes many things from guides and videos that provides information about ways in which individuals can manage their income. Everything from how to make a budget to how to save money for the future.

Now, this all sounds pretty great that the company would provide this free resource to all of its employees to aid them in helping them to construct their own personal financial plan.

However, things went south for the home of the Big Mac in a resource titled “Practical Skills Budget Journal” which provides employees with an actual budget sheet that they can fill in with their own financial information (monthly earnings).


This is where the controversy began.

– First, the budget sheet expects that an individual is working two jobs
– Second, it does not include an area to calculate food costs
or travel costs (gas for vehicle or public transit)
– Third, health insurance cost are estimated to be only $20 a month
McDonald’s own health plan which they provide cost at minimum $14 a week

Essentially, what McDonald’s unearthed with their own “albeit” well intentions was revealing that a full-time employee working for McDonald’s can not afford to live on its given wages.

*at least, it would be expected that an individual living with only one income earner would have a difficult time making ends meet. Throw in a couple of kids and an unexpected expense and living the American dream could be far, far out of reach.

Let’s start with the first discrepancy “Working two jobs”:

The budget sheet holds that an individual working for McDonald’s reports a monthly income of $1,105. At a national minimum wage of $7.35 an hour, this would entail a worker averaging 37.5 hours a week for four weeks in a given month.

*I worked in fast food all through high school and a couple of years after. More often than not you would be lucky to average 20-30 hours a week. Hours and number of days worked fluctuate considerably in the fast food industry as the amount of labor you can have in a given day is dependent on that days sales. There were many days were employees would come into work and then after a few hours be sent home in order to contain labor costs. Typically it is only management that would be able to average 35-40+ hours a week. of course this is all dependent with each store and its given level of sales. I would wager more dense and urban areas would run daily sales much higher than those locations in sparse populated rural areas.

The budget sheet implies that a worker has a secondary monthly income of $955. This would entail a worker log in an additional 129 hours a month at 32 hours a week for a given month (under the precipice they are earning the minimum wage of $7.35 an hour).

In essence, according to the McDonald’s budget sheet an individual is working on average 69.5 hours a week. (once again, this is only estimating that the reported income for both jobs is being paid out at the national minimum wage of $7.35 an hour. Clearly, a higher wage would reduce number of reported hours worked).

The omission of “grocery expenses”

The U.S. Bureau of Labor Statistics and International Business Times reported that the average low-income ($17,563) american family spent $3,748 annually on groceries; this translates to monthly food costs of $312 a month

*these costs will adjust dependent on the number of individuals per household and location. Data is from 2011 reported data.

The cost of “gas” and “travel”

The U.S. Bureau of Labor Statistics and International Business Times reported that the average low-income ($17,563) american family spent $4,019 annually on transportation; this translates to monthly travel costs of $335 a month.

The U.S. Energy Information Administration reported that the average american household spent $250 a month on gasoline consumption (based on reported 2012 data).

*once again, these cost are dependent on actual consumption and type of travel individuals partake in (public transit, driving a personal car etc.).

Health insurance cost; if only it was “$20” a month

The budget planner provided by McDonald’s in a partnership with Visa calculated that monthly health insurance cost would be $20. If only! Unfortunately, the actual cost of health insurance is far more than that.

The Henry J. Kaiser Family Foundation reported that in 2010 the average health insurance premium in the individual market was $215.

McDonald’s own health insurance plan (limited benefits plan) cost workers $14 a week which capped annual benefits at $2,000 and $10,000 in total care annually.

*With the advent of the affordable care act it is likely the plan will be scrapped. The employer mandate has been suspended for an additional year, but the individual mandate requirement will begin as scheduled. In turn, this could costs workers even more each month to participate in the health exchanges set up by the ACA  or pay a lump sum penalty. More about the employer mandate requirement here.

In the end, McDonald’s has “unintentionally” brought upon itself some unflattering PR. What may have been a well intended program/resource for its employers has turned out to only draw the ire of the public against McDonald’s and the wage structure by which they pay their employees.

To make matters worse, a McDonald’s employee passed out from heat exhaustion and was hospitalized after being forced to work after the air conditioning for the restaurant failed during a heat wage. It promoted workers to walk out of the restaurant in protest of working conditions.

Not a good week at all for the golden arches.

But, I believe they will still be serving millions of cheeseburgers tomorrow as people are more than eager to pay for their “presumed” deliciousness no matter what McDonald’s employees are paid or the conditions they have to work in.

Personal Note
*If you don’t like how the company represents/treats its employees, I’d recommend you stop giving them your money. You would be surprised how responsive a company is when the bottom line is affected as a result. I’m sure Burger King would welcome the sales…they probably need it.

Courtesy of Forbes

Courtesy of The Wall Street Journal

Courtesy of Death and Taxes

Courtesy of CNN Money