Employment Financial security Media Poverty

Q: How does a McDonald’s employee get by in the new Mconomy? A: By getting a second McJob, according to McDonalds

Kudos to ThinkProgress for catching this. In case it gets removed, below is a copy of the McDonald’s employee Budget Journal (see p.4)

Of interest to Canadian readers: Even though the same McDonalds employee’s U.S. dollar (USD) income in Canadian dollars(CAD) would leave a Canadian McDonalds employee even further behind, that same worker wouldn’t be considered poor in Canada. According to the official Canadian low-income cut-off table, that McDonalds employee’s income should be more than sufficient for two.

With a salary of $8.25/hr at each job (assuming 15% for payroll, deductions) and monthly earnings of $1105 at the first job and $955 at the second, our tired McDonalds employee would be spending 294 hrs at work each month – 158 hrs at the first job, 136 at the second. Assuming a 22-workday month (21.67 to be exact), that comes out to 68 hrs per week.

If they worked that long at one job, they’d have been entitled to 24-28 hrs overtime pay each week.  Except it’s not the 80’s and this is the new Mconomy. Employee avoidance is the new tax avoidance. Instead of hiring more employees, employers like McDonalds have the same ones work multiple jobs for a fraction of what would constitute a living wage.

Probably one of the most disturbing recent revelations is the practise of another U.S. fast food chain, FatBurger, which has implemented a franchisee employee-sharing scheme to avoid providing its employees health benefits under what’s been termed Obamacare. Under the further-delayed Affordable Care Act, US employers with more than 50 employees would have to provide health care for all who work at least 30 hrs/wk. FatBurger’s solution: simply avoid having any employees work that many hours at a single franchise. The example given in the linked article would have a FatBurger employee work 25 hrs at one franchise and 25 at another (owned by a separate franchisee) during a given week.

Assuming all fast food chains adopt this policy, our unfortunate McDonalds / FatBurger employee would need to find a third job to earn enough to stay within his/her unrealistic McJob budget. As if the assumption they could easily find a second job given the current state of the US labour market (official June 2013 unemployment rate 7.6%, more realistically 15.1%) wasn’t already unreasonable.

Because these pages deal with Canadian socioeconomic issues, a bit of quick conversion is in order. As noted, the overtime requirements in the provinces are similar to those of most states. The CAD minimum wage is higher (PDF), ranging from $8.75/hr to $11.00/hr (in NU only). Sticking with the McDonald’s theme, The Big Mac index (July 2013 edition), courtesy of The Economist, tells us the implied exchange rate is CAD1.21 (per USD). So McDonald’s unrealistic US employee budget assuming $8.25/hr would need to translate to $10/hr north of the border, which on the face of it appears to work.

However, bigger budget items, such as rent/mortgage and auto, are more expensive in Canada than in the US (up to 60% and 25% more, respectively). Also, the US McDonalds employee budget doesn’t take into account GST/HST, since the US doesn’t have federal VAT, and most states have little to no state VAT. If the budget for a US McDonalds employee was unrealistic, it would be nothing short of implausible in Canada.

Despite this, a Canadian McDonalds employee making $2060/mo after tax ($24,720/yr) would not be considered low-income. In fact, a couple residing in a major Canadian urban centre trying to live off that wouldn’t be considered low-income. The after-tax low-income cut-off (LICO-AT) is the Statscan, and Government of Canada, official low-income measure. It is often referenced (incorrectly) as the poverty line. If you ever see or hear Canadian ‘news’ commentators / pundits playing down income inequality by pointing to the official low poverty rate, now you know why: The low-income cut-offs are meaningless as poverty measures (for more, see Inaccurate measures of poverty: A brief Canadian history).

Economists have a thing for McDonalds. It’s uniformity and ubiquity is fascinating. The aim here isn’t to marvel at McDonalds remarkable corporate success; rather, it’s to highlight an unsettling, if not ominous, trend. For those who may have missed it, Canada’s dubious long-form non-Census (aka the 2011 National Household Survey) recent Employment release indicated that Retail, Food & Accomodation (which includes fast food) and Other service sectors employed 3.7Mill of Canada’s estimated 16.6Mill employees, or more than 22% of all Canadian workers.

(For our US friends, the closest thing to the 2011 NHS, the 2011 American Community Survey (ACS), indicates the US Retail, Food & Accomodation (which includes fast food) and Other service sectors accounted for 33.6Mill of the US’s estimated 140.4Mill employees, or 24% of all US workers).

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