Quotulatiousness

July 18, 2013

Foodstamps as a form of corporate welfare

Filed under: Business, Government, USA — Tags: , , , , — Nicholas @ 09:43

Mike Krieger explains how the US foodstamp program can be seen as a form of corporate welfare:

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare. They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins. Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

From the Gothamist post by Nell Casey:

Let’s take a look at what else McDonald’s imagines its employees’ expenditures should look like. First off, the site sets employees’ mortgage/rent at $600, which even if we didn’t live in an outrageously expensive city is still a laughably small figure. Next, the site tallies health insurance at a mere $20 per month. Where is this magical land of nearly free independent healthcare? We want Obama’s unicorn to fly us there! Also as a McDonald’s employee, your cable and phone bills should only come to $100 a month (HA!), your electric bill should hover around $90 (for serious?) and apparently if you work at a fast food chain there’s absolutely no need to ever buy any food ever. Maybe they offer employees a lifetime supply of fries?

So tallying up all of these totally realistic expenses, a McDonald’s employee would need to net $2,060 per month to make this budget work. Broken down, that would mean working at least 40 hours per week and making at least $15 an hour pre-taxes to earn the necessary $12.86 an hour. Currently, McDonald’s workers earn an average of $8.25 per hour, barring any funny business.

Update: A couple of comments have been logged on this post, and Megan McArdle’s first Bloomberg column also addresses the McDonalds/Visa budget thingy:

Speaking of food, a sample budget put together by Visa Inc. and McDonald’s Corp. is rocketing around the Internet. Most of the commentary suggests that McDonald’s is heartless, and gauche, to suggest how its employees might live on the embarrassingly paltry wages that they are paid. (According to the Census Bureau’s American Community Survey of 2009-11, median earnings for a fast-food worker were $18,564 a year.) The budget is based on two jobs, which has aroused special ire: Is McDonald’s telling its employees to get a second job so they don’t have to pay them anything?

[…]

Keep in mind that most McDonald’s workers don’t live close to New York City or Washington, the sources of much of the commentary I’ve seen. These are, respectively, the first- and fourth-most-expensive cities in the country. In many areas, the median after-tax household income is not that far from that on the McDonald’s worksheet, and it’s pretty easy to rent a room in a friend’s house for less than $600 a month. Memphis, Tenn., for example, has a median household income of $35,000, which, according to Paycheckcity.com’s take-home calculator, would give a single person about $2,300 a month after taxes. And that’s the median — 50 percent of the city is below that. You should not develop a theory of household finance that declares that the city of Memphis does not exist.

Survival on such a lean budget is possible because people who do it are not trying to live the atomized life of an upper-middle-class college graduate. They band together, sharing rent, cars and cash when needed, handing down clothes and generally spreading fixed costs over as many people as possible.

Should McDonald’s pay enough to support a thrifty-but-not-too-difficult independent lifestyle? Is that now the minimum decent standard for society? Obviously, a lot of people think that they should. Washington’s City Council just passed a “living wage” law directly targeted at Wal-Mart Stores Inc. that aims to force the retailer to pay its workers $12.50 an hour.

What would that look like nationwide? Let’s set the floor a little above the amount in the budget — about $27,500 after taxes, which will allow them to enjoy the full McDonald’s budget, plus health insurance on an exchange. That’s a minimum wage of $13.75 an hour for a full-time worker, almost double the current minimum; obviously, everyone else would also have to be paid more. The minimum that a two-earner household could bring in would be $55,000 a year — not that far from the current median income for a two-earner household.

Even if it were possible to mandate that everyone in the country make almost the median income, this would come with a cost; I’d guess that most economists would agree that such a hike in the minimum wage would cause fairly significant job losses.

2 Comments

  1. Way too much wrong here to cover in one sitting, but this is my favorite:

    “Also as a McDonald’s employee, your cable and phone bills should only come to $100 a month (HA!)”

    Why yes, as a person with minimal skills, working in a job intended for 16-18 year old children, you’re not automatically entitled to high-tech, full-featured wireless communication services that were out of reach even for heads of state just a few years ago.

    Comment by Tom Kelley — July 18, 2013 @ 11:50

  2. I laugh at the term “living salary” because it is always trotted out on low paying jobs that are low paying for a reason! If you think that a McDonald’s job is going to pay a “living salary” you sadly moved out of Mom and Dad’s basement too soon. Or perhaps you were kicked out due to other factors? Regardless, to complain that Micky D’s needs to provide a “living salary” means that someone else must be willing to shell out $7.00 for a Big Mac, and $14.00 for a meal. And we know that ain’t going to happen.

    Ontario is going to revisit its minimum wage, which I understand is $10.50 an hour. All that will happen if it goes up is that the 2 till people at McDonalds will become 1 till person for most of the day and we will wait longer for our Big Macs, because they are not going to absorb the cost out of the profits, they will make money.

    Comment by Dwayne — July 18, 2013 @ 15:26

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