reality check [mcdonald's style]

(via Lawyers, Guns, and Money)

It's hot here, as it is pretty much everywhere in the States right now, and I had an iced latte this afternoon to see me through my evening shift ... so sleep isn't coming. Solution: blogging.

I Tumblr-ed & Tweeted the link to this story earlier in the evening, but laying awake in the dark I was doing the math so here's an expanded/comparison version.

The sample monthly budget above is courtesy of McDonald's corporation, composed by mad ferrets working for snails in their corporate offices as a teaching aide for their minimum-wage earning employees. See employees! Living in poverty is easy! All ya gotta do is plan.

As the author of the post linked above, Robyn Pennacchia, points out this budget exists in a fantasy where things like food, gas, and heat don't cost anything -- or perhaps, can be squeezed out of that $27/day "spending money goal" at the bottom of the table? She writes:

You may think that most of these minimum wage earners are teenagers. Well, 87.9% of minimum wage earners are over the age of 20. 28% of those people are parents trying to raise a kid on this budget. That is not a good thing for our future and it is not a good thing for our economy. In order for the economy to thrive, people have to be able to buy things. All the money going to people at the top does not help us. 

I don’t want to live in any kind of dog-eat-dog Ayn Rand erotic fantasy. Human beings are worth more than that. Anyone who works 40 hours a week (nevermind 74 hours) ought be able to take care of all the basic necessities in life. Corporations shouldn’t be able to pay their workers nothing, keep all of the profits to themselves, and expect taxpayers to make up the difference with social programs. It’s not fair to the workers, and it’s not fair to any of us.

Pennacchia has the (shockingly not-shocking) national stats; I thought I'd throw a little cold-water reality on the ferrets' fantasy budget by comparing it to what Hanna and I actually have to spend on the necessities listed above. Line by line. (I said I'd had too much coffee!)

• Savings ...... $500.00

The number above is wholly comprised of 401(k) with-holdings and the money we set aside to pay Hanna's self-employment tax in April. Some of that we get to keep, thanks to deductions, but it's not exactly secure savings. We'd put some by in our slush fund earlier this year, but that went to the cats' vet bills in June.

I'm not saying all this in a poor-us fashion, I'm pointing out: $100.00/month in "savings" for someone making minimum wage probably isn't going into a retirement plan. It's likely in the sock drawer until they need to drive across the state to the only Planned Parenthood offering affordable healthcare services.

• Mortgage/Rent ...... $1295.00

We pay for a 1-bedroom in a cheapish part of Boston. I get that Boston is one of the most expensive real estate markets in the United States, but when I first moved here I was working a retail job at Barnes & Noble that paid $9.00/hour. That's only $0.75 more than the minimum wage. The idea of anyone making that level of income being able to afford a rent, let alone buy a house, is pretty laughable from where I and my compatriots are sitting. If you're putting aside $100.00/month you're not accruing anywhere near enough for a downpayment.

• Car Payment Transportation ...... $175.00

I got this number by adding together our monthly T pass expenditure (about $30/each), our monthly Zipcar membership ($75) and my Hubway membership ($7/month), with a bit of cushion for additional Zipcar fees when we need the car for more trip than usual (like to the vet). 

If we lived in the more affordable real estate zones around Boston (i.e. a place where someone might be able to rent a studio apartment for $600.00/month. Maybe. Then we'd be adding in commuter rail fees or car maintenance, insurance, parking, gas. We've done the math, and it pretty quickly starts to cancel out any savings otherwise realized.

• Car/Home Insurance Student Loans ...... $430.00

So we don't have to pay insurance for a car (which we don't have) or a home (which we don't own), but we do have to pay a percentage on our brains. While we have relatively affordable student loan payments through the federal Income-Based Repayment plan, that's still a not-inconsiderable chunk of our income every month. Which might otherwise go toward that retirement TDA or eventual home ownership. Just sayin'.

• Health Insurance ...... $225.00

Hanna and I are both generously insured through our workplaces, with plan that are not only paid for pre-tax (the equivalent of a 20% reduction in premiums) but subsidized by our employers. Harvard University even reimburses us Hanna's copayments after she reaches $135/year (no small perk when you're talking about regular physical therapy or mental health treatments at $15/visit). 

I was on my parents COBRA insurance for a couple of years out of college, and independent Blue Cross/Blue Shield catastrophic-emergency-only insurance a couple of years after that, before moving to Massachusetts and being poor enough to qualify for their state-subsidized insurance plans (thank you Ted Kennedy!). I know how even $225.00/month for a family of two is a deal.

• Heating Gas ...... $30.00

Our heat is electric (see below), and our water comes included with the rent -- but we have a gas stove and pay monthly for that, to the tune of $20-30/month. More in the winter when we're baking, less in the summer when we're too sleep deprived to cook in our non-air-conditioned apartment (which of course means we spend more on prepared meals...).

• Cable/Phone/Internet ...... $70.00

We get the have-a-television cable package for about $18/month, internet for $32, and a land-line for $28. I also maintain my old AT&T cell phone on a pay-as-you-go plan that costs us about $100/year in top-up fees.

I don't think we need to go over, once again, why services like the internet and phones are basic necessities for even those who are homeless and poverty-stricken; without connectivity it is impossible to conduct business in the world, be taken seriously by potential employers, or -- hell -- just enjoy your downtime with crap movies. 

• Electric ...... $62.00

We actually do pretty well with our electricity, no that we pay a flat monthly fee that averages out the winter highs (over $200.00) and the summer lows that come from inefficient electric heat. We pay slightly more for wind power, though the differential is pennies at our level. I wish we had the option for solar, since our apartment building gets direct afternoon sun that could really dial the meter back if taken advantage of.

• Other .... ???

"Other"? By which you mean ... food ($800.00)? Or work-appropriate clothing (~$600.00 annually)? Professional development ($500 so far this year)? Union dues ($380 annually; and no complaints from this quarter)? 

The compost collective we pay into for $20/month?

Oh, I suppose you could mean Netflix at $7.99/month...

...and yeah, you probably look askance, McDonald's, at the $4.00 latte I bought this afternoon which is fueling this late-night verbiage.

• Monthly Expenses Total ...... $2,562.00

Or 2.03 times what that McDonald's employee working 74 freakin' hours per week is supposed to be living on. 

You'll notice I haven't included anything as luxurious in here as weekend trip to Maine to visit the in-laws (about $300.00 for a car rental plus gas) or fun activities like a movie or the purchase of a used book.

On the one hand, I'm grateful that both of us have found work with employers who value and foster our skills, who encourage our professional growth, who offer generous benefits, and who compensate us within the range of professional respectability. Our household income of about $3,625/month net last year* is a solid cushion above the minimum $2,525/month supposedly required by a household of two adults to get by in our county.

On the other hand, I'm appalled that -- as a nation -- we continue to ignore the reality that is the increased cost of living well or even just securely. And that we continue to individualize a social problem -- pretending that just teaching people struggling to get by on what is patently not enough to craft and stick to a budget is somehow going to solve the problem of poverty.

The only thing that will solve poverty is better-paying employment and a strong social safety net.

And now I'm going to return to staring at the ceiling and listening to the cat hunt mosquitoes in the dark.

*I took our Adjusted Gross Income from our joint state tax form, reduced it by 20% to account for tax with-holdings, and divided by twelve. Our AGI was $54,369.00 in 2012.