McDonald's Budget Plan Leaves Out A Critical Line: Corporate Welfare

07/17/2013 01:30 pm ET | Updated Jul 17, 2013
  • Peter S. Goodman Executive Business and Global News Editor, The Huffington Post
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The helpful guide that McDonald's just published offering practical tips on how its workers can subsist on poverty wages is full of ingenious ideas: Get a second job! Don't squander money on trifles like heat and health care! Yet, it is missing one key suggestion: Apply for food stamps and other government assistance immediately so McDonald's can keep the corporate welfare flowing.

The mere existence of the "Practical Money Skills Budget Journal" disseminated by America's most prominent fast-food brand offers the latest evidence that national thinking about economic matters has descended into the intellectual equivalent of dumpster-diving. We are dispensing with complicated yet necessary conversations about how to invest in productive enterprises that might deliver millions of good paychecks. We seem politically incapable of lifting the minimum wage though -- as I have argued here before -- that would amount to a jolt of economic stimulus benefiting everyone.

Instead, we have pundit David Brooks inventing fantastical reasons why able-bodied men have supposedly lost their appetite for work -– it's just not macho enough anymore, what with all those microwave ovens in office kitchens.

And now we have a major employer of the working poor arming its employees with this handy new survival kit: a line item budget that can help them survive on less than $8 an hour and still sleep indoors.

As Dan Gross and others have amply covered, the details seem worthy of the Onion. After working 35 hours a week for monthly take-home pay of $1,105, the employee is supposed to go get another job to bring home almost $1,000 in additional funds. How much is allotted for child care while such people are toiling for 70 and 80 hours a week? Zero. Which means that parents who work at McDonald's get to choose between not making it to work or sticking their child in some ad hoc, unstable and potentially dangerous arrangement with a willing friend or relative.

The health-care line in the budget allows for spending $20 a month -- enough, presumably, to cover the car service required to get to the nearest hospital emergency room when real trouble strikes. There, the cost of care gets picked up by state and federal taxpayers who, one way or another, cover the tab for indigent, uninsured sick people.

Which is where we get to the shadow player present in this budget yet never called out explicitly: the government. Without taxpayers, mega-corporations like McDonald's -- whose reported revenues exceeded $6.6 billion over the first three months of the year -- would never manage to stock their ranks with workers earning poverty-level wages.

People who live in poverty may qualify for Medicaid (though not enough of them, hence the crucial need for the expansion of Medicaid that is a central piece of Obamacare). In 2011, the last year for which data is available, hospitals nationwide delivered more than $41 billion in care for which they received no payment, according to the American Hospital Association. Some of that bill gets covered by government safety net programs, which is to say taxpayers. The rest gets absorbed in the form of higher health care costs for everyone else.

People who live in poverty qualify for food stamps. The working poor qualify for subsidized child care, though that program has been cut down to a wholly inadequate shell in most states, with millions of working mothers languishing on waiting lists. The poor sometimes -- though increasingly rarely -- qualify for the cash assistance known colloquially as welfare.

How much does the whole tab run for public assistance spent on the working poor? No one really knows, but it's clearly a big number. Earlier this year, congressional Democrats crunched the numbers on the costs of public assistance absorbed by the 300 or so workers at a single Walmart supercenter in Wisconsin. At that one Walmart, taxpayers were annually delivering $900,000 worth of aid through food stamps, low-income housing subsidies and other programs.

Any rational person forced to confront a budget the likes of which McDonald's has just presented would surely go as quickly as they could to the nearest county office to fill out whatever forms were required to get some of that meager cash. Not because they are lazy, love the dole and are disdainful of work, but because many jobs pay so little that this is a virtual requirement -- unless they can find a way to live without heat, groceries and medical care.

They might also contemplate crime, an uncomfortable reality to discuss in this context, but a reality nonetheless. Visit a neighborhood in which the youth unemployment rate runs 50 percent, where laid-off construction workers are begging for jobs at fast-food outlets for lack of alternatives, and where many people cannot afford cars yet public transportation fails to reach what jobs exist. Ask yourself this: What would you do? For some, crime is a form of moral degeneracy. For others, it is an economic reality –- a reality in which major employers like McDonald's and Walmart play a role. They pay workers so little that going to the doctor or hiring someone to look after their children weighs in as an unaffordable extravagance.

Some commentators have suggested that we cut McDonald's slack while even praising the company for leading workers toward a sober exercise in financial planning. A little budgeting never killed anyone, but this exercise reinvigorates the unhelpful mantra heard at the outset of the Great Recession that all the pain is merely about a healthy reckoning. Time to live within our means after a reckless credit bender.

The truth is that millions of Americans are mired in financial disaster not because they didn't bother with arithmetic, but because their means have long been inadequate. For some 80 percent of the American workforce, median weekly pay is lower today than it was decades ago. The means have gotten smaller while the costs of housing, health care and education have climbed.

McDonald's is a central part of how that story unfolded. Its business has enriched executives and shareholders while pinning workers in poverty and sticking taxpayers with the attendant costs. A budget that makes sense for the country would capture those costs and put them back on the company in the form of a living wage.

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