“Family Struggles”: McDonald’s Employees Don’t Need Financial Planning, They Need Raises
McDonald’s recently partnered with Visa to put out what they call the Practical Money Skills Budget Journal (pdf), a “helpful” tool for McDonald’s employees to keep track of their earnings and expenses. There have been a flurry of responses to the “McBudget” including realistic comparisons, snarky analysis, and talk of unicorns as a means for transportation. Others have defended the budget, claiming that it gives low-wage workers the necessary tools for financial planning.
Coincidentally enough, we also recently released an online tool related to family budgets—along with Elise Gould and Nicholas Finio, we developed EPI’s Family Budget Calculator, a measure of just how much income it takes for families to buy the necessities for an adequate but modest lifestyle. Our basic budgets include the cost of rent, food, health care, child care, transportation, other necessary expenses and taxes in each of 615 communities across the country. While families at these budget levels may be able to pay their bills and put food on the table, our family budgets imply a pretty austere lifestyle. There is no savings, no vacations, no cable or internet service, and, certainly, no restaurant visits.
The EPI family budgets look at six different family types, ranging from a one-parent, one-child households to a two-parent, three-child households. When you combine what we found in our rigorous family budgets with the McDonald’s budget, some startling results stand out. Meeting the goals in the McDonald’s sample budget requires a monthly net income of $2,060, which is $816 less than what a one-parent, one-child household needs in rural Mississippi, where the post-tax cost of living is lowest. And it is $1,397 less than the median one-parent, one-child family budget. One could argue that our family budgets (which presume the presence of kids) are not particularly relevant to McDonald’s employees, on the grounds that minimum wage workers tend to be teenagers themselves. But that would be wrong. We have shown before that the bulk of the minimum wage workforce are adult employees working at least 20 hours per week, not teenagers or part-timers looking to make a little extra spending money.
Ironically, by suggesting that someone needs a monthly net income of $2,060 to meet their sample budget, the McBudget implies that one 40-hour week minimum-wage job is severely inadequate, and that even two full-time, full-year minimum wage workers would fall short of even this unrealistically low standard. This may be why the McDonald’s budget suggests a second job. A full-time, full-year worker would need to earn about $15.00 an hour (before taxes) to reach this budget level, or would have to work more than 40 hours each week. The McDonald’s sample budget is also underestimating (often radically) many basic necessities, such as rent and health insurance ($20 per month!), and missing others, like child care, that are essential for sustaining employment. (Since its original release, they have increased the heating allowance from $0.00 to $50.00 per month.)
What these two budgets make clear is that the struggles of tens of millions of American families to make ends meet is not a failure of financial planning, it’s a failure of financial resources. Even if McDonald’s employees meticulously track all of their expenses, they will still fall short of what is necessary to make ends meet, let alone actually be able to save $100 every month, as the McDonald’s budget suggests. It’s tempting to believe that all America’s low- and moderate-wage workers need to get by is better life skills, when in fact what they really need is a raise.
By: Hilary Wething, Economic Policy Institute, July 18, 2013
“Doomed To Fail”: When Tea Partiers Try To Show Their “Diversity”
Judging from the matching red t-shirts, bottled water, snack stands, and cover band playing a passable version of Marvin Gaye’s classic, “What’s Going On?”, you wouldn’t be wrong to assume there was a large and elaborate family reunion yesterday, held on the Capitol. But, in fact, it was a rally—organized by the Black American Leadership Alliance, a right-wing group with ties to white nationalists—to oppose the comprehensive immigration bill that has passed the Senate, and is fighting to survive in the House of Representatives.
Two things stood out about the event. First, even in the shade—and even with fans placed strategically around the area—it was hot. I would say it was too hot to be outside in the first place, but obviously, several hundred people disagreed with me. Or at least, opposed immigration reform enough to tolerate the conditions. And second, despite its organizers and its speakers—who were predominantly African American—the large bulk of the crowd was white. At best, there were a smattering of black faces, located at the edges of the group, seated away from the core of the gathering. Most of these faces were male, and like almost everyone there, they traveled from other parts of the country to join this demonstration.
Troy Warren is an unemployed graduate of the University of Wisconsin who came from Los Angeles, California, where he’s lived for the last seventeen years who says that immigration reform is an attempt to take jobs from blacks, and leave them impoverished. Indeed, he’s angry at the idea that African Americans won’t work the same jobs as “Mexicans.” “Look around,” he said, gesturing to the surrounding buildings, “We built this. The slaves. And if we built this, how can we not have the knowledge to work?”
(It’s worth pointing out that, at this point, he struck the drum on his shoulder, to emphasize the question.)
As for politics beyond immigration? When I asked if he liked President Obama, Warren said yes. “Yeah, I’m an Obama supporter. And I think he’s a good example. But he hasn’t done much for black people.”
This is what separated the black attendees from their white counterparts. While the white demonstrators were nearly unanimous in their disdain for President Obama—carrying signs slamming the president for Benghazi and allowing “amnesty”—the African American demonstrators ranged from careful ambivalence about the president, to outright support.
“I love President Obama,” said Gerald Pitts, founder of the “Milllennium Panthers,” an all-black anti-immigration group based out of LA, “I love the First Lady. I love their children. We support the president, completely. And if you fuck with him, I’ll protect him. I’ll be his top security.”
Dressed in military-esque gear, he waved his anti-immigration signs as he explained his stance. “If I did something illegally as a black man, I would be locked up. It’s a double standard,” Pitts said. “I’m a man of God, and I can’t have racism, sexism, or any kind of prejudice in my heart. But the law is the law.”
If there’s one thing that stood out about Warren, Pitts, and others, it was that their opposition to immigration reform—and their conservatism—had more to do with a kind of black nationalism than it did with any actual adherence to Tea Party ideology. Take Kenniss, a middle-aged woman who, in the precise voice of a grammar school teacher (she declined to tell me her occupation), took issue with the idea that all Americans were immigrants. “No African, living in their homeland begged for an opportunity to come here and work as free labor. Still, we were the basis for building this country.” Kenniss’ opposition to immigration reform had less to do with the identity of the immigrants (though she saw a double standard in the treatment of Latino immigrants versus Haitian ones), and everything to do with the idea that it was unfair. If anyone should receive assistance from the government—which, by and large, is how she saw reform—it should be the descendants of slaves.
As for the white attendees? They were there to oppose immigration reform, oppose Obama, and—yes—show their concern for black unemployment. “Adding more workers is irrational,” said Staci, a young single mother from Birmingham, Alabama, “Immigration reform will threaten jobs for black Americans, my children, and every American.” She was disappointed with the president, both for his policies, and for—as she saw it—squandering an opportunity to “bring the races together.” Instead, she said, citing Obama’s decision to get involved in the Trayvon Martin controversy last year, “he’s done the most damage of any president to race relations.”
This comment points to something important. In addition to voicing opposition to the “Gang of Eight” bill, it seems that the goal of this event was to show—loudly—that the Tea Party is as diverse as it claims. Most of the speakers were conservative African American activists, who mixed their attacks on immigration with post-racial red meat—“We’re not African Americans, we’re Americans,” said Ted Hayes, an L.A.-based black Republican—and odd call outs to black culture. Hayes, for instance, ended his speech with a nod to Flavor Flav. “Yeeaaah boyeeee!”, he yelled, which was followed by a crowd-driven chant of “USA, USA, USA!”
Of all the speakers, however, the crowd was most enthusiastic for Texas senator Ted Cruz, who didn’t deviate from his typical approach of broad condemnation for the federal government. But for as much as attendees appreciated the display, all it did was emphasize the extent to which, outside of immigration, there’s not much that could plausibly connect the interests of black Americans to anti-government conservatives.
Indeed, if this rally was meant as a pitch to black voters—to enlist them in the fight against immigration reform—then, from conception to execution, it was doomed to fail. “I voted for Obama both times,” said Pitts, the man who also urged “anchor babies” to go back to their “home country.”
When it comes to black people, that—in a nutshell—is the Tea Party’s problem.
By: Jamelle Bouie, The American Prospect, July 16, 2013
“Nothing To Lose But Power”: Wal-Mart Plays Hardball In The District of Columbia
There’s a power struggle going on in Washington right now, not between Republicans and Democrats but between Wal-Mart—which is supposed to open six stores in the District—and the city council, which has a bill pending to require big-box retailers to pay a living wage. As you surely know, Wal-Mart was built on keeping costs as low as possible, particularly labor costs. The model Wal-Mart recruit is someone who has no other employment options and will take whatever they can get. The retail colossus isn’t going to let some uppity city council tell it how much it can pay its employees:
The world’s largest retailer delivered an ultimatum to District lawmakers Tuesday, telling them less than 24 hours before a decisive vote that at least three planned Wal-Marts will not open in the city if a super-minimum-wage proposal becomes law.
A team of Wal-Mart officials and lobbyists, including a high-level executive from the mega-retailer’s Arkansas headquarters, walked the halls of the John A. Wilson Building on Tuesday afternoon, delivering the news to D.C. Council members.
The company’s hardball tactics come out of a well-worn playbook that involves successfully using Wal-Mart’s leverage in the form of jobs and low-priced goods to fend off legislation and regulation that could cut into its profits and set precedent in other potential markets. In the Wilson Building, elected officials have found their reliable liberal, pro-union political sentiments in conflict with their desire to bring amenities to underserved neighborhoods.
For Wal-Mart, this isn’t just about these particular stores. They can make money even if they pay a higher wage at these stores, and with over 10,000 stores around the world, the D.C. locations are a drop in their enormous bucket anyway. It’s about their relationship both to the people they employ and to the communities they locate in. It’s about power, and as far as they’re concerned, power has to reside with Wal-Mart. Their employees do what they’re told and get paid what they’re told, and if they don’t like it they can go find another job. By the same token, the city council gives Wal-Mart what it wants, and if it doesn’t they can try to find somebody else to open a store there.
My guess is that in the end, either the city council will cave or Mayor Vincent Gray will veto the bill (he says he’s considering it). Why? Because Wal-Mart can walk away from the D.C. stores without a second thought, while the council desperately wants both the jobs the stores will bring and the ability for their constituents to have a convenient place to shop. One side has virtually nothing to lose, while the other side has a great deal to lose.
Would Wal-Mart make less money if they paid their employees a little more? Not necessarily. There are other models out there, most notably Costco and Trader Joe’s, which believe that by giving their employees higher wages and good benefits, they can reduce turnover and provide better service, which lowers costs and increases sales. And it works: they’ve achieved steady growth and excellent profits by making their employees happy.
But the idea that the way to deal with employees is to basically treat them like the enemy, which includes not just paying them as little as possible but also reacting to any hint of solidarity among the employees like an outbreak of the Ebola virus, is bred into Wal-Mart’s DNA. Think I exaggerate? Back in 2000, 11 meat-cutters at a Wal-Mart in Texas voted to join a union. The company responded by announcing that it was immediately eliminating the meat-cutting departments at 180 stores and switching to pre-packaged meat, and would eventually eliminate the meat-cutting departments at every store in the country. They don’t screw around, as the D.C. Council has just discovered.
By: Paul Waldman, Contributing Editor, The American Prospect, July 10, 2013
“The Moment Of Conception For Texas”: Rick Perry Announces He Will Not Seek A Fourth Term As Governor
In a campaign-like event, Governor Rick Perry (R-TX) has announced that he will not seek another term as governor of Texas.
“The time has come to pass on the mantle of leadership,” he said, speaking at San Antonio’s Holt Cat Caterpillar dealership.
The governor was introduced by his wife Anita, who reminisced about how the native son of Paint Creek, Texas “wore her down” into marriage.
Perry’s speech focused on summarizing the success of Texas’ economy — which he said leads the nation in job creation, even though it technically doesn’t — and congratulating himself for defending the “freedom” from the federal government that he insists made it possible. He took office in 2001 after George W. Bush was elected president, and then won his own terms in 2002, 2006 and 2010.
The governor also nodded several times to the ongoing crisis surrounding Republican efforts to impose more abortion restrictions in the state. He vowed that he would call for another special session if the current one designed to enact a 20-week ban on abortions and new restrictions on clinics that offer abortions does not succeed.
Perry has waged a war on family planning and Planned Parenthood in Texas, which has created a dire situation for poor women seeking basic health care.
State senator Wendy Davis (D-Fort Worth), the woman whose filibuster led to the special session, has expressed an interest in seeking statewide office. A recent poll showed Perry leading her by double digits.
The Texas Tribune reports that Attorney General Greg Abbott is the “instant favorite” to replace Perry.
The governor made no announcements about what he would do after his term ends, but he did leave the door open to another presidential run, saying his decision on that would come in “due time.”
Perry’s “oops” moment in a 2011 debate, when for nearly a minute he couldn’t name the third cabinet-level department he would eliminate, will go down in history as one of the greatest flubs by a major-party candidate ever.
Perry said he was leaving his office with a “deep sense of humility and appreciation.”
By: Jason Sattler, The National Review, July 8, 2013
“Defining Prosperity Down”: At This Point, It’s Clear That Monetary Hawkery Is Mainly A Form Of Puritanism
Friday’s employment report wasn’t bad. But given how depressed our economy remains, we really should be adding more than 300,000 jobs a month, not fewer than 200,000. As the Economic Policy Institute points out, we would need more than five years of job growth at this rate to get back to the level of unemployment that prevailed before the Great Recession. Full recovery still looks a very long way off. And I’m beginning to worry that it may never happen.
Ask yourself the hard question: What, exactly, will bring us back to full employment?
We certainly can’t count on fiscal policy. The austerity gang may have experienced a stunning defeat in the intellectual debate, but stimulus is still a dirty word, and no deliberate job-creation program is likely soon, or ever.
Aggressive monetary action by the Federal Reserve, something like what the Bank of Japan is now trying, might do the trick. But far from becoming more aggressive, the Fed is talking about “tapering” its efforts. This talk has already done real damage; more on that in a minute.
Still, even if we don’t and won’t have a job-creation policy, can’t we count on the natural recuperative powers of the private sector? Maybe not.
It’s true that after a protracted slump, the private sector usually does find reasons to start spending again. Investment in equipment and software is already well above pre-recession levels, basically because technology marches on, and businesses must spend to keep up. After six years during which hardly any new homes were built in America, housing is trying to stage a comeback. So yes, the economy is showing some signs of healing itself.
But that healing process won’t go very far if policy makers stomp on it, in particular by raising interest rates. That’s not an idle worry. A Fed chairman famously declared that his job was to take away the punch bowl just as the party was really warming up; unfortunately, history offers many examples of central bankers pulling away the punch bowl before the party even starts.
And financial markets are, in effect, betting that the Fed is going to offer another such example. Long-term interest rates, which mainly reflect expectations about future short-term rates, shot up after Friday’s job report — a report that, to repeat, was at best just O.K. Housing may be trying to bounce back, but that bounce now has to contend with sharply rising financing costs: 30-year mortgage rates have risen by a third since the Fed started talking about relaxing its efforts about two months ago.
Why is this happening? Part of the reason is that the Fed is constantly under pressure from monetary hawks, who always want to see tighter money and higher interest rates. These hawks spent years warning that soaring inflation was just around the corner. They were wrong, of course, but rather than change their position they have simply invented new reasons — financial stability, whatever — to advocate higher rates. At this point it’s clear that monetary hawkery is mainly a form of Puritanism in H. L. Mencken’s sense — “the haunting fear that someone, somewhere may be happy.” But it remains dangerously influential.
Unfortunately, there’s also a technical issue that plays into the prejudices of the monetary hawks. The statistical techniques policy makers often use to estimate the economy’s “potential” — the maximum level of output and employment it can achieve without inflationary overheating — turn out to be badly flawed: they interpret any sustained economic slump as a decline in potential, so that the hawks can point to charts and spreadsheets supposedly showing that there’s not much room for growth.
In short, there’s a real risk that bad policy will choke off our already inadequate recovery.
But won’t voters eventually demand more? Well, that’s where I get especially pessimistic.
You might think that a persistently poor economy — an economy in which millions of people who could and should be productively employed are jobless, and in many cases have been without work for a very long time — would eventually spark public outrage. But the political science evidence on economics and elections is unambiguous: what matters is the rate of change, not the level.
Put it this way: If unemployment rises from 6 to 7 percent during an election year, the incumbent will probably lose. But if it stays flat at 8 percent through the incumbent’s whole term, he or she will probably be returned to power. And this means that there’s remarkably little political pressure to end our continuing, if low-grade, depression.
Someday, I suppose, something will turn up that finally gets us back to full employment. But I can’t help recalling that the last time we were in this kind of situation, the thing that eventually turned up was World War II.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 7, 2013
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