I had planned to write about McDonald’s ridiculous budgeting tips for employees when I first saw the news circulating through social media. I’m so far behind with my editorial plan that every last Consumerism Commentary reader has probably heard about this latest manifestation of corporate ignorance of reality by now. Writers of all stripes and social persuasions have already shared their two cents.
It’s almost not fair. Almost. I wrote about this same company recently because of one franchise’s desire to force the employees to receive pay via fee-riddled debit cards. McDonald’s is a significant employer in the United States, and let’s face it, the minimum-wage and close-to-minim-wage jobs in the fast food industry are opportunities for unskilled workers to eke out a living. This is an economic necessity. And the fact that a corporation is trying to instill financial values in its employees, albeit in a method that has no chance for success, can be lauded, I suppose.
McDonald’s efforts go beyond this budget. With the “help” of VISA Inc., McDonald’s has released an entire, bilingual fifteen-page PDF and accompanying website, the main marketing feature of which is, no surprise, the same VISA “pay card” that some employees will be required to use to receive their minimum-wage pay. Beyond the marketing, the website and PDF carry the typical personal finance advice: thinking about and setting goals, tracking spending and income, and designing a budget. Beyond arithmetic and understanding the social conventions of money for transactional purposes, these are the basic building blocks of financial literacy and the first steps towards building financial independence.
The program won’t be effective for the same reasons financial literacy programs, particularly those designed and funded by the financial industry, fail. That’s not to say the overall advice is incorrect or poorly presented. Lessons like these — not to mention articles on personal finance blogs — are not designed the same way those who most need the information would need to experience those lessons. If designers, writers, and advisers are looking to improve the potential for financial independence among the neediest, a group that includes families living in or near poverty, the financial literacy programs need to be designed to take advantage of how people actually learn and internalize behaviors and to address the realities of a hierarchy of needs.
I’ll get to more on the inefficacy of financial literacy in a future article. Hint: at the World Domination Summit I found myself accidentally announcing my next project. It deals directly with this problem, and now that I’ve announced my intentions, people seem to want to hold me accountable for moving forward. I’m fine with that.
Until actual evidence regarding behavioral cognition is addressed, it makes sense to evaluate programs that approach the problem, including the example budget from McDonald’s. The corporation has already responded to criticism by saying this budget was only intended as a sample, not a suggestion, description, or prescription. I don’t think that’s a good enough excuse. The budget signifies a misunderstanding of how people survive financially in poverty.
I’ve been much better over the last few years about eliminating fast food from my diet. But as I was driving back home from upstate New York a few nights ago, not having packed snacks for the road, I found myself growing hungry with about two hours remaining on the drive. I did what was convenient: I stopped at a rest stop fairly late at night and visited the only counter open: McDonald’s.
This isn’t the only time in my life I’ve opted for McDonald’s food. And I’ve noticed something in my indulgent visits over the years: The products are designed to function more like candy than food in terms of the emotional and chemical response to the dining experience, with the comparatively small burgers, the two-bite-sized chicken nuggets, the sugar, the salt. But I’ve also noticed, although I may be wrong, that most McDonald’s employees do not come from households living in poverty. The typical employee seems to be a young teenager with his first job, part-time, learning to work hard, but perhaps that observation is more a result of the neighborhoods I’ve been in. But in his or her family, at least one parents earns the bulk of the family’s income, and this fast food job is more about teaching responsibility and work-ethic than putting food on the table.
I’ve never worked in the fast food industry, but it looks like it can be frustrating, stressful, thankless, tedious, and manually laborious. Actually, it sounds like many other typically underpaid jobs, from non-profit work to the education industry, but it probably has the most in common with factory work of previous generations.
To return to the budget used an example in this VISA pay card advertisement with tips about financial literacy, the company could have provided a better example. But if most employees are students learning on-the-job responsibility rather than uneducated, unskilled laborers trying to feed a family, does it really matter? The problem is that by virtue of the need for this financial literacy endeavor, McDonald’s is assuming its employees are working there for primary household income. If the company is going to make that assumption, they ought to do it right for the benefit of that particular audience.
Here’s the original budget offered by McDonald’s, before the company responded to criticism and ineffectively shifted some numbers around.
- It take guts to tell your employees they need a second job, and with that, still won’t be able to afford to heat their home.
- $20 a month for health insurance is impossible. Working two part-time jobs, neither will likely offer employer-subsidized (or even employer-available) health insurance. Individual insurance costs at least $400 a month (in New Jersey — other states might have less expensive plans). There are two situations that are likely: kids working at McDonald’s still living with their parents can be covered under their parents’ insurance, so the expense is minimal, or someone in poverty will simply choose not to buy health insurance.
- $600 for a mortgage or rent may be a good estimate in some areas of the country. I know it wouldn’t be sufficient in New York or New Jersey unless sharing an apartment with a group of people — which I did when I worked for a non-profit, getting my rent down to $350 per month. That particular living solution was unsustainable for the long-term, and I can only imagine how worse it could have been.
- Child care and education have no place in this budget unless they fall under the “Other” category.
- I suppose one of the biggest expenses for a family, food, is to be taken out of the “Monthly Spending Money.”
The title of this article states what should be obvious. What may not be obvious is the idea that companies that sell financial products, and in this case that class of companies is represented by VISA, are not the best distributors of basic financial knowledge. VISA is including this effort in its promotion for the company’s pay cards, the feature rolling out to McDonald’s franchises throughout the country. It’s questionable whether this system is a good replacement for paper checks, but only questionable if the employees don’t have bank accounts and must pay a fee to a check-cashing service each time they get paid, and not a good replacement for direct deposit if the employee qualifies for a free checking account.
Some McDonald’s employees, and many other households throughout the country, may have a difficult time finding a checking account that is free, and that’s a situation that must be improved within the industry before any bank or financial company can legitimately try to enter the most neediest communities with an intent to “teach positive financial behavior.”
I would say let’s just ignore McDonald’s attempts at educating its employees through good-intentioned lessons, but the company employees 1,800,000 according to their own marketing. That’s almost the entire population of Houston, Texas and a fairly big audience. Most will likely ignore the information, for better or worse.
What has been your reaction to the McDonald’s budget? Is this workable? Is it important that an example used in a financial literacy guide reflects a generalized reality?
Published or updated July 19, 2013.