McD's Budget Tool Not Adequate for MD Cost of Living

Just how hard is it to set up a budget on fast food wages? That question is currently up for debate in the blogosphere, as Visa's "Practical Money Skills Budget Journal" for McDonald's employees, which they created a few years ago, caused quite the commotion online this week. 

Visa intends for the tool to help fast food employees plan their finances, understand their expenses, and develop savings and spending goals for the future. To aid in this effort, it provides a sample monthly budget that includes a net income of $2,060 for one childless earner working two jobs and lists estimates for various major expense categories. 

Considering the sample personal finance figures, many critics have taken issue with the suggestion by Visa that the worker would be able hold down two full-time, low-wage jobs to be able to earn the after tax income of $2,060 in the budget ($1,105 from one job and $955 from another). The budget's sample expenses also come under fire as being gross underestimates for the real cost of living faced by low-wage workers in most of modern America.

How Realistic is this sample's suggestion for Maryland fast food workers?

Income:
The median earnings for a Maryland fast food cook is $8.91 per hour, according to the Bureau of Labor Statistics (BLS) Occupational Employment Statistics data for 2012. If the sample worker had a minimum wage job as their second source of income, the worker would need to work a total of 75.5 hours per week between their two jobs (37 hours per week at the fast food restaurant and 38.5 hours at their other gig) to have an after-tax income of $2,060. While this may be possible to achieve, data suggests that only around five percent of Americans hold multiple jobs, so this employment situation would fall far outside the norm.

Expenses:

Unstable shift scheduling and transportation challenges also present significant hurdles for low-wage workers trying to find a second job.

The proposed sample budget's expenses underestimate most of the average living costs for a worker with an after-tax income between $20,000 and $29,000. Data from BLS's Consumer Expenditure Survey and the American Community Survey data on median rent costs suggests that the average Maryland fast food worker bringing home an after-tax income of $24,720 would have monthly expenses in these categories totaling at least $2,225, which exceeds their monthly earnings in this example by $165-- and this figure does not even include the typical spending on clothes, housekeeping supplies, prescription drugs and other medical costs, entertainment, alcohol, or tobacco. 

The sample budget also assumes employees do not have children (even though roughly half of minimum wage workers are over the age of 25).

McDonald's does offer a low-cost health insurance plan to its workers, but this bare-bones plan, which is capped at a paltry $2,000 worth of coverage annually, still costs around $60 per month, a full three times the cost suggested by Visa. 

Beyond the sample budget figures, the resource does offer personal finance tips that could aid the worker in reducing their monthly expenses below the average for their income range by using public transportation, avoiding debt, and planning expenses in advance whenever possible. However, Visa also uses the document to promote its prepaid debit card products to workers, and this arguably presents a substantial conflict of interest.

Writers at the Washington Post, Business Insider, and others defend Visa's worksheet, arguing that it is simply a sample for what a worker's budget may look like, and for some parts of America, these estimated expenses may be accurate given their regional cost of living. However, the cost of living in more expensive metropolitan areas across the country demands that workers earn higher wages to support a meager standard of living on a parsimonious budget that apparently is difficult for even a global financial giant to map out in a simple worksheet.