Most people talking about McDonald’s tragicomedy of a budget are focusing on our inadequate minimum wage, the budget’s obviously missing line items, and the assumptive need for a second job. These are all great points, but I’ve got a slightly different cut of beef with Ronald-as-banker.
It is very expensive to be poor.
Big policy changes such as an increased minimum wage and affordable health care are important, but it is also important to remember that the cycle of poverty can be caused by drainage from a thousand tiny price increases.
Timothy Lee at Wonkblog reminded me how important this conversation is. He argues that the housing and transportation expenses are reasonable, given his own experiences and some general car insurance quotes. In my younger days, I lived comfortably on a poverty-level AmeriCorps VISTA salary in Chicago—not known for being a cheap place to live. But expecting people to have access to the same financial opportunities as us is problematic.
Take something as simple as car insurance.
Lee says that acceptable car insurance should cost around $100 a month. A 2006 Brookings Institute report found that being a driver who lived in Compton could raise your rates by $400. That’s another $33 a month alone.
Then there’s his general interpretation of transportation expenses. There’s a reason that the IRS mileage reimbursement rate adds up to way more than the price of gas: cars are expensive to maintain. The Department of Transportation has one estimate that puts the cost of owning a car at about $9,000 per year, assuming 15,000 miles driven annually, or about 40 miles per day. The fixed costs alone—taxes, licenses, depreciation, and financing fees—are estimated at $6,000, or $500 per month. That’s hardly covered by $150 for a car payment and $100 for home and car insurance.
Oh, and what happens if that car breaks down?
Folks like Mr. Lee or myself probably have a credit card to plunk down if we’re a little short on ducats, but the poor have notoriously bad access to fair credit. That means they get dinged for more than we would.
Not to pick on Timothy Lee too much—but he also makes a huge assumption about affordable housing.
Let’s put aside the severe lack of affordable housing in Philadelphia, and ignore the fact that the problem is only getting worse. We’ll also put aside the conversation about housing quality and things like lead paint. (But seriously, in 2002 one third of all low-income housing had lead paint hazard.) Instead, we can talk about the barriers to decent housing for low-income people.
The last few times I’ve moved, I’ve had to fill out a credit application and background check. That rules out folks without credit history, or with a criminal background. Reputable landlords also usually require a security deposit—two months’ rent, in some places. Then there’s Lee’s assumption about having a roommate—perfectly fine for the single and unattached, but what about single mothers, who are more likely than other groups to be working in these sort of minimum wage jobs?
The saddest truth of all is that McDonald’s probably isn’t even among the worst of employers. As a big company, they probably make sure to dot their i’s and cross their t’s—they offer employees free meels, and won’t require their employees to pay for their uniforms. By contrast, plenty of low-wage construction workers have to pay for their own safety equipment. That is just one example of the many tiny violations of federal labor law that go unnoticed by people who don’t suffer them.
The McDonald’s budget might have been tone deaf, but the conversation it has started is an important one. It is vital that we make sure that the conversation includes the fact that poverty comes with all sorts of hidden fees. Financial empowerment and affordable housing may not be in the news as much as the minimum wage or health care, but they are also critical when it comes to talking about poverty.
So is being careful about our own privilege.