A tale of two budgets

An earlier version of this post appeared as a column in the Journal Record

mcdonalds.png.CROP_.article568-large$2,060 a month? Or $4,239? Two recent attempts to calculate how much income it takes to make ends meet reached starkly different conclusions. But both, in their own ways, called attention to how hard it is for many families to afford the needs of a monthly budget. They also remind us why many hard-working families still need a boost in today’s economy.

The $2,060 monthly sample budget was developed by McDonald’s, in conjunction with Visa, to help its workers manage their finances. It was intended to show that employees can cover all their expenses and put aside money for savings even in a low-wage job.

But, as many critics quickly pointed out, the McDonald’s budget showed the opposite.
To make ends meet, their sample worker earning $8.25 an hour would have to work two jobs and at least sixty hours per week. Monthly rent of $600 might allow for decent housing in some locations, but certainly not in most major urban centers. The budget provides nothing for heating or child care,$20 a month for health insurance, and $27 a day to cover food, gas, clothing, and any other expenses. As Forbes’ personal finance contributor Laura Shin notes, “the health insurance item may be the most absurd.”  She writes:

The average national health insurance premium for an individual is $215 per month. As far back as 2010, even McDonald’s own plan for its workers cost $14 a week, according to The Wall Street Journal.

In reality, McDonald’s numbers don’t even come close to adding up, especially for families with children. And yet, for many low- and middle-income workers, trying to manage a budget on an inadequate income, and facing cruel trade-offs when their incomes fall short, is a daily reality.

A more realistic and sobering assessment of how much income it really takes to get by comes from the Economic Policy Institute’s Family Budget Calculator. Using the best available data , EPI’s calculator shows what it costs for families to secure an adequate but modest living standard. Like the Self-Sufficiency Standard, the Family Budget Calculator is a major improvement on the federal poverty level as an income benchmark because it looks at how costs vary for families of different types in different geographical locations.

Economic Policy Institute Family Budget Calculator

The Family Budget Calculator shows that a family with two parents and one child living in the Oklahoma City metro area needs to earn $50,864 a year to cover housing, food, child care, transportation, health care, taxes, and other necessities.  If both parents are working full-time, each would need to earn $12.22 per hour to meet all their expenses. For a single parent with two children in Tulsa, the annual cost of covering the basics is $54,760, equal to a full-time hourly wage of $26.32.

Of course, many working families are paid much too little meet their basic needs.  That is why the work supports available to low- and moderate-income families, such as the Earned Income and Child Tax credits, child care subsidies, food assistance, and Medicaid remain critical for keeping families on their feet.And it is why a “middle-out” economic agenda that focuses on lifting up earnings for those at the lower rungs of the economic ladder should be a priority for government and businesses alike.



Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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