Money

Can You Live On A McDonald's Wage In Australia?

A much-discussed article doing the rounds this week examines how much a McDonald’s worker can make in a full-time job in the US and whether that would constitute a viable living wage. Does the same logic apply in Australia?

The post by Death And Taxes takes as its starting point a sample budget developed by McDonald’s for use by its staff. It then suggests how that money might be spent: Here’s an example quoted in the post:

The really astounding thing about this calculation is that it includes two jobs, both of which are effectively full-time. In large part, that reflects a very low minimum wage in many US states. Whether the other figures in the sample budget are accurate is also open to dispute. Even if they are, having to work two full-time jobs for mere subsistence living seems appalling.

In Australia, the situation is somewhat different. For full-time adult workers, we have a nationally mandated minimum wage if there isn’t an enterprise agreement in place. McDonald’s has such an agreement, so we can work with its figures.

The version voted on for 2013 in NSW gives a good indication of what gets paid at the moment. (Those numbers would vary from state to state, but they serve as a basis for discussion.) These are the figures for a full-time (40 hours per week) Level 2 worker per week and per month, based on age, as of June 24 this year:

Age Weekly Monthly
21+ $695.41 $2781.64
20 $625.87 $2503.48
19 $556.33 $2225.32
18 $486.79 $1947.16
17 $417.25 $1669.00
16 $347.71 $1390.84
15 $278.16 $1112.64

Clearly, if you were a budget-minded McDonald’s franchise owner, you would employ as many good teenagers as you could find and let them worry about living on $1112 a month. However, it’s also reasonable to assume that people under 18 are going to be living at home in many cases and not responsible for the same range of expenses.

In terms of this comparison, note that even for a 19-year-old, the sum total for working one job is higher than the equivalent worker in the US manages with two jobs, so life is automatically looking a little better. For the rest of this discussion, we’ll use the 19-year-old as an example. (Note: I’ll also ignore the potential existence of travel allowances or other benefits, since these aren’t disclosed as openly in public documents.)

The first important point: those are pre-tax figures. A worker on these wages definitely benefits from the higher tax-free threshold that currently applies in Australia. Anyone who earns less than $18,200 a year pays no tax; this job isn’t under that threshold, but only about $10,000 of the annual income is actually taxable. If this is the sole job, the tax taken out each week will be $47, leaving the earner with $509.33 a week, or $2037 over the month.

Now let’s build a provisional budget for our McDonald’s worker. I’m skipping several elements from the US budget. For starters, I haven’t included health care, since we do have Medicare. For the phone, I’m presuming $40 a month for a prepaid unlimited mobile. The food budget is a not-quite-Mastercheap but hardly generous $50 a week (I’m guessing you’d get at least some food at work). The other figures are definitely open to discussion and subject to a lot of variables (including where you live and the distance to your work).

Category Monthly
Monthly income $2037
Rent $600
Car payment $500
Car costs $100
Phone $40
Electricity $50
Food $200
Spare/savings $747

That leftover $747 for a month might sound OK, but bear in mind that I haven’t included savings, purchasing clothes, medical emergencies, child care, additional health insurance, visits to the laundry, unexpected mechanical disasters, or any kind of social life. The budget definitely looks better (and more realistic) than the US one that has been (quite rightly) derided, but it doesn’t look like a lifestyle anyone would want to sustain indefinitely.

What can we all learn from this? Firstly, that we’re massively better off living in Australia than the US. Second, that on a minimum-wage budget, life is still very tight. Additional insights from former or current McDonald’s workers (or other low-wage earners) welcome in the comments.

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