McCarthy grew up in Watkins with his parents and three siblings. He attended St. Anthony's Catholic School in Watkins, and spent hours reading his aunt's "Harvard Classics". He was influenced by the monks at nearby St. John's Abbey and University in Collegeville, Minnesota, and attended school there, at Saint John's Preparatory School, from which he graduated in 1932. He also went to college at Saint John's University, graduating in 1935. McCarthy earned his master's degree from the University of Minnesota in 1939. He taught in public schools in Minnesota and North Dakota from 1935 to 1940, when he became a professor of economics and education at St. John's, working there from 1940 to 1943. While at St. John's, he coached the hockey team for one season.