Low Wages: U.S. Taxpayers Pay $7 Billion Annually to Help Fast-Food Workers

McDonald's wage war
McDonald's wage war
Christine Quinn speaks at protest at McDonald’s in New York. Movement calls for $15 minimum wage for fast-food workers. Image from NPR.com.

Over the past year, we’ve seen numerous protests and walk-outs across the nation as fast-food workers campaign for higher wages. These aren’t high schoolers working their first jobs either, they are adult providers and often the only income in the household. But the problem of low wages isn’t just affecting the workers and their families; about 52% of fast-food workers are enrolled in at least one public assistance program such as SNAP (food stamps) Medicaid or the Children’s Health Insurance Program (CHIP), which is costing taxpayers $7 billion in public assistance.

According to a recent study “Fast good, poverty wages: The public cost of low-wage jobs in the fast-food industry,” three-quarters of American’s who enroll for public benefits are working, many of them within the food industry.

Median pay for a fast-food worker is about $8.69 per hour. And when you factor in the part-time hours and lack of benefits, the wage is hardly enough to put value meals on the table, let alone pay all of the bills associated with running a home.

“The taxpayer costs we discovered were staggering,” said co-author of the study Ken Jacobs of the Center for Labor Research and Education at the University of California, Berkeley to NPR. “The combination of low wages, meager benefits and often part-time hours means that many of the families of fast-food workers have to rely on taxpayer-funded safety net programs to make ends meet.”

Read: Why You Should Avoid Fast Food at All Costs

The overwhelming majority of people working in the fast-food industry are adults who support themselves, not teenagers. And an estimated 68% are the main wage-earners in the family. One quarter work at a fast-food joint to help support children.

A huge gap between the amount of money brought home from a fast-food job and the amount of money needed to run a household is troubling and has led to $3.9 billion each year in Medicaid and Children’s Health Insurance Program (CHIP) benefits, $1 billion for food stamps, and $1.95 for the earned income tax credit.

Workers and the agencies who support their cause are campaigning for higher wages throughout the country. Specifically, they want to see fast food workers—who many people depend on for their morning, noon-time, and evening unhealthy meals—make closer to $15 an hour, at least enough to feed their own families.

Critics say raising wages won’t have the desired effects and won’t save taxpayers anything. As companies are forced to pay workers more, they’ll make do with fewer workers so as not to hurt their profit margin (after all, lining the pockets of giant corporations like McDonald’s is why wages are so low in the first place). And by cutting workers, more unemployed will be forced to turn to public assistance.

A larger piece of the puzzle that many people seem to be missing is that the fast-food industry is not built to pay high wages; there is nothing about this industry that says things should be equitable or fair. It is designed to churn out low-cost food-like products at warp speed and with minimal production costs. If production costs more, the companies may have to charge more for their products.

If the “value meals” cost more, the people might actually start demanding better food and higher quality ingredients for their money. What was the “fast food” industry then turns into the restaurant industry and we all know these companies aren’t running operations reputable enough to call a restaurant.

Rejection: McDonald’s Shuts Down All Restaurants in Bolivia

Study Breakdown:

  • More than half (52 percent) of the families of front-line fast-food workers are enrolled in one or more public programs, compared to 25 percent of the workforce as a whole.
  • The cost of public assistance to families of workers in the fast-food industry is nearly $7 billion per year.
  • At an average of $3.9 billion per year, spending on Medicaid and the Children’s Health Insurance Program (CHIP) accounts for more than half of these costs.
  • Due to low earnings, fast-food workers’ families also receive an annual average of $1.04 billion in food stamp benefits and $1.91 billion in Earned Income Tax Credit payments.
  • People working in fast-food jobs are more likely to live in or near poverty. One in five families with a member holding a fast-food job has an income below the poverty line, and 43 percent have an income two times the federal poverty level or less.
  • Even full-time hours are not enough to compensate for low wages. The families of more than half of the fast-food workers employed 40 or more hours per week are enrolled in public assistance programs.

The solution is less than clear but judging by the quality of food fast food restaurants offer, it is likely that a substantial increase in wage won’t be on the books – not without force, anyway.