Fast Food With A Side Of Poverty, And What It Costs Us

Derek Pugh

A new report from researchers at the University of California at Berkeley estimates that low-wage jobs in the fast-food sector are costing American taxpayers nearly $7 billion every year.

The report—Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast Food Industry—highlights the negative effects low-wage jobs have on the American economy and public. Workers in the fast-food industry are subjected to low pay with no benefits, forcing them to rely on public assistance programs to survive. The median worker is paid a mere $8.69 an hour, with many making at or near the minimum wage, and 87 percent do not receive health insurance through their employer.

Sen. Tom Harkin, D-Iowa, chairman of the Health, Education, Labor and Pensions Committee, linked the report’s findings to one of the main drivers behind the federal deficit: “multibillion-dollar companies that pay poverty wages and then rely on taxpayers to pick up the slack, to the tune of a quarter of a trillion dollars every year in the form of public assistance to working families. Seven billion of this is just for fast food workers, more than half of whom, even working full time, still must rely on programs like food stamps and Medicaid just to make ends meet.”

With 73 percent of enrollments coming from working families, the report combats the myth that families relying on public benefit programs are lazy, unwilling to work or simply wanting a handout.

Devonte Yates, a McDonald’s worker in Milwaukee who earns $7.25 an hour, never imagined he would be working a full-time job and relying on food stamps.

“It just doesn’t make sense that we prepare and cook food for people every day, but instead of being paid enough to feed our own families, many of us can’t afford three meals every day. I don’t want to be on food stamps. I’d rather stand on my own two feet. McDonald’s should raise wages so we can afford decent food for ourselves.”

The report also finds:

  • Compared to the overall economy, fast-food jobs are twice as likely as other jobs to pay so little that workers are forced to rely on public assistance (52 percent versus 25 percent).

  • Full-time jobs in the corporate fast-food industry do not pay enough for workers to get by. Even at 40 hours a week, more than half of front-line fast-food workers are forced to rely on public assistance to cover basic needs like food, rent and health care.

  • The states in which low-paying fast-food jobs cost taxpayers the most include California at $717 million; New York at $708 million; Texas at $556 million; Illinois at $368 million; and Florida at $348 million.

  • Sixty-seven percent of core front-line fast-food workers are adults 20 and older, and 68 percent are the main earners in their families. More than one-quarter are raising children.

Taxpayers, once again, have been left holding the bag because multimillion dollar corporations refuse to provide basic needs to their employees—adequate pay for food, shelter and health insurance.

A companion report—Super-Sizing Public Costs— released by the National Employment Law Project breaks down the data from the UC Berkeley report to serve up the costs of the top 10 fast-food corporations:

  • The 10 biggest fast-food corporations are responsible for nearly 60 percent, or $3.8 billion, of the almost $7 billion in public costs associated with their low-wage, no-benefit business model.

  • McDonald’s represents the most costly fast-food company for taxpayers. Its low wages and lack of benefits leave taxpayers contributing $1.2 billion every year to public assistance programs. YUM! Brands, Subway, Burger King and Wendy’s round out the top five fast-food companies that depend on public assistance for their workers to afford the basics for their families.

  • The 10 largest fast-food companies alone made more than $7.4 billion in profits in 2012, awarding more than $53 million in compensation to their highest-paid executives and an additional $7.7 billion in dividends and buybacks to shareholders.

The American public has subsidized corporations enough. It’s time for them to pay their fair share. Congress also needs to raise the minimum wage, so millions of working Americans don’t have to rely on public assistance programs to get by.

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