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Report: Taxpayers Pick Up $7 Billion Tab for Underpaid Fast Food Workers

Jan Lee
Jan Lee | Thursday October 17th, 2013 | 0 Comments

Fast_food_workers_McDonalds_Las_Vegas_popejon2According to a new report published by the University of California Berkeley Labor Center, more than half of America’s fast food workers must rely on public assistance to get by. That is more than double the national statistic for the workforce as a whole.

States with some of the highest cost of living pay the most, says the report. California and New York taxpayers pay more than $7 million a year, while Texas, Illinois and Florida pay between $348 million and $556 million a year to ensure America’s poorest working families have food and essential support.

The report, which looks at the cost for low-wage fast food jobs, offers some chilling numbers to consider:

  • 73 percent of enrollments in major public benefit programs such as Medicaid, food stamps and Supplemental Security Income come from working families.
  • The average hourly wage for workers at restaurants like McDonald’s, Burger King and Church’s Chicken is $8.67, far below what it costs to support a family, and many of those jobs are part-time.
  • Taxpayers pay an average of $7 billion a year in the form of public benefits because wages paid to fast food workers are insufficient.
  • More than half of that $7 billion covers Medicaid and Children’s Health Insurance Programs (CHIP), which are essential supports for many families working, but earning insufficient wages.
  • Food stamp benefits paid to fast food workers and their families account for $1.04 billion of that budget and are – ironically – the first line of defense for families who don’t earn enough to pay the food bill.
  • The study also found that even though most fast food workers are limited to part-time wages, even working full-time won’t earn enough to support a family in today’s economy.

Last summer, the country saw an unprecedented number of retail workers striking for increased pay. While strikes have died down in major cities like New York, Chicago, Seattle and Washington D.C., the issue hasn’t gone away for some of the country’s largest food chains. Striking workers have been calling for an increase to a “livable wage” of $15 per hour. So far, fast food chains haven’t agreed.

A report published by the Democratic Staff of the House Committee on Education and Workforce has found similar statistics for Walmart workers.

Fast_food_workers_strike_The-All-Nite-ImagesWalmart has long been criticized for its part-time hiring pattern and low-wage compensation. The most recent report, which focused on stores in the state of Wisconsin, found that employees received an average of $3,015 per year in Medicaid, which is designed to help individuals and families that do not earn enough according to state standards. It did not look at other supplemental programs, like food stamps, CHIP and SSI. But with more than 1 million workers nationwide (at least half of which, the report says have no health care plans), the partial costs reflected in this report suggest that low-income jobs are increasingly becoming high-paying headaches that fail to support a substantial number of America’s working families.

The UC Berkeley Labor Center’s report paints a similarly grim picture when it comes to health care benefits. The researchers estimate 87 percent of fast-food workers have no health care. That means increased out-of-pocket costs for the employee, who, already on public assistance, may not be able to pay for routine doctors’ visits, much less emergency services for accidents or illness. In most areas of the country that tab is then paid by the taxpayer, adding further costs to offset an inadequate pay structure for underpaid fast food workers.

Image of McDonald’s Las Vegas, courtesy of Flickr user popejon2

Image of striking fast food worker, August 2013 courtesy of Flickr user The All-Nite Images


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