News organizations took note when the Labor Center at UC Berkeley and economists at the Universtiy of Illinois released a new report showing that more than half of U.S. fast food workers are receiving some type of public assistance. Here is The Los Angeles Times story, followed by a link and excerpts to the report itself.

 

LATImes 10/15/2013

More than half of U.S. fast food workers on public aid, report says

By Alana Semuels

More than half of families of fast food workers receive some sort of public assistance, costing the nation $7 billion a year, according to a new report distributed by a group that has been pushing for union representation and higher wages for fast food workers.

Fast food workers earn an average of $8.69 an hour, and often work fewer than 40 hours a week, qualifying them for food stamps, Medicaid and tax credits, according to the report, written by economists at UC Berkeley and the University of Illinois at Urbana-Champaign.

Even before it was released publicly, the report raised the ire of some conservative groups that said it used faulty methodology to prove a point.

“In its quest to unionize the fast food industry, the SEIU has demonstrated that it will leave no stone unturned — including using ‘research’ and arguments that would get a higher grade in creative writing than in a high school economics class,” said Michael Saltsman, research director at conservative think tank Employment Policies Institute, in a statement.

The report calculates that about $3.9 billion a year is spent on Medicaid and children’s healthcare for fast food workers and their families. Families also receive $1.04 billion in food stamp benefits and $1.91 billion from the federal government through the earned income tax credit. Even those workers who are on a 40-hour-a-week schedule receive benefits; more than half of those families are enrolled in public assistance programs, the report says.

Workers in the restaurant and food services industry far surpass workers in other industries for dependence on public assistance. About 44% of workers in the restaurant and food services sector have a family member enrolled in a public assistance program, compared to 35% for agriculture, forestry and fisheries and 30% in the retail trade.

The report has implications for national policies as Congress debates a farm bill that would cut back on food stamps, and as Republicans look to winnow down costs by scaling back other public assistance programs.

Public assistance programs “could be more effective if supplemented by measures that improve workers’ wages and benefits,” the report concludes.

The Employment Policies Institute counters that raising the minimum wage would hurt fast food workers because restaurants would replace workers with automated alternatives. It also adds that while the earned income tax credit may be costing the government money, it has proven effective at reducing poverty.

A separate report, also out Tuesday, by the National Employment Law Project, calculates how much each restaurant’s employees are costing the federal government because they receive public assistance to supplement their wages.

McDonald’s, which has 707,850 employees, costs $1.2 billion; Yum! Brands, which includes Pizza Hut, Taco Bell and KFC, and employs 379,449, costs $648 million.

McDonald’s CEO Donald Thompson received $14 million in total compensation in 2010, the report points out.

Fast food workers have been holding one-day walkouts and strikes for more than a year to call attention to their wages. They want $15 an hour and union representation – the federal minimum wage is $7.25 an hour.  In their last day of protest, in August, workers in around 50 cities walked off the job.

Last month, California Gov. Jerry Brown signed legislation to raise California’s minimum wage to $10 an hour by 2016. Voters in the small town of SeaTac, in Washington state, will soon vote whether to raise the local minimum wage to $15 an hour.

 

The report itself: : http://laborcenter.berkeley.edu/publiccosts/fastfoodpovertywages.shtml

 

Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry

October 15, 2013, by Sylvia Allegretto, Marc Doussard, Dave Graham-Squire, Ken Jacobs, Dan Thompson and Jeremy Thompson

Executive Summary

Nearly three-quarters (73 percent) of enrollments in America’s major public benefits programs are
from working families. But many of them work in jobs that pay wages so low that their paychecks do
not generate enough income to provide for life’s basic necessities. Low wages paid by employers in
the fast-food industry create especially acute problems for the families of workers in this industry. Median
pay for core front-line fast-food jobs is $8.69 an hour, with many jobs paying at or near the minimum wage.
Benefits are also scarce for front-line fast-food workers; an estimated 87 percent do not receive health
benefits through their employer. The combination of low wages and benefits, often coupled with part-time
employment, means that many of the families of fast-food workers must rely on taxpayer-funded safety net
programs to make ends meet.

This report estimates the public cost of low-wage jobs in the fast-food industry. Medicaid, the Earned
Income Tax Credit and the other public benefits programs discussed in this report provide a vital support
system for millions of Americans working in the United States’ service industries, including fast food. We
analyze public program utilization by working families and estimate total average annual public benefit
expenditures on the families of front-line fast-food workers for the years 2007–2011.1 For this analysis we
focus on jobs held by core, front-line fast-food workers, defined as nonmanagerial workers who work at
least 11 hours per week for 27 or more weeks per year.

Main Findings 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.

Other points:

—The report released Tuesday used state and federal government data from between 2007 to 2012 to get a picture of how fast-food workers fared in different economic periods. They focused on nonmanagerial fast food workers who had worked at least 11 hours a week for 27 or more weeks per year.

—Many people think of fast food work as a job for teenagers, but the report found that many people holding those jobs were adults. About 23 percent of the workers were teens ages 16 to 18, compared to about 26 percent of front-line fast food workers who were adults with children of their own. About half were adults with no children.