Fast Food

Fast Food Is Costing Taxpayers Billions

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Mon, Oct 21, 2013 at 6:00 AM
click to enlarge Low-wage protest outside McDonald's in New York in July 2013 - ANNETTE BERNHARDT VIA FLICKR
  • Annette Bernhardt via Flickr
  • Low-wage protest outside McDonald's in New York in July 2013

Two new studies find that the low wages paid to fast food workers are costing U.S. taxpayers billions annually in public assistance. It's an interesting addition to the debate over the minimum wage, and yet another blow to the idea that government subsidies are mainly paid out to people who are lazy or refuse to work.

The first study, from the University of California, found that:

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.

It found that more than half of the families of fast food workers are enrolled in one or more public programs, and that the cost of public assistance to families of workers in the fast food industry is nearly $7 billion per year. The study stresses that this is not an issue of part-time employment. "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 study says. The assistance calculated included Medicaid, the Children's Health Insurance Program, food stamps and the Earned Income Tax credit.

A study released by the National Employment Law Project (a pro-labor group), titled "Super-Sizing Public Costs: How Low Wages at Top Fast Food Chains Leave Taxpayers Footing the Bill," found that "Low wages and lack of benefits at the 10 largest fast food companies in the United States cost taxpayers an estimated $3.8 billion per year. McDonald's alone costs taxpayers an estimated $1.2 billion each year." The study compares these numbers to the $7.44 billion in profits these companies made collectively last year.

Of course, the studies have been disputed by the National Restaurant Association, as well as anti-union groups.


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