A Big Mac costs only a couple dollars, but it comes with a $7 billion side of welfare. New research shows more than half of low-wage workers at fast-food restaurants rely on public assistance to survive—a rate double that of the overall workforce. According to researchers at the University of California, Berkeley, low wages in the fast-food industry cost American taxpayers nearly $7 billion every year. That’s more than the entire annual budget of the Centers for Disease Control and Prevention. A companion report by the National Employment Law Project found McDonald’s alone costs American taxpayers $1.2 billion annually by paying its workers insufficient wages. Last year, the top 10 largest fast-food companies alone made more than $7.4 billion in profits.
While CEOs are raking in record profits, in August fast-food workers went on strike in 60 U.S. cities in the largest protest of an almost year-long campaign to raise service-sector wages at restaurants, including McDonald’s and Burger King. The striking workers say they want to unionize without retaliation in order to collectively bargain for a $15-an-hour “living wage,” more than twice the federal minimum of $7.25.
Jack Temple talking:
I think this report is an important contribution to what we’ve seen over the last year. You know, we know that the fast-food industry pays low wages. But what this report clarifies is that whether or not you work in the fast-food industry, whether or not you eat fast food, the low-wage business model in the fast-food industry is costing you money. The low-wage business model, which forces workers in the industry to rely on public assistance in order to afford food or healthcare or housing or other basic necessities, is draining the economy of resources. And so, this is an industry that’s really a race to the bottom. And it’s not just spelling economic hardship for workers in the industry; it’s spelling, yeah, weak economic growth and really dragging down the economy across the board.
One is that many of these restaurants, especially McDonald’s and Burger Kings, are franchises, where basically every restaurant is a small business, in effect, and that these jobs are entry-level jobs that naturally would pay low wages, because the people would move on to other jobs.
For all the talk about small businesses in this industry, McDonald’s made $5.5 billion last year. This is an industry that’s making hundreds of billions of dollars every year. And the corporate level really does exercise a lot of control over franchisees. You know, the food tastes the same in any McDonald’s you walk into. The napkins look the same. Whenever there’s a new menu item, all the franchisees have to comply. They have to buy new equipment, when it’s needed. It’s not really fair for the company to say that they can dictate the terms of basically every facet of the arrangement between the corporation and the franchisee, but all of the sudden they have no control over wages. They determine the costs. They determine the requirements that franchisees have to comply by. And, in effect, they absolutely control the wages. And so, the corporations are really on the hook for wages in this industry. And, you know, the only thing more outrageous than that is the fact that they have substantial profits at the same time.
And regarding the question about entry-level workers, the data really show that this is an industry that is significantly older and more experienced than maybe what popular impression might suggest. So, 70 percent of all fast-food workers are adults over the age of 20. And 30 percent, nearly a third, of those workers are actually supporting children at home. And so, these low wages are being used to support adults that are trying to make ends meet, support families that are trying to make ends meet. And that’s why you see the public cost of this industry so high. These wages just aren’t cutting it for workers, and they’re requiring public assistance in order to make ends meet.
at the seven largest publicly traded fast-food companies in the U.S., the CEOs at those companies made a combined total of $53 million in annual compensation last year. At McDonald’s, just for example, the CEO, Don Thompson, made $13.7 million alone last year. Meanwhile, the median hourly wage for a fast-food worker is $8.69 an hour. It’s one of the lowest wages in the economy today for the occupation. So you see the stunning disparity between what the workers are making in this industry and what the CEOs are making.
The median age of the fast-food worker is nearly 29 years old. Many are supporting children. So, you know, this is a workforce that actually isn’t all that different than what we’re seeing across the economy now. Low-wage jobs have made up the majority of job growth throughout the post-recession recovery. And we’ve seen over the last several decades a real shift in the economy away from the manufacturing jobs, the industrial jobs, that once supported the middle class throughout the beginning and the middle of the 20th century, to a service economy in retail and restaurants. These are the industries that are beginning to define the core of the American economy today. And that’s a problem because these are the industries that are driving low wages for a lot of Americans.
more Americans are going to be finding themselves stuck in low-wage jobs. The more low-wage jobs dominate the economy, the more Americans are going to find themselves relying on low-wage jobs to make ends meet. And the data bear that out. So, the Bureau of Labor Statistics does projections for job growth over the next decade and finds that six of the 10 largest growth occupations over the next decade are going to be low-wage occupations. And so, this is an economic trend that’s been going on for the last three decades and is projected to continue. We know that if we don’t take active steps to raise wages, the economy is not going to be doing it on its own.
I think the other—obviously, the real cost of this is, even if you’re not someone that ends up relying on low-wage jobs, you know, as we show in this report, the low-wage economy, low-wage industry, is costing all of us, though. The more workers have to rely on public assistance in order to make ends meet, that’s more money drained out of the economy and going to support massively profitable industries and companies.
a lot of the company spokespersons will argue that these low-wage jobs are exclusively teens or exclusively, you know, workers that are starting out or entry-level workers, and that provides a springboard for more opportunity. But the fact of the matter is, these low-wage jobs are beginning to affect all Americans across the board. If they’re not relying on low-wage jobs already, then their tax dollars are supporting low-wage companies. And so, it’s beginning to be a core—an aspect of the core of the American economy.
companies have a ton of resources. We’re talking, again, multibillion-dollar industry here. There’s just no reason to suspect that companies can’t afford higher wages.
— source democracynow.org
Jack Temple, policy analyst at the National Employment Law Project. He’s the author of the new report, “Super-Sizing Public Costs: How Low Wages at Top Fast-Food Chains Leave Taxpayers Footing the Bill.”