Perhaps you’ve been watching this year’s continuing effort by fast food workers and their allies to demand higher wages, and you’re still not convinced. In fact, chances are good that if you’re lucky enough not to have to flip burgers yourself, you haven’t thought much about why those who do should be paid more.
Well, here are two numbers for you, both gleaned from new reports that were released on Tuesday.
1. The annual cost that American taxpayers spend on public assistance programs for the 52% of fast food workers who access them out of necessity: $7 billion.
2. The amount of those workers’ employers—the seven largest fast-food companies—netted last year alone: $7 billion.
That’s right: The tax dollars going to keep fast-food workers afloat are more or less equal to the profit their employers are making.
The first report, by the UC Berkeley Center for Labor Research and Education, and funded by the Fast Food Forward coalition, looked at public data surrounding front line fast food workers and four core services they regularly access, including Medicaid, the Earned Income Tax Credit, Supplemental Nutrition Assistance Program (or “food stamps”), and temporary aid for needy families. They found that fast food workers access these services at twice the rate of the average working American (52% versus 25%).
Ken Jacobs, one of the study’s authors, adds that, “these [costs] are a conservative analysis. It does not include child care assistance, the Women Infants and Children program (WIC), Section 8 housing, free lunches, low income home energy assistance, or many other programs.”
“These are the people you’re most likely to see when you walk into a fast food restaurant. The people working the counters, pouring the drinks, and cooking the food,” says Jacobs. He and his co-authors looked at what they called “non managerial workers” putting in at least 11 hours a week, for least 27 or more weeks per year.
Around 2.2 million restaurant workers are employed at the 10 largest fast-food companies, which include McDonald’s, Yum! Brands (owner of Pizza Hut, Taco Bell, and KFC), Subway, Burger King, Wendy’s, Dunkin’ Donuts, Dairy Queen, Little Caesars, Sonic, and Domino’s. These fast food workers make a median wage $8.69 and hour and only 13% have health benefits—so it’s easy to see why they may need help covering the basics. The UC Berkeley study also found that these workers are accessing such services because, contrary to a common misperception, many of them are the main breadwinner in their family—not teenagers living at home. In fact, more than 2/3rds are over the age of 20 and more are raising children than living with their parents.
Further more, a disproportionate number of those workers are likely to be people of color. A 2011 study released by the Applied Research Center called the Color of Food (PDF) found that while people of color make up around 35 percent of the population, they are represented in food-related jobs at a level that’s almost one and a half times that number. Furthermore, this population is likely to get stuck in low-wage jobs, as three out of every four managers in the food system are white.
And what about the CEOs, executives and shareholders at the top of the fast food companies? The companion report (PDF), compiled by the National Employment Law Project (NELP), looks at their comparable economic success.
It found that, “the seven publicly-traded firms among the 10 largest fast-food companies netted a total of $7.44 billion in profits, paid $52.7 million in CEO compensation, and distributed $7.7 billion in dividends and buybacks.” Those seven companies awarded CEOs nearly $53 million last year in total compensation.
“These companies operate on a biz model that leaves low-paid workers unable to afford basic necessities, leave tax payers on the hook for billions, but awards CEOs millions in executive compensation,” says Jack Temple, policy analyst for NELP.
And while the mirroring $7 billion numbers mentioned at the top of the story—the tax payer cost for the social services fast food workers access and the amount their employers net—may in fact be a coincidence, the larger trend is clear.
“Every time taxpayers have to pick up the tab for basic necessities that workers don’t get via their jobs, and can’t afford on their low wages, we’re making a direct deposit to corporate profits,” said Christine L. Owens, executive director of the National Employment Law Project said in a press release for the report.
McDonald’s stands out as the largest of the chains, and, according to NELP, it costs taxpayers an estimated $1.2 billion per year in tax dollars for safety net programs for its workers (or more than twice that of any other company).
This fact doesn’t surprise Sara Deon, who directs the Value [the] Meal Campaign for Corporate Accountability International. The campaign has been working to raise awareness about the way McDonald's and other fast food chains have externalized costs to society through health-related illnesses, so another externalized cost makes sense to Deon.
“The burger giant’s multi-billion dollar marketing campaigns are a primary force behind this epidemic of disease that costs taxpayers and families billions of dollars in health expenses every year. It should come as no surprise that McDonald’s business practices, like the food it sells, come at a high cost for the rest of the country."
Of course, McDonalds doesn’t exist in a vacuum, and it remains to be seen whether data alone can stem the tide of taxpayer subsidies in place of corporate responsibility. But one thing is clear, says NELP’s Jack Temple: “Low wage fast food jobs are expensive—for all of us.”