Taxpayers Beware: 5 Reasons You May Want the Minimum Wage Raised

Guess who picks up the tab when employers don’t give full-time workers a living wage?

(Photo: Getty Images)

Apr 13, 2015· 2 MIN READ
Shaya Tayefe Mohajer is TakePart's News Editor.

Keeping the minimum wage low means protecting the profits of major American industries, but the government picks up the tab for many living costs through welfare programs.

“Taxpayers bear a significant portion of the hidden costs of low-wage work in America,” as researchers from University of California, Berkeley’s Labor Center put it in their new report.

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From fast food to day care, low-wage workers do what they can to make a living, but American taxpayers are helping pick up the tab where employers fall short—and it’s a huge gap to fill.

1. Low Wages Cost Everyone—Big

American taxpayers spend about $153 billion a year helping working families of low-wage earners get by. The Berkeley researchers came up with that number by accounting for spending of the largest nationwide programs that restrict benefits to low-income families.

That $153 billion includes food stamps through the Supplemental Nutrition Assistance Program; Medicaid, the federal health insurance program for the poor; Children’s Health Insurance Program, which specifically covers poor children; Temporary Assistance for Needy Families, and the earned income tax credit.

Those programs—which are frequently targeted for cuts and reductions—help Americans meet a basic standard of living. The analysis doesn’t include some other major costs associated with low-wage workers’ families, such as child care subsidies and free or reduced-fee school lunches—programs that are always paid for through taxes.

2. Millions of Americans Rely on Low Wages

More than 25 million Americans make less than $15 an hour—that comes to about 42 percent of workers. Here’s what the majority of those jobs are, broken down by field.

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More than half of fast-food workers rely on public assistance, along with nearly half of home health workers and child care workers.

3. Latinos Have It the Worst

Overall, about 42 percent of workers make less than $15 an hour, and though that number may be surprising, it’s an average that hides some demographic disparity.

Nearly 60 percent of Latino workers make less than $15 an hour, compared with about 36 percent of whites, according to the National Employment Law Project.

4. Wages Haven’t Grown in Decades

No matter how well deserved or overdue, landing a raise can feel like an epic challenge for most workers. For the bottom 10 percent of wage earners, income actually dropped 5 percent between 1979 and 2013 when adjusted for inflation and other shifts, according to the Berkeley research.

5. We Know It’s Going to Get Worse

Despite the reputation for abysmal pay, demand means that there will be more openings for many low-paid jobs because of growth in retail sales, food prep and service (including fast food), and janitorial and cleaning work.

That could mean more taxes to help them make ends meet, or an increase in the number of financially miserable Americans. That’s unless wages change substantially, which has been happening in some places, such as Seattle and San Francisco, and which analysts hope will continue as the economy improves.