California taxpayers spend $717M annually subsidizing benefits for fast food workers, new report claims

Workers use report release as opportunity to repeat call for higher wages

A host of activists gathered this afternoon (October 15) outside a Mission Valley McDonald’s restaurant touting the release of a new study from the University of California, Berkeley, finding that $7 billion is spent by taxpayers each year on providing social benefits to food service workers.

Although gainfully employed, some 52 percent of fast food workers are still eligible for programs such as Medicaid, food stamps, housing assistance, and welfare and earned income tax credits. In California, the estimated cost from workers’ participation in these programs is at $717 million, highest of all states.

The report “details the cost to taxpayers in making up the difference in what fast food employers pay and what their employees need to survive,” said Peter Brownell, research director at the labor-friendly Center on Policy Initiatives, a local think tank. “The reality is that fast food companies can afford to pay every dollar that taxpayers are currently paying to support their employees and still turn a profit.”

Brownell went on to cite numbers from the National Employment Law Project indicating that the top ten fast food companies were responsible for $3.8 billion in benefits absorbed by their employees. The same companies reported $7.4 billion in profits.

Supporters of the “Fight for 15” campaign that drew a mix of labor activists, members of the Occupy movement, and food service employees to a nationwide one-day strike pushing for a $15 minimum wage in August were present, including Raquel, a Wendy’s worker and mother of seven.

“We’re asked to come to work with a smile on our face every day. But the job makes it really hard to keep that smile,” said Raquel, expressing her frustration through a translator. “We don’t believe we should have to rely on the government when we can work.”

Labor leader turned state Assemblywoman Lorena Gonzalez was also on hand with comments, noting that California has already taken action to lift wages and eliminate some tax breaks for the fast food industry while calling for still stronger action.

“We, as taxpayers, have been subsidizing the fast food industry for years. Not just in public assistance, but in tax breaks by way of enterprise zones and other subsidies,” Gonzalez said.

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Comments

When will they stop the exploitation of workers!?

I read the same story but if I believe the numbers in California there are 225,000 Fast food workers, at a cost to the state of $717,000,000 in benefits to these workers it comes out to less than $3200/year each, which if they were working full time is an additional $1.60 / hour, not nearly double current wages or $15/ hour.

Has anyone really looked at the numbers with the changes in Income Tax to be paid at the higher wage, Obamacare coverage for the newly raised workers, etc.? Does the raised pay really move the economic status of these workers? Will it get them out or off the food stamps, medical and other government programs?

Simplified comparisions and solutions usually carry their own set of issues.
BBQ

There's plenty to this picture that hasn't been mentioned. "Raquel" the employee quoted herein needed a translator to express her job dissatisfaction. And she's in a service business! It is very unlikely that she is native born, and it is quite possible that she entered the US illegally. If so, she's probably earning more per hour at the fast food outlet than she would have earned in the country of her origin in a day. Is this exploitation? Or is it opportunity for a person in her situation?

Is hiring all these people who have limited English skills really that good a deal for McDonald's and so many of the burger (and taco) operations? And is saving on their pay an unmitigated blessing? To answer that, we need to look at a couple such brands that pay well, and hire those who can speak good English. They are In-n-Out and Chick Fil-A. If anything their stores are busier by far than the competitors outlets, make a better quality product, and deliver a better impression and experience. It is not clear that they are more profitable, but they are expanding and certainly appear successful.

So, if McDonald's and all those others paid more, would they be more profitable? We can't be sure. They have geared their operation to low pay and low output, and now reap the "benefit" or "penalty" of that choice. But it does mean that fast food and good pay can coexist and prosper.

Complicated, isn't it?

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