Two recently published reports shed damning light on the high cost of low wages in the fast food industry – an industry dominated by the restaurant giant McDonald’s, which raked-in over $5.4 billion in profits last year.
The reports – Super Sizing Public Costs: How Low Wages at Top Fast-Food Chains Leave Taxpayers Footing the Bill and Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry – argue that low-wages in the fast-food industry cost taxpayers nearly $7 billion annually.
Medicaid and CHIP (the Children’s Health Insurance Program) account for more than half of the $7 billion, at an average of $3.9 billion annually. Additionally, due to low earnings, fast food workers’ families also receive an annual average of $1.04 billion in food stamp benefits and $1.91 billion in Earned Income Tax Credit payments.
The ten largest fast-food companies alone made more than $7.4 billion in profits in 2012 and paid their top executives more than $53 million in compensation.
Low-wage fast-food jobs cost tax-payers the most in California ($717 million), New York ($708 million), Texas ($556 million), Illinois ($368 million), and Florida ($348 million).
According to Super Sizing Public Costs, “McDonald’s represents the most costly fast-food company for tax-payers.” Low wages and lack of benefits at McDonald’s cost tax-payers “$1.2 billion every year in public assistance programs,” according to the report.
YUM! Brands (Pizza Hut, Taco Bell, KFC), Subway, Burger King and Wendy’s round-out the top five fast-food companies with workers who rely on public assistance.
The median average wage for fast-food workers is $8.69; an estimated 87 percent of fast-food workers do not receive health benefits. Furthermore, 67 percent of front-line fast-food workers are adults 20 and older; 68 percent are the main earners in their families and more than one-quarter are raising children.
“This business model puts tax-payers on the hook, while rewarding corporate CEO’s,” Jack Temple, a policy analyst for the National Employment Law Project and co-author of Super Sizing Public Costs, said during a conference call with the press on October 15.
The reports come on the heels of a nation-wide wave of fast-food worker strikes; most recently strikes took place in over 60 cities across the nation with thousands of fast-food workers walking off their jobs.
“The CEO of McDonald’s makes more in a day than I make in a year,” Yates added.
Fast-food workers nationally are calling for $15 an-hour in pay and the right to form or join a union without retaliation.
Jacobs also addressed the wave of non-traditional worker organizing taking place in fast-food, retail and other low-wage service sector jobs.
Super Sizing Public Costs: How Low Wages at Top Fast-Food Chains Leave Taxpayers Footing the Bill was published by the National Employment Law Project and Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry was published by the University of California Labor Center.