Whoa! How low wages cost taxpayers $243 billion every year

From 2007 to 2011, a combination of low wages, low benefits in the fast-food industry, part-time work hours, and other low-wage industries, have resulted in $243 billion spent each year on public benefits programs to working families who live in poverty or near poverty, according a just-released study by the University of California, Berkeley.  The study focused on fast food workers as emblematic of the plight of low wage workers and the costs that low wages pass along to taxpayers.

The researchers analyzed four vital public benefits programs to working families, “the last line of defense between America’s growing low-income workforce and the want of basic necessities.” These are: Medicaid and Children’s Health Insurance Program (CHIP), Earned Income Tax Credit, Food Stamps or SNAP and Temporary Assistance to Needy Families (TANF). Under these programs, the total cost of assistance to working families averages $243 billion a year between 2007 – 2011.

Particularly with regard to the fast-food industry, the researchers found American taxpayers shell out nearly $7 billion annually, because its jobs pay so little that 52 percent of fast-food workers are forced to enroll their families in public assistance programs,

“The taxpayer costs we discovered were staggering,” said Ken Jacobs, chair of UC Berkeley’s Center for Labor Research and Education and coauthor of the report. “People who work in fast-food jobs are paid so little that having to rely on public assistance is the rule, rather than the exception, even for those working 40 hours or more a week.”

Fast food is a $200 billion-a-year industry. The median wage for core front-line workers at fast-food restaurants nationally is $8.69 an hour. Only 13 percent of the jobs provide health benefits.

The states where the fast-food industry’s low wages cost U.S. taxpayers the most include California at $717 million, New York at $708 million, Texas at $556 million, Illinois at $368 million and Florida at $348 million. A breakdown of other states for which data are available is in the report, “Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry.”

The researchers said families of front-line fast-food workers are enrolled in public programs at more than twice the rate of the overall workforce.

The report also indicates that just 28 percent of core front-line fast-food workers regularly work 40 or more hours per week, compared to 75 percent of the country’s workforce as a whole.

The report was funded by Fast Food Forward, a coalition of workers and labor, religious and community groups campaigning for higher wages and rights on the job for New York City fast-food workers.