Tax Dollars Help Fast-Food Giants
Washington — Taxpayers are spending nearly $7 billion a year to supplement the wages of fast-food workers, even as the leading fast-food companies earn billions of dollars in annual profits, according to a pair of reports released Tuesday.
More than half of the nation’s 1.8 million “core” fast-food workers rely on the federal safety net to make ends meet, the reports said. Together, they collect nearly $1.9 billion through the earned income tax credit, $1 billion in food stamps and $3.9 billion through Medicaid and the Children’s Health Insurance Program, according to a report by economists at the University of California at Berkeley’s Labor Center and the University of Illinois.
Overall, the “core” fast-food workers are twice as likely to rely on public assistance than workers in other fields, said one of the reports, which examined nonmanagerial fast-food employees who work at least 11 hours a week and 27 weeks a year.
Even among the 28 percent of fast-food workers who were on the job 40 hours a week, the report said, more than half relied on the federal safety net to get by.
“These statistics paint a picture of workers not being able to get their fair share of the largest, richest economy in the world,” said Sylvia Allegretto, lead author of the report by the university economists. “It is a good thing that we have these work supports, but they should be a last resort.”
Those workers are left to rely on the public safety net even though the nation’s seven largest publicly traded fast-food companies netted a combined $7.4 billion in profits last year, while paying out $53 million in salaries to their top executives and distributing $7.7 billion to shareholders, according to a second report by the National Employment Law Project, a worker advocacy group.
The reports lend academic support to the growing activism among fast-food workers, poorly paid employees of federal contractors and other low-wage workers, who for the past year have been calling a series of small but growing one-day strikes.
The workers are demanding raises to $15 an hour and an easier route to forming unions.
The job actions are supported by organized labor groups, including the Service Employees International Union and Change to Win, who are lending organizing staff and cash to the effort.
The aim of the unions is to gain new members, and short of that, increase pressure for raising the $7.25-per-hour federal minium wage while highlighting the nation’s growing economic inequality. Fast-food industry representatives call the workers’ demands unrealistic. Raising wages for cooks, cashiers and drive-through window workers — who earn a median wage of $8.69 an hour, according to the report by the Illinois and Berkeley economists — would ultimately lead to fewer jobs overall, they argue.
Also, they say, the franchisees who own many fast-food restaurants operate on thin profit margins, and dramatically raising wages would force them out of business.
But advocates for fast-food workers say the new reports demonstrate what they have long suspected: that the fast-food industry generates substantial profits that are distributed inequitably.
Moreover, they said, the low wages of fast-food workers leave taxpayers taking up the slack.
“I think what the report does is separate myth from reality,” said Jack Temple, a policy analyst who authored the report by National Employment Law Project.