Taxpayers Fund $7 Billion A Year To Help Fast-Food Workers Survive

When Nancy Salgado, a Chicago single mother of two confronted Jeff Stratton, president of McDonald’s USA, a video of the confrontation went viral.
1x1.trans Taxpayers Fund $7 Billion A Year To Help Fast Food Workers Survive


The video shows Stratton standing at a podium in a ballroom giving a talk when Salgado interrupted him and from the back of the room shouted:

“It’s really hard for me to feed my two kids and struggle day to day. Do you think this is fair, that I have to be making $8.25 when I have worked for McDonald’s for 10 years?”

When McDonald’s doesn’t pay real living wages to their employees, taxpayers are forced to make up the difference by funding the food stamps issued to McDonald’s employees who cannot afford to feed their families, and that amounts to a staggering amount of corporate welfare — $7 Billion a year to be exact.

NPR reports that a new analysis finds 52 percent of fast-food workers are enrolled in, or have their families enrolled in, one or more public assistance programs such as SNAP (food stamps) Medicaid or the Children’s Health Insurance Program (CHIP).

The report finds the fast-food industry’s low wages, combined with part-time hours and lack of health care benefits, creates demand for public assistance of $3.9 billion per year in Medicaid and Children’s Health Insurance Program (CHIP) benefits.

1x1.trans Taxpayers Fund $7 Billion A Year To Help Fast Food Workers Survive


Add another billion for food stamp assistance. And Earned Income Tax Credit payments (a subsidy to low-wage workers) amount to about $1.95 billion per year.

“The taxpayer costs we discovered were staggering,” says Ken Jacobs of the Center for Labor Research and Education at the University of California, Berkeley.

“The combination of low wages, meager benefits and often part-time hours means that many of the families of fast-food workers have to rely on taxpayer-funded safety net programs to make ends meet.”

For those who assume most fast-food workers are just kids working part-time jobs, the report found the vast majority of front-line fast-food workers are adults who are supporting themselves.

Marc Doussard of the University of Illinois at Urbana-Champaign, a co-author of the paper, said 68 percent are the main wage earners in their families. Doussard claims about a quarter of those working these jobs in fast-food restaurants are parents supporting children at home.

And since the job market has not improved since the recession, fast-food workers are reluctant to quit and find a better paying job. A majority of the jobs added during the recovery have been low-paying, according to a report from the National Employment Law Project.

“The overarching message here is we don’t just have a jobs deficit; we have a ‘good jobs’ deficit,” said Annette Bernhardt, the report’s author.

Higher Wages Would Slow Down Hiring

Michael Strain, a resident scholar at the American Enterprise Institute, told NPR’s Allison Aubrey that raising the minimum wage to $15 an hour would not solve that problem.

1x1.trans Taxpayers Fund $7 Billion A Year To Help Fast Food Workers Survive


Strain says if wages were raised to that level fast-food companies would slow down their hiring. And this would lead to more workers looking for jobs — and potentially needing to rely on more public assistance.

Strain argues that fast-food businesses are paying their workers wages the businesses have calculated are equal to the value these workers are adding to the production process.

“If we were to raise the minimum wage to $15 an hour, I think most economists, including me, would argue it would result in a lot fewer workers, since fast-food companies would slow down on hiring.”

Strain’s Argument is Nonsense

Strain’s argument is, of course, complete nonsense. Sure more workers would be employed, but at slave wages, and these workers would be subsidized by taxpayers forced to buy food stamps and fund other public assistance programs.

Fast-food companies can afford to pay higher wages, they just don’t want to reduce their formulated profit margins, especially when they know they can rely on taxpayer funded corporate welfare in the form of public assistance.

Ken Jacobs uses In-N-Out Burger, an example of an employer that pays higher-than-average wages, yet is still profitable.

Jacobs argues that it’s possible employers may see a small decline in profits, but when wages are raised, “you do find a significant decline in turnover [of workers], which is cost-saving for employers.”

Spence Cooper
Inquisitive foodie with a professional investigative background and strong belief in the organic farm to table movement. Author of Bad Seeds: A FriendsEAT Guide to GMO's. Buy Now!
Spence Cooper