More than half of low-wage workers employed by the largest U.S. fast-food restaurants earn so little that they must rely on public assistance to get by, costing taxpayers billions of dollars a year, according to a pair of reports released Tuesday.
Data from the U.S. Census Bureau and public benefit programs shows 52 percent of fast-food cooks, cashiers and other staffers relied on at least one form of public assistance, such as Medicare, food stamps and the earned income tax credit — a federal tax credit for low-to-moderate-income working individuals and families — from 2007 to 2011, researchers at the University of California at Berkeley and the University of Illinois at Urbana-Champaign said in a report (PDF).
In another recent report, the pro-labor National Employment Law Project (NELP) found that the 10 largest fast-food companies in the U.S. cost taxpayers more than $3.8 billion each year in public assistance (PDF) because the workers do not make enough to pay for basic necessities themselves.
"It doesn't matter whether you work or shop at McDonald's or not. The low-wage business model is expensive for everybody," said NELP policy analyst Jack Temple, who worked on the report. "Companies ... are basically pushing off part of their costs on the taxpayers."
The studies followed large nationwide demonstrations in August, when fast-food workers went on strike and protested outside McDonald's, Burger King and other restaurants in 60 U.S. cities, demanding a living wage of $15 per hour.
Devonte Yates, a McDonald's worker in Milwaukee who receives food stamps, which he says are something he has to rely on "in order to eat at night and provide for my family."
"If it wasn't for low-wage workers every day who do their job very well, these companies wouldn't thrive as they do," he said. "The CEO makes more in a day than I do in a year. If they paid their workers better, we wouldn't have to rely on public programs."
The U.S. fast-food industry generates sales of $200 billion a year. The companies have long said that mostly young people do the entry-level work of flipping burgers or making milkshakes and that these positions are stepping stones to higher-paying jobs. However, the NELP found that the median age of fast-food workers was 28, Temple said.
Twice as many fast-food workers enroll in public aid programs than the overall workforce because of the low wages, limited work hours and skimpy benefits their jobs afford them, according to the Berkeley study.
But even those who work full time are struggling. More than half these families are enrolled in public-assistance programs, the researchers said. This costs taxpayers nearly $7 billion per year, more than half of which is in health insurance costs.
"I've been working in fast food for over 16 years. I've managed to raise two sons, to provide for them and put food on the table," said Willietta Dukes, a North Carolina Burger King worker who receives food stamps. "I work so hard, but I'm forced to rely on government assistance. I don't think it's fair, and don't think I should have to. These people make so much, and yet I can't afford my medicine because I can't afford to pay for it."
The Employment Policies Institute, which has opposed calls for higher fast-food wages, said in a statement that the reports "ignore economic evidence that dramatic wage hikes would make fast-food workers worse off" when employers "replace employees with less costly automated alternatives."
U.C. Berkeley labor economist Sylvia Alegretto, who worked on the report from her school and the University of Illinois, said the economic recovery did not make life much easier for these workers, who are stuck in a low-wage rut.
"They took it on the chin when the economy was bad, and now that it's better, wages aren't going up," she said. "In fact, they're making less than their counterparts were 50 years ago."
Alegretto said her team was "very conservative" in estimating the number of low-wage workers, counting only those who worked more than 10 hours a week for at least 27 weeks a year.
The median wage for front-line fast-food workers is $8.94 per hour, according to the NELP's analysis of government data. Many of these jobs are not full time.
The time frame of the study includes the 2007-09 recession and the subsequent years of slow economic growth. In that time, the number of workers eligible for public assistance increased in some states.
Overall, families with a working member account for 73 percent of all enrollments, amounting to two-thirds of all public benefit spending, the study said.
In other types of service work — such as maintenance, laundry and personal services — the researchers found that one-third of employees are enrolled in public-assistance programs, as were about 30 percent of workers in the retail and hospitality sectors.
Michael Pizzi contributed to this report, with Reuters