Fast-food workers' low pay costs the government

Protesters outside a McDonald's in August in Los Angeles. Protests were held around the country that day, demanding higher wages. A report says families of fast-food workers receive $7 billion a year in public assistance.
Protesters outside a McDonald's in August in Los Angeles. Protests were held around the country that day, demanding higher wages. A report says families of fast-food workers receive $7 billion a year in public assistance. (NICK UT / Associated Press)
Posted: October 21, 2013

Ben and Sharneka Hunter are a fast-food family.

The Wilmington husband and wife work at Burger Kings in different cities - Ben, 43, in Wilmington, Sharneka, 30, in New Castle.

Both earn hourly minimum-wage salaries of $7.25. And both need food stamps and Medicaid to augment their combined $17,000 yearly salary - $2,500 under the federal poverty line - so that they and their 9-year-old daughter can survive.

"I don't think it's fair to be underpaid," Ben said.

The Hunters' plight is shared nationwide, according to a report released last week by the University of California Berkeley Center for Labor Research and Education.

About 52 percent of the families of nonmanagerial fast-food workers need some form of government assistance to get by, the report said. The cost of that public assistance amounts to $7 billion annually.

In Pennsylvania, the public cost of low-wage fast-food jobs is $204 million a year, with 42 percent of fast-food workers needing public assistance, according to the report.

In New Jersey, it costs $204 million, with the same percentage needing assistance.

"Low-wage work keeps people in poverty," said Roberta Iversen, social-work professor at the University of Pennsylvania. "Taxpayers in America are picking up the bill for fast-food companies not paying workers enough. Meanwhile, the health and well-being of these workers' children are being risked."

Iversen said that experts on poverty and the economy call for a rise in the U.S. minimum wage, which is $7.25 an hour, the same as in Pennsylvania and New Jersey.

Deborah Weinstein, executive director of the Coalition on Human Needs, agreed. The coalition is an alliance of national organizations working to help low-income Americans.

"The preponderance of economists' views is that moderate increases in the minimum wage are positive and do not substantially reduce employment," she said.

Hold on, counter groups such as the Employment Policies Institute in Washington, which represents the interests of businesses, including restaurants.

Michael Saltsman, research director at the institute, said that raising the minimum wage would cut into the profits of restaurant owners, working in an industry known for small profit margins.

It also could preclude owners from hiring workers, thus impinging on the lives of other low-income people, he said.

Despite the Berkeley report's criticism of reliance on the federal safety net, Saltsman said it's fine that minimum-wage workers can count on benefits programs such as the federal Earned Income Tax Credit for help. EITC is a refundable tax credit for low- and moderate-income workers, primarily with children. The credit went to 27.5 million families in 2010, federal figures show.

"It's more effective to support workers through the tax code than an unrealistic mandate on employers to raise the minimum wage," he said.

Asked to comment, Burger King officials e-mailed a statement saying, in part, "As a corporation, we respect the rights of all workers."

While the popular image of a fast-food worker is that of a teenager, more than two-thirds of nonmanagerial workers in places like McDonald's are 20 or older, according to the Berkeley report.

Nearly 70 percent of them are the primary wage earners in their families, while more than one in four are raising children.

Economists say that teens are being driven out of fast-food jobs by older people hurt by the slow-recovering job market.

Ben Hunter is a certified carpenter who would rather be working elsewhere. "I'm qualified to do other work," he said. "It's just hard to find a job, and I've put in many applications."

Hunter took part in a one-day national strike of fast-food workers Aug. 29. The Service Employees International Union, which unionizes janitors and security guards, provided technical assistance to the striking workers and has organized a national public-relations campaign on behalf of fast-food workers.

People like Hunter need an increase in salary - but not too much of one, said Timothy Smeeding, an economist and director of the Institute for Research and Poverty at the University of Wisconsin.

"A minimum wage of $7.25 is too low," Smeeding said. "You can go to $9, or $9.50, without doing too much damage. But much above $10, employers start thinking about laying off workers."

And, he added, as a result of higher minimum wages, fast-food places will replace workers deemed too expensive with self-checkout machines, or even robots in drive-through windows.

Aside from low wages, the Berkeley report underscores another important issue relating to low-income Americans: "It dispels the myth that those in poverty do not work," said Judith Levine, a sociologist with Temple University. "Many people in poverty have jobs. The problem is the jobs don't pay enough."


alubrano@phillynews.com

215-854-4969

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