Labor Center


Press Room


In the News 2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

Low fast-food wages come at high public cost, reports say

Wall Street Journal, October 15, 2013

By Melanie Trottman

Proponents of boosting low wages strategically shifted their focus to U.S. taxpayers Tuesday, issuing two studies contending the public foots the bill for billions of dollars in public assistance for fast-food workers.

The companion studies, issued by the National Employment Law Project and researchers at the University of California, Berkeley, are the latest attempt to generate public pressure on fast-food companies and other employers accused of overpaying executives and shortchanging frontline workers. Low-wage critics, including unions in search of new members, have also been trying to pressure lawmakers to advance wage-increase proposals at the local, state and federal levels.

"Until these companies do something, this movement is only going to continue to grow," said Jack Temple, policy analyst for NELP, an advocacy group for the working poor and unemployed.

The researchers said 52% of the families of frontline fast-food workers are enrolled in one or more public programs. They estimated that the cost of public assistance to families of fast-food workers is nearly $7 billion a year, including expenses for food stamps, Earned Income Tax Credit payments and Medicaid, the state-federal health insurance program for the poor.

The studies drew praise and criticism, underscoring the often-partisan divide over boosting low wages.

The National Restaurant Association called the reports misleading. The researchers used "a very narrow lens and selective data to attack the industry for their own purposes," said Scott DeFife, the trade group's executive vice president of policy and government affairs. He also said the reports "fail to recognize that the majority of lower-wage employees works part-time to supplement a family income."

But Rep. George Miller, the senior Democratic on the House Education and the Workforce Committee and author of a bill to gradually boost the federal minimum wage to $10.10 an hour from $7.25, said the reports "highlight the significant costs to our families and our economy of low wages paid by the multibillion dollar fast-food industry." If these companies paid more, those families could live better and the nation could invest more money to improve roads, schools and create more "good-paying" jobs, Mr. Miller said.

The UC Berkeley report examined the extent to which fast-food companies' wages and lack of benefits force workers to seek public assistance, while the NELP report analyzed the Berkeley data to show how much low-wage jobs cost the public at each of 10 big fast food corporations.

Michael Saltsman, a research director at the right-leaning Employment Policy Institute, questioned the accuracy of NELP's analysis. He also said the UC Berkeley report ignored evidence that dramatic wage hikes would hurt fast-food workers by forcing employers to replace them with automated alternatives.

"Taxpayers do have a choice," said Mr. Saltsman. "They can either provide partial support to less-skilled employees who have difficulty finding employment at higher wage rates, or they can provide a 100% subsidy when these employees lose their jobs due to an unrealistic wage mandate."

Correction: The Employment Policy Institute is conservative-leaning, not left-leaning as incorrectly stated in an earlier version of this post.

 

Original Article

 

 
Center for Labor Research and Education
2521 Channing Way # 5555
Berkeley, CA 94720-5555
TEL (510) 642-0323    FAX (510) 642-6432


A public service and outreach program of the Institute for Research on Labor and Employment
CLRE