Half of all U.S. fast-food workers get food stamps or tax credits

Los Angeles TimesOctober 15, 2013 

More than half of fast-food workers’ families receive some sort of public assistance, costing the nation $7 billion a year, according to a new report distributed by a group that has been pushing for union representation and higher wages for fast-food workers.

Fast-food workers earn an average of $8.69 an hour and often work fewer than 40 hours a week, qualifying them for food stamps, Medicaid and tax credits, according to the report, which was written by economists at the University of California-Berkeley and the University of Illinois at Urbana-Champaign.

Even before it was released publicly, the report raised the ire of some conservative groups that said it used faulty methodology to prove a point.

“In its quest to unionize the fast-food industry, the (Service Employees International Union) has demonstrated that it will leave no stone unturned – including using ‘research’ and arguments that would get a higher grade in creative writing than in a high school economics class,” Michael Saltsman, research director at conservative think tank Employment Policies Institute, said in a statement.

The report calculates that about $3.9 billion a year is spent on Medicaid and children’s health care for fast-food workers and their families. Families also receive $1.04 billion in food stamp benefits and $1.91 billion from the federal government through the earned income tax credit. Even those workers who are on a 40-hour-a-week schedule receive benefits; more than half of those families are enrolled in public assistance programs, the report states.

Workers in the restaurant and food services industry far surpass workers in other industries for dependence on public assistance. About 44 percent of workers in the restaurant and food services sector have a family member enrolled in a public assistance program, compared with 35 percent for agriculture, forestry and fisheries and 30 percent in the retail trade.

The report has implications for national policies as Congress debates a farm bill that would cut back on food stamps, and as Republicans look to winnow down costs by scaling back other public assistance programs.

Public assistance programs “could be more effective if supplemented by measures that improve workers’ wages and benefits,” the report concludes.

The Employment Policies Institute counters that raising the minimum wage would hurt fast-food workers because restaurants would replace workers with automated alternatives. It also adds that while the earned income tax credit may be costing the government money, it has proved effective at reducing poverty.

Total cost to government

A separate report, also out Tuesday, by the National Employment Law Project, calculates how much each restaurant’s employees are costing the federal government because they receive public assistance to supplement their wages.

McDonald’s, which has 707,850 employees, costs $1.2 billion, the report states; Yum! Brands, which includes Pizza Hut, Taco Bell and KFC, and employs 379,449, costs $648 million.

McDonald’s CEO Donald Thompson received about $14 million in total compensation in 2012, the report points out.

Fast-food workers have been holding one-day walkouts and strikes for more than a year to call attention to their wages. They want $15 an hour and union representation; the federal minimum wage is $7.25 an hour. In their last day of protest, in August, workers in around 50 cities walked off the job.

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