Fast-food jobs pay too low to make ends meet, study finds

- October 15th, 2013
   

Nearly three-quarters of families enrolled in major public benefit programs work jobs that don’t pay enough to provide for basic necessities. Compensation is particularly poor in the fast-food industry.

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National and Ohio food workers must turn to public supports for essentials

Nearly three-quarters (73 percent) of families enrolled in major public benefit programs work, according to a new study by researchers at the University of California-Berkeley Labor Center, released locally by Policy Matters Ohio. But the low pay provided by their jobs does not generate enough income to provide for basic necessities, the study finds. Compensation is particularly poor in the fast-food industry.

Nationally, frontline fast-food jobs pay an average $8.77 hourly and an estimated 87 percent get no work-provided health insurance. “Low wages, no benefits, and part-time status mean families of fast-food workers can’t get by without public safety nets,” said Amy Hanauer, executive director of Policy Matters.

Fast-food workers are more likely than other workers to live in or near poverty. Nationally, the study found, one in five families with a fast-food worker has an income below the poverty line, and 43 percent have an income two times the federal poverty level or less. The study estimates that more than half (52 percent) of families of frontline fast-food workers (non-managerial, working at least 11 hours a week and at least 27 weeks a year) were enrolled in public programs annually, compared to 25 percent of the general workforce. 

The nationwide cost of public assistance to families of fast-food workers is nearly $7 billion per year. This includes $3.9 billion a year for Medicaid and the State Children’s Health Insurance Program, $1.04 billion in Supplemental Nutrition Assistance Program benefits (food stamps), and $1.95 billion in Earned Income Tax Credit payments. Many workers can’t get full-time hours, but even those who do struggle. The families of more than half of fast-food workers employed over 30 hours per week are still enrolled in these programs.

 “The research uncovers broader problems in the US economy – corporate profits as a share of national income are at record highs, while the share going to workers is at a 55-year low and falling,” said Sylvia Allegretto, report author and an economist at UC-Berkeley.

Of Ohio’s 75,000 frontline fast-food workers, 45 percent are forced to turn to one of several public benefit programs for their families: 39 percent to the Earned Income Tax Credit, 17 percent to Medicaid, 13 percent to the Children’s Health Insurance Program and 21 percent to food stamps. For these Ohio fast-food workers, the combined public cost of these programs is $291 million: $67 million for the federal EITC, $132 million for adult Medicaid, $48 million for children’s health insurance and $40 million for food stamps.

“These programs are essential,” Hanauer said. “But a higher minimum wage or unionizing of this industry would help fast-food workers get better pay, which would help Ohio families and reduce public costs.”

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