Are California’s fast-food customers paying twice for their orders? That’s the claim of a new report co-released by the Labor Center at the University of California, Berkeley, which argues that “safety net” spending associated with fast-food restaurants is disproportionate to other industries.
It’s an incendiary claim that’s earned the report a joint Senate-Assembly informational hearing today in Sacramento. But it doesn’t stand up to careful scrutiny.
The report in question has been widely described as a product of UC Berkeley, but it actually originates from a labor union-supported research center that’s housed at Berkeley. The Labor Center has on its board a who’s who of union bigwigs and is generously supported by the same unions that stand to benefit from its research products. That includes the SEIU, which funded the Labor Center report via the Fast Food Forward worker center it helped organize.
Given this clear conflict of interest, it’s not surprising that false and misleading claims start early in the report’s text.
Take, for instance, the authors’ claim that fast-food employees represent a “disproportionate” share of spending on safety net programs like the Earned Income Tax Credit, Temporary Assistance for Needy Families (i.e. TANF, formerly known as welfare) and Medicaid. To support this claim, the authors calculate that fast-food workers and their families represent nearly $7 billion in total safety net spending.
That number is intended to shock, but it represents just 1.8 percent of all spending on the aforementioned programs. And since Census Bureau data show that employees of fast-food restaurants represent about 3.3 percent of the private sector workforce, they’re a “disproportionate” share of spending only in the sense that government spends less on them relative to their share of the workforce.
The numbers look similar for the individual public programs: For instance, “welfare” spending on the fast-food employees studied in this report represents just nine-tenths of 1 percent of the total program cost. In other words, the most shocking thing about this report is the lack of shocking information about fast-food employees and their safety net participation rates.
The focus on low-income fast-food workers also obscures the fact that a large percentage of this workforce lives in middle- or even high-income households. For instance, roughly 37 percent of the fast-food workforce in California lives in a middle-income household earning $45,000 to $99,000 per year. That’s the same as the percentage of the state’s entire workforce that lives in a middle-income household. Census data also show that nearly half of the state’s fast-food workforce has a household income that’s 200 percent or more of the poverty line.
An academic paper might have presented a balanced discussion of fast-food jobs that generally represent a pathway upward rather than a dead end. The Labor Center report isn’t an academic paper, though, and the cost to taxpayers of the fast-food industry isn’t the real issue here. After all, the Labor Center has argued in the past for a dramatic increase in taxpayer costs, via “living wage” and minimum-wage laws that drive up prices. The only time that the taxpayer’s interests are of concern to the Labor Center is when they can be used to further the interests of the center’s supporters.
Here’s the real takeaway from this report: Fast-food restaurants are no different than any other business that provides opportunities for people with less education and experience. When 95 percent of your workforce has less than a college degree, some portion will undoubtedly qualify for such programs as the Earned Income Tax Credit that are specifically designed to boost wages without the unintended consequences of a minimum-wage mandate. We should celebrate this as a policy victory, rather than giving credence to wildly exaggerated reports and demonizing industries that are creating opportunities for middle-class Californians.
Michael Saltsman is research director at the Employment Policies Institute, which receives support from foundations, businesses and individuals.