John D’Amanda previously owned his own window-cleaning business, but it failed during the recession. After his business went under, the only work he could find was at McDonald’s. His wages are so low that he now uses food stamps and Medi-Cal to get access to food and health care.
John is not alone. The middle-wage jobs that accounted for the greatest job losses during the recession have been replaced by positions paying much less. With jobs paying too little for families to get by, more and more working families must rely on public assistance programs to make ends meet. This is especially true in the fast-food industry, where the median wage for front-line workers is $8.69 an hour and only 13 percent have health benefits through their employer. These are the people you are most likely to see when you walk into a fast-food restaurant: the people who are working the counters, pouring the drinks and cooking the food.
A wave of strikes organized by people who work in fast-food restaurants over the past year has brought new attention to this issue. A joint California Senate and Assembly committee hearing today will look into wider public consequences of low pay rates in fast food. They were right to do so.
A new report, “Fast Food, Poverty Wages,” I co-authored with colleagues at the University of California, Berkeley, and the University of Illinois quantified some of the public costs that are generated when businesses pay too little for workers to afford basic necessities. The numbers are staggering.
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We found that having to rely on public assistance to make ends meet is the rule, rather than the exception, for families of workers in fast-food jobs. More than half – 52 percent – of front-line fast-food workers and their families participate in one or more of the four largest public assistance programs: Supplemental Nutrition Aid Program, Medicaid and the Children’s Health Insurance Program, Temporary Aid to Needy Families and the earned income tax credit.
The lack of steady, predictable work hours that many fast-food workers deal with is a major problem, but even working full-time hours in a fast-food job does not pay enough for workers to stand on their own. We found that more than half of full-time front-line fast-food workers and their families also need help from a public assistance program.
Nationally, it costs American taxpayers nearly $7 billion dollars each year to provide this much needed aid to fast-food workers and their families; $717 million of which is in California.
It is important to note that these are conservative estimates. We limit the analysis to core front-line workers, and include only the four largest means-tested federal programs with available data. Our cost estimates do not include Childcare Assistance, Section 8 Housing, Free or Reduced Priced Lunches, Low Income Home Energy Assistance or any state-based programs.
Contrary to a common misperception about fast-food workers, we found that more than two-thirds of the core front-line workers at fast-food restaurants across the country are over the age of 20, and 68 percent are main wager-earners in their families. In fact, more of the workers are parents raising a child than are teenagers living with their parents.
Many of these programs, like food stamps, are under steady attack because they supposedly discourage people from working. I suspect that many Americans are simply unaware that nearly three-quarters of the people who rely on our major public assistance programs are in working families. These public programs provide a vital safety net to millions of American working families. This is not an issue of a shortfall of effort or of work – it’s a shortfall in job quality.
Low pay and a falling wage floor in growing industries like food service creates costs for all of us. Fast-food workers like John D’Amanda are demanding a raise. We should listen to them.