Study reveals how taxpayers spend $7 billion a year to subsidize programs that go to fast food workers

The fast food industry cost taxpayers $7 billion a year in public assistance to low-wage workers,according to a University of California-Berkeley study.

“When you look at front-line fast food workers—the cashiers, the cooks, all the restaurant workers that we think of as the sort of low-wage workers, the front-line workers that make up these this industry—you find that over half, 52 percent, actually rely on some form of public assistance to support themselves or their family,” said Jack Temple, a policy analyst at the National Employment Law Project.

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Temple also said managerial positions and franchise ownership collectively make up only 3 percent of the fast food industry, making upward mobility unlikely for any front-line worker.

“It’s not an industry where you can start out, you know, flipping burgers or making change at the cash register and have a plausible chance of owning your own franchise one day or becoming the manager at a restaurant,” said Temple.

“This is a highly profitable industry, and it’s based on a business model of paying poverty-level wages.”

Story Transcript

JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.

A new study reveals that the fast food industry cost taxpayers $7billion a year in public assistance because of low-wage workers. According to Ken Jacobs of the University of California, Berkeley, which compiled the data, dependence on public assistance is the rule rather than the exception for fast food jobs.

Jack Temple joins us now to discuss all this. Jack provides writing, research, and communications support to NELP’s minimum-wage campaign.

Thanks for joining us, Jack.

JACK TEMPLE, POLICY ANALYST, NATIONAL EMPLOYMENT LAW PROJECT: Thanks so much.

DESVARIEUX: So let’s get right into the numbers. What percentage of fast food workers rely on some form of public assistance?

TEMPLE: Yeah. Well, this is the real shocking finding that leads the report. So when you look at front-line fast food workers–the cashiers, the cooks, all the restaurant workers that we think of as the sort of low-wage workers, the front-line workers that make up these this industry–you find that over half, 52percent, actually rely on some form of public assistance to support themselves or their family.

And so, as you mentioned in the opening and as Ken Jacobs said in the Berkeley report, public assistance is part of the business model for the fast food industry. It’s not an exception. It’s not something that only a few workers need in order to make ends meet. It’s part and parcel of the industry itself. And that’s a problem. It’s a symptom of the fact that the industry is basically built on low-wage jobs that leave workers with no resources in order to afford basic necessities.

DESVARIEUX: Jack, how many families actually depend on fast food wage earner as their primary household income?

TEMPLE: Yeah. So this is another important statistic, because there’s a lot of myths about the fast food industry, in the sense–which I think–I’m sure you’ve heard before is that the fast food industry is generally teenagers or young workers, very few have kids, they’re generally working for side money. And even if that was true, maybe, at one time, it’s certainly no longer the case today, and the data really show this. You know, given the fact that over the past couple of decades growing numbers of low-wage workers have–growing numbers of workers, actually, throughout the economy have found themselves relying on low-wage work, we see older workers, more workers trying to support children in these traditionally low-wage industries. And so for fast food, for example, 70percent of all fast food workers are over the age of 20. The median age in fast food is almost 29 years old. So these are adult workers, not teen. And a third of these adult workers are supporting children at home. And so these workers are on very meager wages trying to support family.

DESVARIEUX: So, as you said, a third of fast food workers actually support a family. What other sort of findings or conceptions, preconceived conceptions that we have about fast food workers that you found out through your research?

TEMPLE: Well, I think what we’ve been learning, you know, over the last year, as I’m sure you’ve followed, there have been growing numbers of strikes and protests across the country. Most recently, around Labor Day there were protests in 60 different cities across the country of fast food workers walking off the job and demanding higher wages.

And I think what we’ve learned throughout this time is that the fast food industry, you know, the reality is very much different than what you hear at the corporate level. For example, you hear corporations say that the fast food industry is a launching pad, that workers may start out earning low-wages but could move up to become managers or open their own franchise someday. And the reality is very different. Managerial positions make up just 2percent of the fast food industry. Franchise owners make up just 1percent of the fast food industry. And so by and large it’s these front-line workers, the ones that are relying on public assistance in order to make ends meet and support their families, that make up the basically over 90percent of the entire industry. It’s not an industry where you can start out, you know, flipping burgers or making change at the cash register and have a plausible chance of owning your own franchise one day or becoming the manager at a restaurant.

And the other surprising part of the fast food industry is that almost unlike any other industry, this is an industry where major companies, major multinational chains that are driving the trends that we’re seeing across the industry–. So it’s not small mom-and-pop shops that can’t afford higher wages. It’s not small businesses that we often hear about when we talk about raising the minimum wage. These are multinational companies like McDonald’s, Wendy’s, Burger King. And they’re highly profitable companies. You know, McDonald’s alone made about five and a half billion dollars worth of profits last year. The CEO, you know, made several millions in executive compensation. And so this is a highly profitable industry, and it’s based on a business model of paying poverty-level wages.

DESVARIEUX: Wow. Really fascinating study. And we really appreciate you being on the The Real News Network.

TEMPLE: Thank you so much for your time.

DESVARIEUX: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.