Taxpayers are subsidizing fast-food industry’s low wages, report finds

Activists pass out fliers highlighting the findings of a new report on the public cost of fast-food wages outside a Minneapolis Wendy's restaurant.

Outside a Minneapolis Wendy’s, activists pass out fliers highlighting a new report on the public cost of fast-food wages.

That extra value meal might seem like a bargain, but a new report shows low prices on the fast-food menu come at a high cost to U.S. taxpayers.

How much? Nearly $7 billion a year.

That’s the cost of public assistance for fast-food workers and their families, according to “Fast Food, Poverty Wages,” a report released Tuesday by researchers from the University of California, Berkeley and the University of Illinois at Urbana-Champaign.

The report undermines industry-backed stereotypes of fast-food workers as teenagers gaining valuable employment experience, or students mixing part-time work into their busy schedules.

In reality, fast-food workers are more likely to be parents than to be living with their parents. Most are adults for whom “fast-food wages are an essential component of family income,” according to the report, which looked at “core” workers – those logging 10 hours or more per week, at least 27 weeks out of the year on the industry’s front lines.

The industry’s low wages, coupled with its approach to scheduling, mean people working fast-food jobs are more likely than other workers to live in or near poverty, the report found. The median hourly wage for core, front-line workers in the industry is $8.69, and the median number of hours worked is 30 per week. Only 13 percent receive health benefits through their employer.

With basic needs like food, shelter and health care out of reach, 52 percent of front-line fast-food workers seek public assistance for themselves or their families. Medicaid, the Earned Income Tax Credit, the Supplemental Nutrition Assistance Program (SNAP) and Temporary Aid for Needy Families (TANF) are “indispensible programs” for fast-food workers, according to the researchers.

‘Unacceptable and unsustainable’

To activists who demonstrated outside the Wendy’s restaurant off Lake Street and Hiawatha Avenue in Minneapolis on Tuesday, the new report was more evidence that taxpayers are picking up the social costs of fast-food companies’ low wages and staggering profits.

“Fast food companies like Wendy’s have accumulated profits in the billions of dollars, yet they are saying they can’t afford to do more for their workers,” said Carol Nieters, executive director of Service Employees International Union Local 284.

SEIU members joined forces with the community outreach organization Minnesotans for a Fair Economy to stage the demonstration. Activists waved leaflets at cars exiting the Wendy’s drive-through, and they talked to customers about the findings of “Fast Food, Poverty Wages,” the findings of which, Nieters said, highlighted a “sad moment in our nation’s history.”

Rev. Grant Stevensen, a pastor at St. Matthew’s Lutheran Church in St. Paul, joined the protest out of concern not just for fast-food workers, but also for franchise owners, who are being “squeezed more and more by the parent company,” he said.

“We are tied together as a patchwork in this country,” Stevensen said. “Whether we rise or we fall, we do that together. It is imperative the faith community be involved in this call for justice because we don’t have to live this way. We can create a different future that works for everybody.”

Raise the wage!

Both Stevenson and Nieters pointed to the report as more evidence to support raising the minimum wage at both the state and federal levels. The Minnesota Legislature is likely to take up a minimum-wage bill during the 2014 session, and labor, faith and progressive groups have formed a coalition planning to push a $9.50-per-hour minimum wage.

Authors of the report agree: Stronger minimum-wage laws would go a long way toward bridging the gap between fast-food workers’ wages and their basic needs, while easing the burden on taxpayer-funded programs.

“The results of this report suggest (public assistance) programs would be more effective if they were combined with measures to improve wages and health benefits among low-wage workers,” the report says. “Many fast-food workers earn close to the minimum wage and would benefit from an increase in the minimum wage or through targeted local laws to raise labor standards.”

The report also notes that “very few fast-food restaurants have collective bargaining agreements,” which would “increase wage and benefits standards” in the industry.

One thing Nieters knows for sure is fast-food companies won’t increase wages and benefits for their workers without public pressure. “Corporations like Wendy’s will not do more for their workers because it’s the right thing to do,” she said.

Click here to add your name to a petition in support of raising Minnesota’s minimum wage to $9.50 by 2015.

Rev. Grant Stevensen and SEIU Local 284 Executive Director Carol Nieters speak to activists outside a Wendy's in Minneapolis.

Rev. Grant Stevensen and SEIU Local 284 Executive Director Carol Nieters speak to activists outside a Wendy’s in Minneapolis.


  1. An alternative headline would be that taxpayers are subsidizing a system that’s creating an incentive to remain low skilled.

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