Taxpayers' $7 Billion Subsidy to Fast-food Profits Should End
October 31, 2013 (St. Louis Post-Dispatch (MO)) The following editorial appeared in the St. Louis Post-Dispatch on Wednesday, Oct. 30:
Is fast food so vital to the nation that taxpayers should spend $7 billion a year to supplement the industry's profits? Imagine the outcry if that was proposed.
And yet a study by economists at the University of Illinois at Champaign-Urbana and the University of California at Berkeley's Labor Center says it's already happening.
Seven billion dollars a year is what it costs taxpayers for Medicaid, food stamps and the other public assistance programs for fast-food workers who are paid poverty-level wages.
A second report, "Super-Sizing Public Costs" by the National Employment Law Project, said low wages and missing benefits at the 10 largest fast-food companies in the country cost taxpayers about $3.8 billion a year.
Another way to look at it: McDonald's posted $1.5 billion in third-quarter profits. Taxpayers paid $1.2 billion last year for public assistance to the McDonald's workforce. That's $300 million per quarter, a 20 percent contribution to the company's bottom line.
It's enough to give you indigestion.
The academic study _ "Fast Food, Poverty Wages" _ shows that more than half of the nation's 1.8 million "core" fast-food workers rely on the federal safety net to survive. Core workers are front-line, non-managerial employees.
Collectively these workers get $1.9 billion through the nation's earned income tax credit, $1 billion in food stamps and $3.9 billion through Medicaid and the Children's Health Insurance Program.
The study examined employees who work at least 11 hours a week and 27 weeks a year. Of that group, 28 percent worked 40 hours a week and half of them also relied on federal public assistance to make ends meet.
Rallies, job walkouts and demonstrations this summer around the country highlighted the plight of fast-food workers. Labor organizers and social service advocates have been calling for higher wages for the workers, whose median hourly pay is $8.69.
The minimum wage in Missouri is $7.35 an hour, with an automatic increase built into the law to reflect inflation. The federal minimum wage is $7.25 an hour. Activists also are urging the workers to seek collective bargaining agreements.
The fast-food giants are accused of keeping their wages low and profits high by intentionally steering workers to sign up for food stamps and other public assistance programs.
By under-paying employees, companies push their real cost of doing business onto the public at large. This can be called corporate welfare. Or socialism. But not capitalism.
Fast-food workers should be paid a living wage. The corporations that hire them must stop relying on the public for anything more than buying the occasional burger.