The Fast Food Economy Costs More

If people cannot pay for the bare necessities themselves, the community at large will end up paying it.

By SHARE
EC_131016_wasserman.jpg

With the economy struggling out of a recession, politicians are loath to put pressure on business to pay workers a decent wage. And it's not just on the free-market, GOP side either. Despite protests by fast-food employees who work in restaurants on federal property (such as the Smithsonian museums), the Obama administration, for example, has not moved to force those restaurants to pay a living wage. And Washington, D.C. Mayor Vincent Gray vetoed a measure that would have forced Walmart to pay a higher-than-minimum wage to workers in new stores. The worry is that the so-called "job creators" will simply go somewhere else – where the labor is cheaper – much as companies have moved jobs overseas. And any job, the cruel reasoning goes, is better than no job. Further, consumers wants the cheap goods at Walmart and the inexpensive hamburgers at McDonalds, the experts say.

But is cheap fast food really cheap for consumers? Not really. As a new study from the University of California at Berkeley shows, taxpayers end up paying, one way or the other, for the meager wages paid to fast-food and big box store workers. In fact, the fast-food industry alone ends up costing American taxpayers $7 billion annually because 52 percent of the employees need to enroll in public assistance programs, the report found. Said one of the report's authors, Ken Jacobs, chair of UC Berkeley's Center for Labor Research and Education:

People who work in fast-food jobs are paid so little that having to rely on public assistance is the rule, rather than the exception, even for those working 40 hours or more a week.

[ See a collection of political cartoons on the economy.]

The fast-food workers make an average of $8.69 an hour, and often work only part-time. The burden then shifts to the government, which ends up paying, according to the report, $3.9 billion per year in Medicaid and the Children's Health Insurance Program, $1.95 billion in Earned Income Tax Credit payments, $1.04 billion a year in food stamps, otherwise known as the the Supplemental Nutrition Assistance Program, or food stamps, and $82 million in Temporary Assistance for Needy Families.

People have basic needs – food, shelter and health care. If they cannot pay for those bare necessities themselves, the community at large will end up paying for them. This is why the unpopular mandate for health insurance is so critical to bringing health costs down. The uninsured don't necessarily go without any kind of care at all. They go to emergency rooms for non-emergency care, and the rest of us end up paying for it with higher premiums.

If the District of Columbia demands that big stores with billions of dollars in revenues pay a livable wage, and the store then refuses to locate in the nation's capital, is that a loss? It might seem so at first – there was certainly a long line of people waiting in line to apply for jobs at the new store. But in the end, it might be a bargain taxpayers just can't afford.