Report: Taxpayers Spend $7B a Year Helping Fast-Food Workers Survive

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You’ve probably heard about fast-food workers striking for a living wage and about how McDonald’s budgeting guide for employees tells them they need two full-time jobs to make ends meet.

Now, two new reports show just how much taxpayers spend to subsidize the people trying to get by on those low wages, The Washington Post says. It’s about $7 billion per year.

There are about 1.8 million “core” fast-food workers, and more than half of them rely on federal government benefits. They claim nearly $1.9 billion a year through the earned income tax credit, $1 billion in food stamps, and $3.9 billion through Medicaid and the Children’s Health Insurance Program.

One of the reports comes from the University of California at Berkeley’s Labor Center and the University of Illinois and was funded by Fast Food Forward, a group supporting fast-food strikes. The other report comes from the National Employment Law Project, a worker advocacy group.

National Restaurant Association executive vice president Scott DeFife said the reports’ data were deliberately misleading, according to the Post. He singled out the EITC as a program “designed for working families, not public assistance, and is used to inflate their numbers.” (OK, but what about the other $5 billion, one wonders.)

Other critics said restaurant jobs are a valuable path into the workforce, the Post says. Maybe, but they could also be seen as a broken rung on the career ladder. Another report from a couple of months ago noted that more than two-thirds of fast-food workers are over the age of 20, that most have at least a high school diploma and many are college-educated, and that older fast-food workers make little more despite their education, age and experience.

Here’s what else the two new reports found:

  • A quarter of the U.S. workforce is enrolled in public assistance programs, while more than half of fast-food workers are.
  • “One in five families with a member holding a fast-food job has an income below the poverty line, and 43 percent have an income two times the federal poverty level or less,” says the Labor Center report. The federal poverty line for a family of four is $23,550.
  • The 10 largest fast-food companies in the U.S. cost taxpayers an estimated $3.8 billion per year, with McDonald’s representing nearly a third of that.
  • Among those 10, seven are publicly traded and last year collectively earned $7.4 billion in profits, paid $52.7 million to top executives, and distributed $7.7 billion in dividends and stock buybacks.

Let us know what you think about the findings on Facebook.

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Comments & discussion

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  • http://moneystepper.com/ moneystepper

    I don’t really think this is anything new! “Other critics said restaurant jobs are a valuable path into the workforce, the Post says. Maybe, but they could also be seen as a broken rung on the career ladder” – I don’t think that the majority of fastfood workers think of their job as part of their long-term career. Also, the £7bn sounds huge, but I wonder what the equivalent is for other low paid jobs – about the same I would imagine.

  • Drew

    Wait, but the Obama administration keeps telling me about how welfare stimulates the economy, so how can this be bad? Every $5 spent on food stamps creates $9.20 in economic activity. Thus, I conclude, if fast food workers get raises, all that economic activity would be reduced and this country would be thrown into a depression!

  • financialcoach

    This topic makes for great headlines but all the news and comments reported are incredibly superficial like the “strike” by minimum wage workers. Yes, raise the minimum wage to take some of those bloated profits from Mickey D’s and Wal Mart. But understand that greatly affects small businesses many of whom would go out of business with a minimum wage increase. Get to the core of the problem, which is to bring skilled jobs back to the U.S. so that people have an opportunity to engage as a skilled worker thereby increasing their wages. As important as health care coverage is (i.e. Obamacare), companies that provide jobs for skilled workers generally have health care options so you kill two birds with one stone. Minimum wage is supposed to be a stepping stone not a life sustaining job. But with skilled jobs disappearing across the borders, you now have those skilled workers having to take minimum wage jobs. I did that – after being laid off from my $100,000 per year job and not being able to find work after a year plus of looking and unemployment benefits ending, I took a job at Barnes & Noble that paid $7.50 per hour. Don’t see too many of those stories in the headlines, do you?

  • nitemare2

    Nothing other than finger pointing at the Conservatives again and trying to say how awful they are expecting some responsibility instead of the occupy/liberal mentality of give me give me.

  • John Hughes

    This is a simple statement: If there is even ONE person requiring tax dollars to survive while holding down a full time job and the company or shareholders profit then it is too many!

  • Joseph Freitas

    I think if you are a life long fast food worker struggling to make it you have one person to blame. Yourself! Get up and go do something different. There are other jobs out there but it may take a little effort and a little sense to get them.
    The article said many of the workers are college educated. This could be misleading. Does college educatedd mean they took one class at a community college and dropped out, or does this mean MBA’s decided to make a career at Burger King?
    I say this because in high school i worked in fast food. I saw the lifers who made a career at these places and guess what the only thing stopping them from leaving was themselves. The workforce was consisted of other highschool students, older highschool drop outs, ex-criminals, and people without a lot of ambition. Some of us went on to great careers, some of us now own businesses, and guess what some of the people are still there 10 years later.
    These jobs require no skill and little effort! They are entry level. Hence the low pay. If I could make at McDonalds what I make in the corporate world then I would do it. Less stress and free food.

  • John Hughes

    Taxpayers should not pay for company profits.

    • bigpinch

      Well, this is the way an artificial economy looks; an economy that is becoming more and more a product of the Welfare State: Workers who can’t earn enough money needing tax payer assistance while serving marginally nutritious food to taxpayers who think they can’t afford otherwise and big business profiting from the arrangement making campaign contributions to politicians hell-bent on expanding the Welfare State under the false flag of COMPASSION (which is really just vote buying). This is the house that Jack built…

  • JGObserver

    Pay the staff $15/hour and the big mac and fries goes to $10+. That will cause demand to greatly decrease and put a lot of workers on the unemployed ranks as well as a number of franchisees going bankrupt. In addition the marginal income citizens will lose places to get an inexpensive meal.

    • Key Typer

      Bull sh$&^%t