The video below, released this week by the service employees’ union, shows a concrete example of how private corporations that pay poverty wages profit by imposing part of their labor costs on the rest of us.
In it, you’ll hear an audio recording of a woman who’s worked full-time for McDonald’s for ten years calling the “McResources helpline,” where a helpful operator encourages her to apply for foodstamps and Medicaid for herself and her two children.
In our society, people like Nancy face a significant degree of stigma for accepting public benefits, but the real “welfare queens” in this story are McDonald’s shareholders, who pocket the difference between what the company pays and what their workers’ need to make ends meet. They use their lobbying power to oppose minimum wage hikes, but they haven’t beaten back deep cuts to our social welfare system.
This kind of subsidy is incredibly common in today’s low-wage economy. According to a study released last week by the Labor Center at UC Berkeley…
- More than half (52 percent) of the families of front-line fast-food workers are enrolled in one or more public programs, compared to 25 percent of the workforce as a whole.
- The cost of public assistance to families of workers in the fast-food industry is nearly $7 billion per year.
- At an average of $3.9 billion per year, spending on Medicaid and the Children’s Health Insurance Program (CHIP) accounts for more than half of these costs.
- Due to low earnings, fast-food workers’ families also receive an annual average of $1.04 billion in food stamp benefits and $1.91 billion in Earned Income Tax Credit payments.
- People working in fast-food jobs are more likely to live in or near poverty. 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.
- Even full-time hours are not enough to compensate for low wages.
This isn’t how a “free market” is supposed to work. These workers are selling their labor for less than the cost of production – less than what it takes to provide basics like food, shelter and health care. Low-wage employers are in turn keeping the cost of their products artificially low by socializing a chunk of their labor expenses. And while we may be enjoy a cheap burger, we end up paying more for it when taxes are pulled out of our paychecks.