Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

How Our $7B a Year Lets Fast Food Companies Pay Minimum Wage

Tickers in this article: BWK MCD WEN YUM

BOSTON (TheStreet) -- In September, workers from fast food chains in more than 60 cities across the nation went on strike to push for a wage increase to $15 an hour.

Many of those opposing the move have warned that such a wage increase could cost consumers, who would wind up being hit with a price bump on their burger. But it turns out Americans are already paying a high price to cover for the flat wages of fast food workers.

At least, that is the conclusion that can be drawn from two reports showing workers in the fast food industry rely heavily on public assistance to make ends meet -- at more than twice the rate of the overall workforce.

More than half (52%) of the families of frontline fast food employees are enrolled in one or more public assistance programs such as Medicaid, food stamps and Temporary Assistance for Needy Families, costing taxpayers up to $7 billion dollars a year, according to the report issued by the University of California at Berkeley's Labor Center.

Of those fast food workers enrolled in public assistance, nearly half are full-time. The states paying out the most in public assistance are California and New York, where $717 million and $708 million are spent each year, respectively.

"The paper is indicative of larger issues in the economy," said UC-Berkeley economist Sylvia Allegretto, co-chairwoman of the Center for Wage and Employment Dynamics and co-author of the report. "Corporate profits are highest on record, and workers' salaries are at a 50-year low."

The report also found that despite the traditional perception of the typical fast food worker as a teenager, two-thirds of them are in fact adults over the age of 20 and only a quarter of them minors. Additionally, the report revealed that 68% of these adult workers are the breadwinners for their household, yet a staggering 87% of them get no health benefits from their employer. This might explain why the largest expenditure in public assistance spent on fast food workers by far is Medicaid and the Children's Health Insurance Program, which accounts for $3.9 billion annually.