Low-wages paid by the multi-billion dollar fast-food industry forces 51 percent of Illinois' fast food workers to rely on public assistance programs to cover basic needs, costing taxpayers in the state $368 million annually, a new report from the University of California at Berkeley shows. Progress Illinois takes a closer look at the issue.
Low-wages paid by the multi-billion dollar fast-food industry forces 51 percent of Illinois' fast food workers to rely on public assistance programs to cover basic needs, costing taxpayers in the state $368 million annually, a new report from the University of California at Berkeley shows.
Overall, 52 percent of American fast food workers rely on some form of public aid, leaving taxpayers with a nearly $7 billion tab each year, according to the report, "Fast Food. Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry."
"Working for poverty wages is no life. Working on tight, erratic schedules is no liberty. And working for McDonald's and Burger King and Wendy's and having to rely on government checks instead of their own checks is not the pursuit of happiness," Arise Chicago Executive Director Rev. C.J. Hawking said at a Tuesday news conference about the new research. "This is an issue about morality, our humanity and who we are going to be as a society."
Almost 60 percent, or $3.8 billion, of that nearly $7 billion taxpayer tab comes from the country's 10 largest fast-food companies, which together hauled in $7.4 billion in profits in 2012. Last year, those 10 companies also compensated their highest-paid executives with a combined $53 million while also shelling out $7.7 billion in dividends and buybacks to shareholders, according to a related report also released Tuesday by the National Employment Law Project.
McDonald's alone costs taxpayers $1.2 billion every year in public assistance programs, the most out of all fast-food corporations, according to the "Super-Sizing Public Costs" report. In 2012, McDonald's made a whopping $5.5 billion dollars in profits.
"We as taxpayers are left to feed McDonald's greed to the tune of a billion dollars a year, because McDonald's workers are forced to rely on public assistance," said Action Now Executive Director Katelyn Johnson. "I think my tax dollars would be better spent towards revitalizing our neighborhoods, saving our public schools, funding social programs, but not enabling the greedy to take advantage of the working poor."
The other companies that round out the top five corporations forcing their workers to seek public aid due to low wages include YUM! Brands, Subway, Burger King and Wendy's, according to the National Employment Law Project's report.
"It's ridiculous that corporate fast food is draining money from our families and our communities, and it's disgusting they are using taxpayers' dollars to finance their greed," Johnson added.
Illinois fast food workers were in the top five when compared to their counterparts in other states in needing public assistance to supplement their low wages, according to the university's report. The other top states include California at $717 million; New York at $708 million; Texas at $556 million; and Florida at $348 million.
"That is a huge amount of money that corporate fast food is draining out of communities, monies that could be used much better in the funding of improving our schools and creating jobs," said State Sen. Jacqueline Collins (D-Chicago), who also took part in releasing the reports' findings.
Pelhol Wiley, 22, who has worked at McDonald's for a year, said he gets paid Illinois' $8.25 minimum wage, but that's not enough to cover his basic necessities like food and transportation to get to work. Wiley is enrolled in the Supplemental Nutrition Assistance Program (SNAP) and uses a LINK Card to help pay for his groceries.
Another McDonald's worker of 21 years, Tyree Johnson, 45, also earns just $8.25 an hour, forcing him to rely on Medicaid and SNAP.
"I made millions of dollars for McDonald's in 21 years, and I'm not valued as a good worker," he said. "They continue to tell me that I'm valuable to them, but they don't pay me enough. It's a shame to have to live off public aid and Medicaid just to survive."
Marc Doussard, one of the UC Berkeley report's co-authors and an assistant professor of urban and regional planning at the University of Illinois at Urbana-Champaign, said the report debunks the notion that fast-food workers are mostly untrained teenagers.
More than two-thirds of the country's core, front-line fast food employees are older than age 20, and 68 percent are the main wage earners in their families, he said in a statement. Additionally, more than 25 percent of America's fast food workers are parents, raising at least one child.
Each year, the fast-food industry rakes in about $200 billion, yet the median wage for its front-line workers nationally is just $8.69 an hour. Only 13 percent of the country's fast food jobs provide health benefits, according to the university's research. Offiials with the Workers Organizing Committee of Chicago, a union of downtown fast food and retail workers, said fast food workers in the Windy City earn a median hourly wage of $9.07. There are some 275,000 low-wage fast food and retail workers in the Chicago area, according to the union.
A full-time, minimum-wage worker in Illinois earns an annual salary of $17,160 before taxes. The federal minimum wage, which has not seen an increase since 2009, is $7.25.
One in three Illinoisans live in or near poverty. But for fast food workers, about two in three of the employees live in poverty, said Kimberly Drew with the Heartland Alliance, a Midwest anti-poverty organization. About 100,000 people in Illinois are working full-time and year round, but they are still poor.
Despite working 40 hours per week, more than half of the country's full-time, front-line fast food employees have to tap into public assistance. The UC Berkeley researcher's noted that fast food workers are twice as likely to be enrolled in public programs compared to those with other jobs.
The low wages and lack of benefits provided by the fast food industry increases demand each year for programs like Medicaid and the Children's Health Insurance program by $3.9 billion, $1.95 billion in Earned Income Tax Credit payments, $1.04 billion for the Supplemental Nutrition Assistance Program, and $82 million for Temporary Assistance for Needy Families.
"This is the public cost of low-wage jobs in America," UC Berkeley economist Sylvia Allegretto, co-chair of the Center for Wage and Employment Dynamics, said in a statement. "The cost is public because taxpayers bear it. Yet it remains hidden in national policy debates about poverty, employment and public spending."
Drew, with the Heartland Alliance, said no one who works for a living should be in poverty. Raising the state's current $8.25 minimum wage would significantly help to reduce poverty in the Land of Lincoln, she stressed.
Gov. Pat Quinn called for a minimum wage hike to $10 an hour during his State of the State address earlier this year, and more recently has reignited the effort during his re-election campaign. A bill introduced in the Senate back in 2011 to boost the minimum wage, however, hasn't left committee.
Those with the “Fight for 15” campaign are calling for a $15 minimum wage, which is a yearly salary of about $31,000. Fight for 15 organizers say $15 an hour would cover workers’ basic needs. Fast food workers in cities across the country, including Chicago, went on strike at the end of August calling for the $15 pay bump as well as the right to form a union without retaliation.
"Illinois workers need a raise because the current minimum wage is just unlivable," Drew stressed. "The reality is that workers just cannot survive and support themselves and their families on a minimum wage job anymore."