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UC Berkeley Labor Center

Low wages paid to U.S. fast-food workers costs taxpayers $7 billion nationwide, and $368 million in Illinois, according to a study released earlier this month by researchers at University of Illinois Urbana-Champaign and the UC Berkeley Labor Center.

Reports: Taxpayers footing $7 billion to supplement low fast-food wages

by Derrick Clifton
Oct 31, 2013

Low prices for drive-thru meals come at a higher cost than you may think.

An Oct. 15 report released by researchers at University of Illinois Urbana-Champaign and the UC Berkeley Labor Center showed that low wages paid to fast-food workers cost U.S. taxpayers $7 billion annually in public aid spending, $368 million in Illinois.

According to the report, “Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs in the Fast-Food Industry,” more than half of fast-food workers depend on public assistance programs such as food stamps and Medicaid to obtain access to basic needs they can’t afford. That’s compared to one quarter of the general workforce.

“Because pay is low and weekly work hours are limited, the families of more than half of the workers in the fast-food industry are unable to make ends meet without enrolling in public programs,” the study’s authors said in the report. “Low wages, benefits and work hours in the fast-food industry come at a public cost.”

The study also suggested public assistance programs would be more effective if combined with improvements in health benefits and wages for fast-food workers.

A companion report released by the National Employment Law Project estimates that low wages paid to McDonald’s workers alone costs taxpayers $1.2 billion each year. That’s more than Wendy’s, Subway and Burger King’s combined cost to taxpayers.

One Chicago fast-food worker described working on low wages as a hard experience.

“[Fast-food companies] should be able to pay us enough wages to provide for our kids and our families,” said Nancy Salgado, 27, who makes $8.25 an hour at a McDonald’s franchise in Logan Square -- one dollar above the federal minimum wage. She said she has not received a raise since being employed with McDonald’s – 10 years.

If Salgado’s name rings a bell, it’s because she’s recently at the forefront of advocacy efforts to increase fast-food worker wages.

Earlier in October, Salgado was arrested with seven others after confronting McDonald’s USA president Jeff Stratton about low wages during his speech at the Union League Club.

link to video:

Last week, labor advocacy group Low Pay Is Not OK released an edited recording of Salgado’s conversation with a McDonald’s “McResources” help line representative. She called asking for assistance to make ends meet.

During the call, the help line operator told Salgado to apply for food stamps and Medicaid.

McDonald’s said the video is not an accurate portrayal of their help line.

"The fact is that the McResource Line is intended to be a free, confidential service to help employees and their families get answers to a variety of questions or provide resources on a variety of topics including housing, child care, transportation, grief, elder care, education and more," the company said in a written statement, according to various reports.

Salgado, a mother of two, says she applied for federal benefits in the past but added the process has been too difficult for her to complete.

“I gave up because it was wasting a day of work,” said Salgado, citing issues with case workers due to her relocating in the city. “My case was never in the correct area so they had me going back and forth for two years.”

Salgado added that unpredictable work hours make it difficult for her to look for a second job or other means to support her children.

The results of this month’s reports on low fast-food wages were no surprise to Deivid Rojas, communications director for the Worker’s Organizing Committee of Chicago, which is helping workers in the Fight for $15 campaign.

Rojas said the reports “confirmed what the workers were saying” and “showed how much it’s costing the country.”

McDonald’s did not respond to requests for comment about the study.