UC Berkeley Labor Center Report Underlines Harm More Guest Workers Would Inflict on America’s Poor

Published on October 20th, 2013

In my Labor Day blog, I wrote that 3 million underpaid fast food workers planned to strike to get their wages raised from an average $9 an hour to $15. The Federal Reserve Bank of St. Louis calculates that the typical fast food employee earns about $12,355 per year, assuming he works the full 52 weeks.

This month, the UC Berkeley Labor Center issued a more detailed study about workers in service-related industries that paints a grim picture. The Berkeley study found that even though they are employed, the combination of low wages, lack of benefits and part-time status means that most families of fast food workers must rely on taxpayer-funded safety net programs for their basic needs.

From the report:

  1. 52 percent of the fast food workers’ families are enrolled in one or more public programs, compared to 25 percent of the workforce as a whole.
  2. The taxpayer cost of providing public assistance to those families is nearly $7 billion per year.
  3. 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 the $7 billion in aggregate public assistance.
  4. Because of their 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.
  5. 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.
  6. Even working full time is not enough to compensate for the abysmally low pay scale. More than half of fast food workers employed 40 or more hours per week are also enrolled in public assistance programs.

Despite the pitiful wages the industry offers, it’s lobbying to pay even less. Casual observers might think that’s impossible. But they’d be wrong. The industry supports House legislation that would import more unskilled immigrant labor and which would also put at risk marginally employed Americans. The proposed House bill, which would create a new “W” visa, would add 20,000 new low-skilled workers annually until the 220,000 cap was reached.

As the Berkeley report emphasizes, America’s service employees rely heavily on government assistance to scratch out the most meager existence. Importing more unskilled workers whose few job qualifications would include fast food preparation shows Congress’ callous indifference to the daily struggles of many Americans.

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