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How Multibillion Dollar Corporations Rely on the Public to Feed their Workforce

Amy Traub

Dunkin Donuts is getting a sweet deal. The company enjoyed $108.3 million in profits last year and compensated its CEO, Nigel Travis, to the tune of $1.9 million. Meanwhile, the public paid an estimated $274 million to feed, provide medical care, and subsidize the wages of their workforce. And Dunkin Donuts is not alone or even the worst offender: new studies out today from the University of California, Berkeley Center for Labor Research and Education, the University of Illinois, and the National Employment Law Project detail just some of the vast scope of public subsidies for the fast food workforce.

The Berkeley/Illinois study finds that, overall, public assistance to workers in the fast food industry and their families costs nearly $7 billion a year. That includes public spending on Medicaid, the Children’s Health Insurance Program, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families—but doesn't account for free school lunches, housing assistance, or home heating aid that families may also need to survive on median wages of $8.69 an hour.  

At wages that low, working more hours is still not enough to get by. Part-time fast food employees have the most difficult time making ends meet, but half of the fast food workers employed 40 or more hours per week still need to enroll their families in public assistance. Nor are these employees primarily teenagers picking up pocket money: an employee in the core fast food workforce is more likely to be a parent supporting children of her own than a teenager living in her parents’ home.

For the fast food corporations it’s a lucrative business model: they get labor at rates too low to keep families housed and fed, the public makes up the difference, and the company rakes in the profits.

But it’s not working for employees, who don’t like having to depend on public benefits despite their hard work—benefits are skimpy and the process of qualifying is often humiliating. As full-time Burger King employee Willetta Dukes of Durham, NC explains, “I stand on my feet eight hours a day… we’re not expecting to get rich, but why can’t I pay my light bill?”

Sleeping in a homeless shelter while punching the clock at KFC is no one’s idea of the good life. Nor is it good for families or our communities as a whole. It’s no wonder wave after wave of fast food strikes have broken out in cities across the country this year.

It’s clearly not working for the public either. Taxpayers forked over $1.2 billion last year to cover the costs of low wages and few benefits at McDonalds alone. Yet a federal minimum wage increase, which would force these companies to pay more, does not look imminent, despite the best efforts of Rep. George Miller and co-sponsors of HR 1010. We are also not strengthening our labor laws to ensure that fast food workers and others can safely exercise their rights to band together and negotiate for better wages and benefits on their own.

Instead, we’re talking about more cuts to the already-inadequate safety net workers and their families depend on. Those people who rely on food stamps? They should get a job.

Yet states and cities, like fast food workers themselves, are beginning to push back in ways big and small. The town of Seatac, WA is considering a $15 an hour minimum wage. Jersey City, NJ just opted to require employers to let workers earn paid sick days. The fast food industry's toxic business model should spur similar action across the nation.