NCPA - National Center for Policy Analysis

Public Cost of Fast Food Industry Pay Remains Unclear

November 12, 2013

Relative to the price of a value meal, $7 billion is an awfully big pile of cash. Relative to the total payroll of fast food workers in the United States, or the total cost of major nationwide benefits programs, it's not much, says a recent Wall Street Journal article.

That figure made headlines last month after researchers at the University of California, Berkeley, and the University of Illinois, Urbana-Champaign, reported that front-line workers at fast food restaurants, and their families, receive at least $7 billion a year in public benefits to supplement their wages -- typically, under $9 an hour. The authors described the amount as "the public cost of low-wage jobs in the fast food industry." Indeed, 52 percent of fast food workers receive benefits from government programs.

Other researchers dispute that interpretation.

  • They say the cost to the public would be higher without those jobs.
  • And if fast food restaurants raised their wages, that wouldn't guarantee a corresponding decline in benefits: Some restaurants might automate functions and cut jobs, and some benefits remain available to workers making higher salaries.
  • "There are unintended consequences associated with raising the minimum wage," says Michael Saltsman, research director at the Employment Policies Institute.

Jerry Nickelsburg, an economist at the University of California, Los Angeles's Anderson School of Management, says studies of the effect of a minimum-wage rise are "all over the map." They also may be, he says, increasingly irrelevant. Research based on data earlier in the computer age may not fully capture the appeal today of replacing workers with the latest technology -- such as tablet computers instead of cashiers for ordering a meal.

Source: "Public Cost of Fast-Food Industry's Low Pay Remains Unclear," Wall Street Journal, November 1, 2013.


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