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Taxpayers pay high cost for low fast-food wages, lawmakers are told

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SACRAMENTO — Low wages paid by the fast-food industry come with a high public cost for California taxpayers, academics and advocates for the working poor told state lawmakers.

Workers at hamburger, pizza and other, mainly franchise, eateries are paid at near-minimum-wage levels, making them eligible for public assistance that totaled an average of $717 million a year in California from 2007 to 2011.

The condition of low-wage fry cooks and sandwich makers was the focus of a joint hearing of the Senate and Assembly labor committees Wednesday. The inquiry was held in the wake of a 60-city protest in August by fast-food employees. Protesters, backed by the Service Employees International Union, called for collective bargaining and a $15-an-hour minimum wage.

Simone Sonnier Jang, a mother of two who works at a Los Angeles McDonald's, said she wouldn't be able to survive financially without subsidized housing, day care and medical care for her children and cash assistance.

"Without that I wouldn't be able to pay rent, cover the cost of utilities," she said, "and I wouldn't be able to buy my own food."

The drain on the safety-net funding is alarming, said Assemblyman Roger Hernandez (D-West Covina). "The taxpayer should not have to subsidize one industry," he said.

The movement got a boost in September when Gov. Jerry Brown signed legislation raising the California minimum wage from $8 to $10 an hour, in two steps, by 2016.

Much of the data presented to the committees came from an Oct. 15 report on fast-food workers by the UC Berkeley Labor Center and the University of Illinois Department of Urban and Regional Planning.

"Relying on public assistance is the rule rather than the exception for fast-food workers," said Ken Jacobs of UC Berkeley, one of the study's authors.

The research, financed by Fast Food Forward, a labor union-supported advocacy group, found that 45% of all fast-food workers nationwide live in a household with at least one member getting federal government aid at a total annual cost of $7 billion nationwide. And 1 in 5 families that included a fast-food worker had income below the federal poverty line.

The data challenge the fast-food industry's assertions that its workers mainly are teenagers living at home with parents. According to the study, 68% of core employees — those who work 10 hours or more a week and 27 weeks or more a year — do not attend school and are single or married adults with or without children.

But Michael Saltsman, research director of the Employment Policies Institute, which is supported by employers, countered that the Berkeley paper was biased and exaggerated levels of public assistance received by fast-food workers.

"Roughly 37% of the fast-food workforce in California lives in a middle-income household earning $45,000 to $99,000 per year," he said. Fast-food restaurants provide entry-level jobs for people with little education and experience, Saltsman said, and it's not surprising that some portion qualifies for assistance programs, such as food stamps, Medi-Cal and tax credits.

Fast-food wages are in line with earnings of workers in other industries who are hired with little education and skills, Saltsman said.

What's more, fast-food outlet owners are plagued with extremely high employee turnover and tight profit margins of less than 5% of revenues, said Jot Condie, president of the California Restaurant Assn.

marc.lifsher@latimes.com

Twitter: @MarcLifsher

Copyright © 2014, Los Angeles Times
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