New study shows why we have to raise the minimum wage to $15 an hour

By Marc Jampole

Your Big Mac and Baconator aren’t as cheap as you think they are. In fact, every time you bite into a burger or other fast food concoction, the federal government subsidizes your meal—and the profit made by the fast food company.

That’s because more than one half of low-wage workers employed by the largest U.S. fast food restaurants earn so little that they get public assistance.  An analysis of Census Bureau figures by researchers at the Universities of California-Berkeley and Illinois released this week found that 52% of fast food workers used Medicaid, food stamps or the Earned Income Tax Credit program, between 2007 and 2011.  In fact, more than twice as many fast food workers sign up for public aid programs than does the overall workforce.

Another study—this one by the National Employment Law project (NELP)—found that public assistance for fast food workers costs U.S. taxpayers $3.8 billion a year. That’s a $3.8 billion subsidy to the fast food industry and denizens of fast food. It’s almost 2% of the total sales of the U.S. fast food industry, but a much larger portion of the profit. So if senior management of McDonald’s, Burger King, Wendy’s and Sonic are enjoying their country club memberships and private pools, they have the U.S. government and taxpayers to thank.

The NELP study estimates that the average in-store fast food employee makes $8.94 an hour.  That works out to less than $20,000 per year for someone working 40 hours a week 52 weeks a year.

I can understand why taxpayers subsidize the development of alternative energies, oil and gas drilling and university attendance. But why are we subsidizing an industry that contributes so much to our national health epidemics of obesity, diabetes and heart disease?

I’m thinking that if we ended this subsidy by raising the minimum wage to a decent level—say $15 an hour—your burger and fries would likely cost a little more and that the big fast food purveyors would make a little less profit. Of course, if fast food cost what it is supposed to cost without government subsidies, maybe some part of the market for fast food would opt for healthier and tastier food.  While that might lead to healthier Americans, it would definitely lead to fast food companies making even less money. And we couldn’t have that, could we?

Could and should.

The argument that raising the minimum wage would lead to job losses is complete garbage.  Employers tend to only hire when they need someone and when they can demonstrate to themselves that the additional employee will help to make a lot more money than the new employee’s salary, benefits and cost to train and equip. Many companies get fat over time and have to do occasional trimming or purging—but that’s not related to the minimum wage. These companies didn’t hire additional workers because they were cheap, but because company management thought they needed them at the time.

It makes sense that employers like to pay as little as possible for everything, including labor. But the minimum wage sets a floor on how low employers can go for public policy reasons: most everyone would agree that it’s in the best interest of the country to make sure that people who work will be able to eat and have shelter. With the current minimum wage, far too many don’t have the basics.  It’s time to raise it.

The call for $15 an hour minimum for all workers is realistic because over the past 30 years we have allowed the minimum wage to lose ground against the cost of living and corporate profits. Keeping the minimum wage low was an integral part of the game plan in the class war against the middle class and poor that the wealthy began in this country under Reagan.

The first step in returning to a more equitable distribution of wealth is raising the minimum wage.

You might have to pay more for your hamburger, but fewer of your tax dollars will go to the public aid programs for the poor that so many Americans love to hate.