The Fast Food Industry Takes an Unfair Beating…Yet Again

fast-food-banThe University of California – Berkeley released a study implicating the fast food industry for variety of sins, mainly, not paying high enough wages generic levitra to its employees and not providing benefits.  This is not terribly surprising since there is a push by labor groups to unionize fast food employees and pay them above-market wages.  The study, titled “The Public Cost of Low-Wage Jobs in the Fast-Food Industry,” was also featured in a brief written by the National Employment Law Project, a pro-labor advocacy organization.   It is designed to anger taxpayers about footing the bill for public assistance programs by blaming the costs on uncaring CEOs of fast food companies.

After reading NELP’s article and the Berkeley study, I was a bit perplexed by the conclusions to be drawn.  While most agree that the median wage for a typical fast-food worker is nothing to write home about, the Berkeley study failed to disclose pertinent information that puts the industry labor market into context.

Here are some examples from the Berkeley study:

  • Median pay for core front-line fast-food jobs is $8.69 an hour, with many jobs paying at or near the minimum wage.”  But how many individuals earn the minimum wage for the rest of their lives?  Very few, I would bet.
  • “People working in fast-food jobs are more likely to live in or near poverty.” Fair enough, but what is not clear is causation.  Are people living in poverty more likely to work in the fast-food industry due to their skill level, or does working in a fast-food job lead to poverty?  Of course the study would not attempt to investigate such a crucial issue.
  • “An estimated 87 percent do not receive health benefits through their employer.”  What percent of this 87 percent is part-time?  The study later confirms on a back page that about 41 percent of fast-food workers work less than 30 hours a week.  Yet there is absolutely no mention of the role of Obama Care in the decision for restaurants to reduce their employees’ work hours.  Furthermore, fast food restaurants that attempt to offer affordable limited health care plans for their employees will no longer be able to do so under Obama Care.

What is particularly intriguing is how the study rightfully notes the cost of Medicaid, which trumps the cost of other assistance programs.  Berkeley reports that 330,000 fast-food workers are enrolled in Medicaid, and 432,000 children of fast-food workers are enrolled in CHIP, the Children’s Health Insurance Program.  But being that many states offer Medicaid benefits to households living well above the poverty level, it is disingenuous to connect Medicaid benefits directly to fast-food workers.  In fact, there are 636,000 families enrolled in Medicaid and CHIP in Massachusetts thanks to its generous eligibility criteria, but only 34,000 households containing fast-food workers.  It would hardly make sense to blame Massachusetts’ Medicaid burden on the fast-food industry.  But far be it for facts to get in the way of a good push by “living wage” advocates.

So what are the solutions besides mandating a $20 minimum wage that will further drive workers into poverty (as a result of their becoming unemployed)?  More on this in a future post.

Comments (14)

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  1. Lloyd says:

    It really is unclear if poverty leads them to fast food jobs or the fast food industry leads them to poverty. Very good question.

    • Chris says:

      To support both arguments.

      Poverty leads them to fast food jobs, because little to no skill set is needed.

      The fast food industry leads them to poverty, because little to no skills are gained in this industry.

      • Donald says:

        Maybe the trans-fat content is to blame.

        WARNING: May cause poverty, low paying jobs, delusional thoughts of earnings, laziness…

      • Joe Barnett says:

        Actually, such a job can teach the most important basic skills (which many people are oblivious to):
        Showing up for work. Showing up on time. Taking direction. Being polite to customers.

        Failure to learn just the skills above account for the majority of firings.

  2. Randall says:

    Every market needs its low price as well as a high price. The fast food places have long provided the low price in food, therefore providing the low wages and easy entry into that business.

  3. Lindsey M. says:

    No one forced any of these people to work in the fast food industry, no one forced these people to stay in the fast food industry, no one withheld these people from getting an education and deserving a higher paying job- except for themselves.

    CEOs worked hard to be where they are. That guy on the fry cooker needs to stop pointing fingers and improving his skill set to EARN a higher wage.

    • Lindsey M. says:

      and start improving*

    • Dewaine says:

      Many CEOs worked on the fry cooker when they were young and their experience there helped develop insight into business. These jobs need to be viewed as a stepping stone for bigger things.

      • JD says:

        Right, that touches on another important angle. Working in fast food shouldn’t be considered an end goal. Raising wages will make it more of one and decrease the proportion of our labor force that is high-skilled.

  4. Rutledge says:

    Since when are fast food workers supposed to earn a decent living? Those jobs are for the unskilled laborers, as known as high school students.

  5. BHS says:

    “But far be it for facts to get in the way of a good push by “living wage” advocates.”

    That was great.

  6. JimS1 says:

    The “minimum” component of the minimum wage is a tax. Businesses do not “pay” taxes. All else being equal, a business must collect taxes from their customers by increasing their prices. Business paid taxes are both a hidden tax and a regressive tax that hurts the poor the most. When we tax business for their US based labor, we increase US labor costs which makes US goods less competitive in a global economy and forces “tradable jobs” overseas. The collection of costs imposed on business that do not directly improve the value of their goods and services are called the JOB BURDEN. Minimum Wage, like the business paid portions of Social Security, Medicare, Health Insurance premiums and unemployment are examples of the US JOB BURDEN. These, and other Job Burden costs have made the US JOB BURDEN the most expensive in the world. Our Government’s goal should be to free our jobs from the job killing JOB BURDEN and develop an alternative funding mechanism for our business funded safety net programs. We should separate Government expenditures into Safety Net costs and all others. We should eliminate our Payroll Tax system and pay for our safety net through a national retail consumption tax called the Safety Net Tax (SNT). Like the FairTax proposal the SNT should include a Prebate to cover the tax paid for a minimum standard of living. If we the people want a minimum wage, or want to increase the minimum wage, we should not penalize our jobs which will retard the growth of our economy. Remember, the cost of our minimum wage is already baked into the prices we pay. The best way to grow US based private sector jobs is to identify and eliminate the US JOB BURDEN and transfer those costs to a Safety Net Tax. This would reduce the base cost of US labor by at least 30%. What might that do to our job market?

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