Report cites taxpayer cost for low wages in fast food jobs

By Juan Castillo

American-Statesman Staff

Taxpayers are picking up an exorbitant tab for the low wages paid by the nation’s fast food corporations, fast food workers and their supporters said Tuesday in Austin.

“When multibillion-dollar (fast food) corporations don’t pay their workers a livable wage, their workers are living in poverty and the state has to provide a safety net for those workers,” said Eric Tang, an assistant professor at the University of Texas and director of the Social Justice Institute there.

Tang spoke at a news conference, held on a vacant lot near UT and a cluster of fast food restaurants, called to bring attention to a new report Tuesday that found more than half of fast food workers’ families need to rely on some sort of public assistance, more than twice the rate of the workforce overall. This costs the nation nearly $7 billion a year in public assistance to families, according to the study by economists at the University of California at Berkeley’s Labor Center and the University of Illinois and distributed by a group that has been pushing for union representation and higher wages for fast food workers.

The cost to Texas taxpayers is $556 million a year, because 59 percent of fast food workers’ families need public assistance, the report said.

The Employment Policies Institute, a conservative think tank, blasted the report, saying it was based on faulty methodology and that it ignored evidence that dramatic wage hikes would make fast food workers worse off. It said that faced with low profit margins and customers demanding low prices, fast food employers would have to replace employees with cheaper automated alternatives if they had to raise minimum wages.

“In its quest to unionize the fast food industry, (Service Employees International Union) has demonstrated that it will leave no stone unturned — including using ‘research’ and arguments that would get a higher grade in creative writing than in a high school economics class,” Michael Saltsman, the institute’s research director, said in a statement.

But at Tuesday’s press conference in Austin, James Galbraith, an economist who holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations at UT, said raising wages for low-wage workers would have wide-ranging benefits.

“Workers who are being paid a decent minimum wage by their employers would not be draining the coffers of public assistance, as they are now,” Galbraith said. “They will also be paying higher payroll taxes and eventually higher income taxes, and that is a benefit to the Social Security system.

James Rigby, a minister at St. Andrew’s Presbyterian Church in Austin who also spoke at the news conference, said he once thought that politics and religion don’t mix, but not anymore.

“In the same way it’s wrong to rob somebody with a gun, it’s equally wrong to rob them systemically through an economic inequality,” Rigby said. “If religious people don’t stand up for the weak and the voiceless, I don’t know who will.”

Fast food workers have been holding one-day walkouts and strikes for more than a year to call attention to their wages. They want $15 an hour and union representation; the federal minimum wage is $7.25 an hour.