The Real Cost Of Low Wages

The low wages paid by businesses, including some of the largest and most profitable companies in the U.S. – like McDonald’s and Wal-Mart – are costing taxpayers nearly $153 billion a year.

After decades of wage cuts and health benefit rollbacks, more than half of all state and federal spending on public assistance programs goes to working families who need food stamps, Medicaid, or other support to meet basic needs. Let that sink in — American taxpayers are subsidizing people who work — most of them full-time (in some case more than full-time) because businesses do not pay a living wage.

Workers like Terrence Wise, a 35-year-old father who works part-time at McDonald’s and Burger King in Kansas City, Mo., and his fiancée Myosha Johnson, a home care worker, are among millions of families in the U.S. who work an average of 38 hours per week but still rely on public assistance. Wise is paid $8.50 an hour at his McDonald’s job and $9 an hour at Burger King. Johnson is paid just above $10 an hour, even after a decade in her field. Wise and Johnson together rely on $240 a month in food stamps to feed their three kids, a cost borne by taxpayers.

The problem of low wages and the accompanying public cost extends far beyond the fast-food industry. Forty-eight percent of home care workers rely on public assistance. In child care, it’s 46 percent. Among part-time college faculty—some of the most highly educated workers in the country—it’s 25 percent.

Ebony Hughes is paid $7.50 an hour as a home care worker in Durham, N.C., and has a second job at a local KFC. While the home care industry has the fastest growing number of jobs in America, these workers are some of the lowest paid in the country – earning, on average, $13,000 a year. To get enough hours to pay the bills, Hughes works from 6 a.m. to 11 p.m. But she and her daughter still rely on public assistance to make ends meet.

UC Berkeley’s Center for Labor Research and Education, which I chair, has analyzed state spending for Medicaid/Children’s Health Insurance Program and Temporary Assistance for Needy Families, and federal spending for those programs as well as food stamps and the Earned Income Tax Credit.

We found that, on average, 52 percent of state public assistance spending supports working families (defined as working for at least 26 weeks a year and 10 hours a week) – with costs as high as $3.7 billion in California, $3.3 billion in New York, and $2 billion in Texas.

In recent months, the substantial public cost of low wages has prompted elected officials to take action. Legislators in California, Colorado, Maine, Oregon, and Washington are considering increasing the minimum wage to $12 an hour. In Connecticut, a proposal currently moving through the state legislature would fine large companies that pay low wages in an effort to recoup the costs imposed on taxpayers.

When 73 percent of people who benefit from major public assistance programs live in a working family, our economy isn’t operating the way it should – and could – be. From 2003-2013, inflation-adjusted wages fell for the entire bottom 70 percent of the workforce. Over the same time period we have also seen a large decline in the share of Americans with job-based health coverage.

Today – on Tax Day – underpaid workers are striking and protesting in cities across the country and around the globe to call for $15 an hour and the right to form a union. Their success would increase family incomes for tens of millions of adjunct professors, fast-food, home care and child care workers, among other underpaid workers. Raising wages would also generate significant savings to state and federal governments, and allow them to better target how our tax dollars are used.

Public assistance programs provide a vital support system for American families. But when Americans like Wise, Johnson and Hughes are working as hard as they can and are still paid too little to get by without public support, we need action to raise wages. On Tax Day it is a good time to take a hard look at the high public cost of low wages in the United States.

we need to lower wages even further to make it fair for people in other countries who don't make as much as we do.

i'm more worried about the inevitable inflation this would cause as the companies affected try to recoup losses.

while i'm in favor of an increased minimum wage for most businesses (cause who don't like more money to afford to live?), i'm more worried about the inevitable inflation this would cause as the companies affected try to recoup losses.

Real wages will still remain stagnant, even decline in some areas. But who wants to know that little tidbit?

Soon, Home Care Workers will be replaced by Baymaxes.

The unemployment numbers would absolutely skyrocket.

New technology does this, yes.

it's only FAIR... americans have been making far too much for far too long. it's time to tighten our belts and learn how to share...

No, really. I don't think you realize the amount of people that work in home/nursing facility health care. It's got to trail only cashiers/food service in the "available, minimal skills needed" category of work.

Edit: But you are right. Which is why we need to stop having so many *** kids. We're not going to have anything for them to do with the way we keep mechanizing.

Yet we've outbred even China.

No, really. I don't think you realize the amount of people that work in home/nursing facility health care. It's got to trail only cashiers/food service in the "available, minimal skills needed" category of work.

Edit: But you are right. Which is why we need to stop having so many *** kids. We're not going to have anything for them to do with the way we keep mechanizing.

Yet we've outbred even China.

Yeah, I really want the person taking care of my elderly parents to be underpaid and barely trained...

Breeding isn't the only reason. Migration to the states also is a contributing factor to the population growth.

Are you advocating that we have overly restrictive migration policies like Japan does?

We just need to start a sterilization process it's part of the feminist agenda ! Strong independent women don't want to have kids.

BWAHAHAHAHAHAHAHAHAHAHAHAHA.

You just try to get a doctor to give permant sterilization to a woman under 40 and see how quickly s/he runs you out of their office with more rhetoric than Nausi, me, and Chanti combined can throw at you on any other topic.

Because remember, 20 isn't too young to make the life-changing decision to have a baby, but it's too young to make the life-changing decision to not have one.

Women don't' run that fast hunt her down and force the sterilization !

Well why pay for all the abortions when you can just get your tubes tied and be down with it !

That's *** then ! Since it was proven in another thread that women can't afford the 20 bucks a month for *** control (birth control however *** control works too!) pills. We need to have subsided tube ligation.

You're still replying to a post you wanted to see vs. what I posted, I think.

I'm telling that doctors don't want to sterilize women. Even if they go in with all the quite logical reasons they want it to be done and say in no uncertain terms "please sterilize me".

They even make you jump through hoops to get sterilized if you're a man. They try to talk you out of it. They try telling you that "you're too young to decide this for good" (despite the fact that, all things even, having a child is permanent too).

I'm well aware it's largely from a legal standpoint because they don't want you coming back after the procedure because you changed your mind and now you want kids, but they will all but refuse to sterilize women permanently. In fact, some will refuse and refer you to other physicians.

No, really. I don't think you realize the amount of people that work in home/nursing facility health care. It's got to trail only cashiers/food service in the "available, minimal skills needed" category of work.

Edit: But you are right. Which is why we need to stop having so many *** kids. We're not going to have anything for them to do with the way we keep mechanizing.

Yet we've outbred even China.