BUSINESS

Low Wages Cost U.S. Taxpayers $153 Billion A Year

04/13/2015 01:23 pm ET | Updated Apr 13, 2015

When thousands of low-wage workers across the country protest low pay on Wednesday, they won't only be fighting for the millions of workers who flip our burgers, stock our grocery shelves and take care of our kids. They'll be fighting for a monumental shift in the American economy that could save taxpayers billions of dollars.

Poverty wages cost U.S. taxpayers about $153 billion each year, according to a recent report from the University of California, Berkeley. That's because, when families depend on low-wage jobs to survive, they're forced to rely on government programs like Medicaid and food stamps to make ends meet.

The Berkeley report looks at how much states and the federal government are spending on programs like Medicaid, the Children’s Health Insurance Program, the Temporary Aid to Needy Families program, the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program, better known as food stamps. The report found that the federal government spends about $127.8 billion per year, and states collectively spend about $25 billion per year, on public assistance programs for working families.

Currently, the federal minimum wage is stalled at a paltry $7.25 an hour. A parent working full-time at that rate over the course of the year won't bring in enough money to live above the poverty line for a family of two, which means leaning on government assistance.

So when a company like McDonald's, for instance, pays a worker the minimum wage, you, the taypayer, end up subsidizing her pay. A 2013 analysis from the National Employment Law Project found that the 10 largest fast food companies cost taxpayers about $3.8 billion per year.


Infographic by Alissa Scheller for the Huffington Post

More than half of fast-food workers rely on public assistance, in fact. But that's not the only sector desperate for a raise. The Berkeley report also found that child-care and home-care workers also rely on public assistance to get by.

On April 15, workers across the U.S. are planning to protest for better pay and union representation for low-wage workers. The protests are being organized by Fight for 15, a national labor movement fighting to raise the federal minimum wage to $15 an hour.

Here's a look at what percentage of low-wage workers across the following fields rely on public assistance:

share of workers

Many low-wage employers, from Walmart to McDonald's, have announced pay raises in recent months, but workers say it isn't enough. For example, McDonald's plan to raise wages by 10 percent will only affect a small percentage of the company's workers. Most McDonald's workers are employed by franchisees, and the company has said it can't control how those workers are paid.

Suggest a correction
Comments

CONVERSATIONS