Fast-food workers leaning on federal aid

(MoneyWatch) Many fast-food workers are forced to lean on taxpayers because of their low wages, new data suggests.

According to researchers at the University of Illinois at Urbana-Champaign and the University of California Berkeley Labor Center, 52 percent of fast-food restaurant employees are enrolled in one or more public programs, at a cost of nearly $7 billion a year. That percentage is more than double the national rate.

Meanwhile, a report by the National Employment Law Project, an advocacy group, estimates that employment practices at the 10 largest fast-food company brands in the U.S. are responsible for $3.8 billion of that $7 billion total. According to NELP, McDonald's alone is responsible for $1.2 billion.

The reports follow a series of fast-food labor actions sponsored by the Service Employees International Union and United Food & Commercial Workers union, as well as a number of religious and social justice groups.

Fast-food restaurant pay is among the lowest categories in the country, with wages last year for food preparation and serving workers averaging $9.03 an hour, according to the U.S. Bureau of Labor Statistics. When adjusted for inflation, the wages have steadily dropped since the beginning of 2010, even as the economy began to recover.

Not only do fast-food workers have low wages, but they are also typically under-employed, with average weekly hours not having risen above 26.4 since 2006. That means the average fast food worker must hold multiple jobs, which can mean difficulty in scheduling and transportation, particularly if the workers are not guaranteed predictable hours in advance. Even at 40 hour weeks, the average worker is near the poverty line, whether the person has children or not. The paucity of employee benefits, including health care, often exacerbates the situation.

The University of Illinois/UC Berkeley study found that one-quarter percent of all U.S. workers participate in at least one federal program, such as Medicaid, Children's Health Insurance Program, Federal Earned Income Tax Credit, food stamps (Supplemental Nutrition Assistance Program, or SNAP) and Temporary Assistance for Needy Families.

According to the study, the restaurant and food service industry has the highest share of workers with family members enrolled in at least on public program, at 44 percent. The next highest, at 35 percent, was agriculture, forestry and fisheries.

The NELP study makes its calculations based on the total number of restaurants per company. That includes franchised operations, which means that technically those workers aren't employees of the central fast food companies themselves. Those franchises often operate at single-digit profit levels, so increasing worker pay and benefits would not be financially sustainable, as industry critics point out.

However, the central companies typically charge franchise owners fees that can reach 10 percent and more of gross sales. In addition, the franchisees often pay rent to the central company and are contractually required to buy all their supplies from it, rather than relying on market competition to get lower cost food and supplies.