‘High Public Cost Of Low Wages’: Taxpayers Paying Billions In Assistance To Working Families

In the first report to ever detail the cost of public assistance to working families in the United States, findings show that taxpayers are footing a hefty bill for corporations that pay low wages.

The report, entitled High Public Cost of Low Wages, published by the University of California, Berkeley, studied how working families utilized health care programs such as Medicaid and Children’s Health Program (CHIP), along with enrollments in the basic household assistance program Temporary Aid to Need Families (TANF), as well as the Supplemental Nutrition Assistance Program (SNAP). Findings show that between 2009 and 2011, the federal government, as well as individual state governments, spent a total of $152.8 billion a year on public assistance to working families.

The study also stated that more than half of the families receiving public assistance are working families and placed the blame of the high cost to individual taxpayers on corporations that do not pay employees a livable wage.

“When jobs don’t pay enough, workers turn to public assistance in order to meet their basic needs. These programs provide vital support to millions of working families whose employers pay less than a livable wage. At both the state and federal levels, more than half of total spending on the public assistance programs analyzed in this report—Medicaid/CHIP, TANF, EITC, and food stamps—goes to working families.”

The federal minimum wage is set at $7.25 per hour, which means a parent working full-time at that wage does not make enough money to live above the poverty line for a family of two. Because of that, many full-time workers are eligible for public assistance benefits.

A nationwide protest against low wages is scheduled for April 15, with an expected 200 cities to join in. Fast-food workers will join with Walmart employees, home-care aides, childcare employees, and adjunct professors in what protest organizers say will be the largest protest by low-wage workers in American history.

But, as the Huffington Post reports, those who join in the protest won’t just be fighting for higher wages for themselves — they’ll be fighting for lower costs to taxpayers, as well.

“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.”

It’s estimated that low wages paid by the 10 largest fast-food corporations cost the American taxpayer $3.8 billion per year. Forbes reports that retail giant Walmart cost taxpayers $6.2 billion in 2013 because so many of its employees had to rely on public assistance due to low wages.

There has been a push to raise the federal minimum wage from $7.25 to at least $10.10 an hour, with others saying it should be set even higher. Signed into law by President Franklin Roosevelt in 1938, the federal minimum wage had a stated purpose of keeping American workers out of poverty and was designed to “create a minimum standard of living to protect the health and well-being of employees.” And until the early 1980s, an annual minimum-wage income was actually enough for a family of two to live above the poverty line, creating less of a need for working families to utilize public assistance. But wage stagnation and inflation has taken its toll, as USA Today reported.

“The last time Congress voted to raise the wage to its current rate of $7.25 an hour was seven years ago. Since then, the cost of life’s essentials have shot up. Groceries cost 20% more, a gallon of gas costs 25%more, and average tuition at a community college increased 44%. But the minimum wage remains at $7.25. If it had kept up with inflation since 1968, it would be almost $10.70 today.”

Others argue that raising the minimum wage would give some workers a larger paycheck, but result in other workers losing their jobs completely.

For more on the battle between those who want to raise the minimum wage and those who declare it to be a potential economic disaster, click here. And let us know in the comments below — were you surprised that American taxpayers are footing such a huge bill for companies that pay low wages? And do you think those costs should be pushed back onto the corporations?

[Photo by Scott Olsen / Getty Images]