Friday, December 6, 2013

Side Order of Public Assistance

This is an guest post from the Personal Finance Blog Debt Discipline:

Over the summer a number of fast-food workers staged protest to demand higher wages. I stumbled across a number of articles on the topic recently at Business Week and Bloomberg. It’s an interesting debate and if not familiar with the topic you’ll be surprised to find out what type of side item is being served to these workers, public assistance. The problem stems from the fact that your average fast-food worker is no longer the teenager living at home. Over 60% are single or married adults who are not in school. 50% of families of fast-food workers are enrolled in as least one public assistance program. McDonald’s and Wal-Mart are two of the biggest offenders. McDonald’s has gone so far as setting up a resource line to help workers apply for aid. Looking over both McDonald’s and Wal-Mart’s recent profits shows that both are successful. The median salary for a fast-food worker is $8.69 an hour in 2013. These companies are simply taken advantage of tax payers and some outdated laws.

public assistance

How to Solve

The easiest way would be to raise wages. This could be done slightly over time to eliminate the need for workers to rely on the public assistance. This would possible increase cost of goods and decrease profits, but reduce the burden on tax payers. The other option would be to charge back the company the amount of public assistance an employee receives. I’m not sure how much support this would receive in Washington.

Bottom Line

Something needs to change. A full time worker making the average of $8.69 an hour will make just over $18k a year. This is just above the poverty guidelines for a family of two. Do the math, after basic needs this is hardly enough to live on. Companies need to provide better opportunities for these workers. If they are dedicate, committed they should have the chance to early high wages to provider for themselves and their family, not relying on public assistance to survive.

Were you aware of this practice by business? How would you solve this problem? Would you trade a more expensive Big Mac for lower taxes?

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