The Ripple Effect of Low-Wage Work

A new report from the University of California, Berkeley’s Institute for Research on Labor and Employment (IRLE) estimates the public costs of low-wage work in the fast-food industry. In doing so, the report highlights a key and underdiscussed point about low-wage jobs: They don’t just have an impact on the workers themselves; they have an impact on everyone.

The authors estimate the financial costs of providing critical public services to workers who cannot make ends meet because of low wages, insufficient hours, or inadequate access to health care benefits. The study estimates that nationwide, the public costs of providing health care, nutrition services, and cash assistance to fast-food workers amount to nearly $7 billion per year.

The report also busts some pervasive myths about who low-wage workers are. As we have noted in the past, low-wage workers are not just teenagers employed in their first jobs. As the IRLE report points out, more than a quarter of fast-food workers have children, while employees who are younger than 19 years old and living with a parent represent 18 percent of fast-food workers. Overall, for more than two-thirds of fast-food workers, their wages are an essential part of their total family income.

Finally, the IRLE analysis provides further evidence that the recently enacted increase in California’s minimum wage, which takes effect next summer, is good policy for the state. The typical front-line fast-food worker in the US earned $8.69 an hour in 2011, far below the national median wage of $16.57. By this time next year, fast-food workers in California will be earning at least $9 an hour, and by 2016 they will be earning at least $10 an hour. This wage increase will be a critical boost in income that will help workers provide for their families and bring food to the table.

— Luke Reidenbach