If the Congress of the United States was really serious about cutting the deficits the fastest way would be to raise the minimum wage!
A study released Tuesday revealed that over the five years between 2007-2011 low wages paid by profitable employers cost the taxpayers $243 billion a year. The fast food industry alone costs $7 billion a year. This amounts to a huge taxpayer subsidy to businesses.
The bottom line, if Congress really wants to fix the deficit the fastest way would be to raise the minimum wage!
The reason is that profitable corporations pay their workers so little that they depend on taxpayer-funded programs just to survive. What is running up the cost of “social net” programs is not fraud like many Republicans assert, it is that individuals who are actually working full time in one or more jobs are paid so little they qualify for a variety of programs that cost the U.S. taxpayers $243 billion a year.
A study published Tuesday by researchers at the University of California, Berkeley focused on fast food workers and the costs that low wages pass along to taxpayers. The report was funded by Fast Food Forward, a coalition of workers and labor, religious and community groups campaigning for higher wages and rights on the job.
The researchers found that the fast-food industry’s low wages and meager benefits, often accompanied by part-time hours, combine to create substantial public-assistance needs. More than half (52%) of the families of front-line fast-food workers are enrolled in one or more public programs, compared to 25% of the workforce as a whole. That means taxpayers are subsidizing private business for 25% of all the workers in the nation. Many of these companies don’t even pay taxes.
All together, the government shells out $243 billion a year on these programs to people who are working full time. We spend $261.3 billion a year on Medicaid and Children and Infant Health (CHIP) for 23 million families. Taxpayers pay $55.9 billion a year on food and nutrition programs to 25 million families; $9.8 billion to 2.9 million families for Temporary Assistance to Needy Families. Furthermore 26.3 million families earn so little they are entitled to the Earned Income Tax Credit costing taxpayers $58.6 billion a year.
Raising minimum wage good for the economy
Raising the minimum wage is good for the workers allowing them to earn a living wage without the stigma and hassle of being on public assistance programs. It reinforces to their children the value of work—that work allows one to live a dignified life, and the harder you work the better life you have. Today’s system teaches the opposite.
Raising the minimum wage is also good for taxpayers. Clearly, taxpayers are getting hosed by these businesses, many of which are huge multi-national corporations with billions of dollars of profits each year thanks to government subsidies of their labor cost. If workers earned enough so they no longer qualified for these federal programs and the EITC, the cost of those programs would drop drastically reducing annual deficits.
If millions of workers were paid a living wage, almost of all that incremental money would go right back into the economy. They would buy goods and services creating demand for manufacturers, customers for retailers, and ironically, fast food joints. It would swell local sales and income tax collections. In short, this rising tide would dramatically raise all boats.
Now that Congress is in the process of damaging our economy, we need this boost more than ever. It is time for Congress to raise the minimum wage to a level sufficient to allow most of these 23 million working families to no longer qualify for public assistance. If it kept up with inflation, it would be $12 an hour; if it kept up with productivity, it would be $22 an hour—just saying.
Businesses won’t close down, they’ll just pass cost on to consumers. What will happen is we will have more of a “free market economy” which is what business says it wants.
Business leaders and Republicans swear by “trickle down economics.” That has never worked because Congress plugged up the tiny tube the money would trickle down through. Raising the minimum wage will unclog that tube at least a little.