You Are Subsidizing McDonald’s – Why?

By Shlomo Maital

     Big Mac

  You may be unaware, but – Huffington Post (Oct. 15) informs us, citing a study by the National Employment Law Project (NELP), that “Taxpayers are shelling out $1.2 billion a year to help pay workers at McDonald’s”. 

   McDonald’s is a highly profitable company, with 2012 revenues of $27.6 b. and net income (profit) of $5.5 b.   Why should taxpayers subsidize McDonald’s workers? 

   And it’s not only McDonald’s.  The government subsidizes the entire fast food industry to the tune of  about $3.8 billion per year, according to a a study by University of California-Berkeley and University of Illinois at Urbana-Champaign.

    How does this work?  McDonald’s Wendy’s, KFC and other companies pay very low wages, close to minimum wage.  Workers then apply for public assistance, and receive food stamps.  They can survive on McDonald’s jobs, only if they get help from the government.  McDonald’s can pay rock bottom wages only because their workers are on food stamps – a program that costs the US about $78 b. a year.   Half of food industry workers are on public assistance, compared with one worker in four for the whole US economy.  According to the experts, “in many cases, it’s not just teenagers working fast food jobs for some extra cash. These low-wage workers are often older — and in many cases are the breadwinners for their families.”

   Fast food companies say they operate on slim margins. Really?  $5 b. in profit on $28 b. in revenue?   About 18 per cent net margin?    SLIM?????  That $1.2 b. subsidy goes directly to the shareholders’ pockets.

   How could this be fixed?  Raise the minimum wage.  Make companies pay living wages.      

   McDonald’s says it provides hundreds of thousands of jobs.   This is true – however, the jobs are largely part-time, low-paying and even though those who have such a job are employed, hence not part of the unemployment statistics, they struggle to make a living. 

   Add that $3.8 b. fast-food subsidy to the enormous costs that fast food impose on health care, through obesity, diabetes, etc., and you have a strange system in which our taxpayer money is used to subsidize an industry that causes health problems that use even more taxpayer money.