A home health care worker in Durham, N.C.; a McDonald’s cashier in Chicago; a bank teller in New York; an adjunct professor in Mayfield, Ill. They are all evidence of an improving economy, because they are working and not among the steadily declining ranks of the unemployed.
Yet these same people also are on public assistance — relying on food stamps, Medicaid or other stretches of the safety net to help cover basic expenses when their paychecks come up short.
And they are not alone. Nearly three-quarters of the people helped by programs geared to the poor are members of a family headed by a worker, according to a new study by the Berkeley Center for Labor Research and Education at the University of California. As a result, taxpayers are providing not only support to the poor but also, in effect, a huge subsidy for employers of low-wage workers, from giants like McDonald’s and Walmart to mom-and-pop businesses.
“This is a hidden cost of low-wage work,” said Ken Jacobs, chairman of the Berkeley center and a co-author of the report, which is scheduled for release on Monday.
Taxpayers pick up the difference, he said, between what employers pay and what is required to cover what most Americans consider essential living costs.
The report estimates that state and federal governments spend more than $150 billion a year on four key antipoverty programs used by working families: Medicaid, Temporary Assistance for Needy Families, food stamps and the earned-income tax credit, which is specifically aimed at working families.