Taxpayers Spend Billions On Government Help For Low-Wage Workers

Although she works 40 hours a week, it’s hard for Cheyenne Mathieu to support herself and her four-year-old son without a little help. As a nonunion home care aide in suburban Hartford, Connecticut, Mathieu, 21, earns $9.15 an hour for homemaking and $9.75 an hour for companionship. The former involves daily chores like cleaning and cooking for her clients; the latter includes work outside the home like picking up groceries and going on walks.

Mathieu started a couple of months ago after quitting a job at a Hartford Dunkin Donuts that paid even less and offered fewer hours. To get by, she depends on government assistance: $357 a month from the Supplemental Nutrition Assistance Program, which is better known as food stamps, $487 a month from Connecticut’s Temporary Family Assistance program and $370 a month in state help for child care.

“I’d like to get off it,” she says of the government aid. “It’s not something anybody wants to be on.”

It's not as if the pay at Global Horizon Home Care offers her a choice. “Working is not a problem,” she says. “I’m working 40 hours a week and I still can’t pay the rent.”

Contrary to stereotypes that portray welfare recipients as unemployed or unmotivated, people like Mathieu -- low-paid workers with families -- make up the bulk of government assistance beneficiaries nationwide. And the help they’re getting comes at a hefty price.

Taxpayers subsidize low-wage earners and their families to the tune of $152.8 billion a year, according to a report released Monday by the University of California, Berkeley. The study considered spending on Medicaid and the Children’s Health Insurance Program, the Earned Income Tax Credit, Temporary Assistance for Needy Families and food stamps. From 2009 to 2011, the federal government spent $127.8 billion per year for working families on these programs, while states spent a combined $25 billion annually, the report found.

"Effectively, we're subsidizing low-wage employers and [businesses are] shifting costs onto taxpayers," says Ken Jacobs, one of the report's authors.

The recent pay hikes in the low-paying retail and fast-food sectors are unlikely to make major dents in either of those trends.

Walmart said in February it would boost pay for some 500,000 employees to at least $9 by April, and McDonald’s announced it would raise wages for about 100,000 employees to $1 above local minimum wages. But employees who earn $10 an hour and work 34 hours a week still reel in less than $18,000 in annual income, as a separate report this month from Americans for Tax Fairness highlighted. With two or more members in their household, workers at that pay grade would still qualify for Medicaid, food stamps and the earned income tax credit in addition to child care and housing aid programs.

In its conclusion, the UC Berkeley report endorses higher wages and improved employer-provided health care as a means of lowering costs and allowing “all levels of government to better target how their tax dollars are used.”

A series of nationwide strikes and protests on Wednesday aim to make the case for at least the wage portion of that. Starting in 2012, with major backing from the Service Employees International Union (SEIU), the demonstrations have focused on fast-food workers, calling for “$15 and a union.” But this year, organizers hope to draw attention to the plight of other low-wage workers like adjunct professors, retail employees and home care aides.

In the meantime, SEIU has backed another effort aimed at creating upward wage pressure.

In Mathieu’s state of Connecticut, lawmakers have introduced a bill that would tax large companies at a rate of $1 per hour for every employee who earns $15 an hour and lower. The legislation would apply to firms with 500 employees or more, including franchisers like McDonald’s and Subway. Currently, no state has such a law on the books, but SEIU 1199 spokeswoman Jennifer Schneider anticipates it will gain momentum in one of the nation’s few Democratic-majority legislatures.