Report: US Taxpayers Bear 'Hidden Cost' of Poverty Wages

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Report: US Taxpayers Bear 'Hidden Cost' of Poverty Wages

Low-wage workers comprise more than 70 percent of individuals enrolled in federal and state-run poverty assistance programs

Protesters in New York City rally in Manhattan on October 24, 2013. (Photo: the All-Nite Images/cc/flickr)

Protesters in New York City rally in Manhattan on October 24, 2013. (Photo: the All-Nite Images/cc/flickr)

Stagnant wages and declining employer-provided benefits mean that low-wage workers in the United States are increasingly reliant on federal and state-run public assistance programs.

In fact, U.S. taxpayers pay roughly $153 billion each year to supplement employers who refuse to pay a livable wage, according to report published Monday by the University of California, Berkeley, Center for Labor.

U.S. taxpayers "bear a significant portion of the hidden costs of low-wage work in America," said report authors Ken Jacobs, Ian Perry, and Jenifer MacGillvary.

According to the report, The High Public Cost of Low Wages (pdf), 73 percent of those enrolled in the country's major public support programs are members of working families. The Berkeley study examined state spending for Medicaid/Children’s Health Insurance Program and Temporary Aid to Needy Families (TANF), and federal spending for those programs as well as food stamps (SNAP) and the Earned Income Tax Credit (EITC).

Despite a rebounding economy, U.S. workers are not being compensated. According to the research, when adjusted for inflation, wage growth from 2003 to 2013 was either flat or negative for the entire bottom 70 percent of the wage distribution. Further, the number of non-elderly Americans who receive insurance benefits from an employer has fallen from 67 percent in 2003 to 58.4 percent in 2013.

"When companies pay too little for workers to provide for their families, workers rely on public assistance programs to meet their basic needs," said report co-author Ken Jacobs, chair of the Labor Center. "This creates significant cost to the states."

According to the Berkeley study, the reliance on public assistance spans a diverse range of occupations, including fast-food workers (52%), childcare workers (46%), home care workers (48%), and even part-time college faculty (25%).

In total, more than half of all state and federal spending on public assistance program now goes to working families, the study finds.

The report comes amid a growing push to increase the federal minimum wage. On Wednesday, workers in hundreds of cities across the country are holding an international day of action to call for a $15 minimum wage and the right to form a union without retaliation.

And the Berkeley researchers contend, raising wages "would lift working families out of poverty and allow all levels of government to better target how our tax dollars are used."

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