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Fast-food industry drives workers to homelessness, report finds

When it comes to low-wage jobs, not all industries are created equal. Being employed in the fast-food industry is the surest way to end up in poverty as a low-wage earner, a new study finds.

A new study conducted in California by the nonprofit group Economic Roundtable has reinforced previous findings that the fast-food industry has a larger proportion of workers in poverty than any other. It's a disparity driven by fast-food workers' low wages and inability to get full-time hours. 

The industry has served as a significant driver of homelessness in the Golden State over the past eight years, pushing up the state's homeless population by 51%, the study found. Now, fast-food workers represent 1 in 17 of homeless people in Californina, according to the report.

"We estimate that homelessness would have grown about one-fifth less in California if the fast-food wage floor was adequate to ensure that workers have stable housing," the study reads.

Low pay and underemployment in the fast-food industry aren't only California's problem, Audrey Taylor, a leader with fair pay advocacy group Fight for $15, told CBS MoneyWatch. 

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"It's clear that in California and across the country, our wages aren't keeping up with the skyrocketing cost of living," said Taylor, who makes $12 per hour at a Wendy's in Milwaukee, Wisconsin. "Economic Roundtable's study in California should be a wake-up call around the country."

Not enough work hours for a full week's pay

The federal poverty level for a three-person household, the average American household size, is $24,860, according to the Department of Health and Human Services. 

As of last year, there were an estimated 3.3 million fast-food and counter workers in the U.S. making an average hourly wage of $13.53, Bureau of Labor Statistics data show. That works out to $28,130 per year, assuming a 40-hour workweek, which many fast-food workers don't get. 

Though California has one of the highest minimum wages in the U.S., at $15.50 an hour, fast-food workers there often don't work enough hours in a week to improve their living conditions, the report said. 

California's frontline fast-food workforce get an average of 1,340 hours of paid work per year, the study found. For someone who works year-round, that averages 26 hours a week. By comparison, all other workers in the state work an average of 1,839 hours per year.

Low pay, high profits

While fast-food workers struggle to make ends meet, the companies employing them are doing just fine. McDonald's raked in $1.9 billion in profit during the fourth quarter of 2022, up from the year before, the company's filings show. Meanwhile, Chick-fil-A recorded $18.8 billion in U.S. system sales in 2022, up nearly 13% from the year prior, The Franchise Times reported.

However, fast-food businesses might not fare so well in the future if they don't begin caring more about their employees, Daniel Flaming, Economic Roundtable's president and one of the study's authors, told CBS MoneyWatch.

"This industry is highly profitable, but it will not be sustainable until it stops creating and perpetuating destitution and homelessness among its workers," Flaming said.

"Statewide, the public is paying the health care costs for 31% of frontline fast-food workers through Medi-Cal coverage, paying for food stamps for 17% of frontline workers, and paying a wide range of costs for homeless services and housing for 10,120 homeless individuals from the fast-food workforce."

At the same time, fast-food companies are achieving enormous profits, he said, noting that the five largest companies in the business had $12 billion in profits last year and $14.5 billion the year before. "This is not equitable for workers or sustainable for society."

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