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What happens when you’re working but still can’t afford a place to live?
That’s a question addressed by a recent report commissioned by the Service Employees International Union and conducted by the nonprofit Economic Roundtable that looked at the prevalence of homelessness among fast-food workers in California. What it found was striking — fast-food workers make up 11% of all homeless workers in California, 9% in Los Angeles County and 8% in the city of Los Angeles — which the researchers chalk up to low pay and limited work hours set by the employers.
“It’s a lot of people with part-time hours and low wages and a hard time paying rent,” said Daniel Flaming, president of the Economic Roundtable, during an interview with Marketplace’s David Brancaccio. Fast food workers “have the highest rate of poverty employment of any industry in California.”
The following is an edited transcript of their conversation.
David Brancaccio: Let’s start with more of these basics about what the report finds — fast-food workers in California, that’s quite a percentage of people who are unsheltered.
Daniel Flaming: It is. It’s a large labor force. It’s about 665,000 folks in California. So it’s a lot of people with part-time hours and low wages and a hard time paying rent.
Brancaccio: So fast-food workers toward the top of this list, not just because there are so many in California. It’s not just something with the numbers there?
Flaming: They have the highest rate of poverty employment of any industry in California. So they’re big, and they don’t pay much.
Brancaccio: They don’t pay much. Is that the root cause of this, the fact that the pay, the compensation, is low for this type of work?
Flaming: Yes, it’s low, both because the wages are low and the number of hours are low. The workers that we see when we go into a fast food restaurant, the counter worker, the person making the fries, they work an average of about 26 hours a week. The cutoff point for being entitled to health care paid by the employer in California is 30 hours. And a full-time job is over 35 hours by most other definitions. So the employers, in most cases, don’t have to pay health insurance for these workers. And that’s a way of cutting private costs.
Brancaccio: So keeping the hours lower in a given week so they’re not counted as full-time employees. But the net effect is you need more people to do the work. But that means you’re paying people less.
Flaming: And it also means that the taxpayers are paying for health insurance coverage through Medicaid. So close to half of these workers get their health care through publicly funded insurance.
Brancaccio: And you can look at it through the other porthole here, which is housing is not affordable, and it makes those wages look low.
Flaming: Yes, there are two sides of this coin. One is that housing is expensive in many California cities. And the other thing is that the route to being housed for most people is to have enough income to pay for rent. So if people have an adequate wage, then it does make them housed. That’s a double whammy, both expensive housing in cities like Los Angeles and also very low wages for these workers.
Brancaccio: So another strategy for being able to afford someplace to live, if you’re not making much, is to do multiple jobs. Is that a viable strategy for many fast-food workers?
Flaming: It would be if the scheduling were stable, but it’s unpredictable, on-demand scheduling. So to hang on to the job, workers need to be available for it. And they don’t know when they’ll be called in to work.
Brancaccio: Because yeah, you’re not quite sure when you’re going to work. I suppose gig work could enter into it, where you have a little bit more control of when you work the second job.
Flaming: It’s conceivable that if people had a good car, you know, they could do some Uber driving or some Lyft driving around their fast-food job. It’s not necessarily easy to afford an Uber car on the wages that fast-food workers are [receiving].
Brancaccio: Now when the report came out, there was pushback by the fast-food industry. A consortium of restaurants had, among other things, a full-page ad in The Los Angeles Times. They reject your statistics. They say they were manipulated, that your numbers aren’t reliable. What would be your response?
Flaming: I think that’s a wonderful debate to have with the fast-food industry. We use the best federal data from the Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, but what is true is that the fast-food employers have better data, they have the payroll data. So they didn’t put this data out and say, “You’re wrong, Economic Roundtable.” In fact, they didn’t put any facts out, but we would welcome seeing the payroll data from some of these employers.
Brancaccio: And that’s not all they said. That consortium of restaurants also suggested the real aim here is not about homelessness, but about, as they see it, uprooting the franchise model of local ownership that defines so much of the fast-food industry. Is that what you’re really up to here?
Flaming: No, I enjoy a hamburger or a wrap as much as the next person, and there’s no intent to kill jobs or put anybody out of business. The interest is to make it sustainable. It doesn’t work if we pick off one employer at a time, but if the entire industry has the playing field raised, then nobody’s put at a disadvantage. They all are playing under the same terms, and the terms are that your worker should be able to afford to pay rent.
Brancaccio: And tell me about some of the policies that would help align pay of fast-food workers with what is needed to just get by and actually have a roof over your head. That has something to do with minimum wage.
Flaming: It absolutely does have something to do with a minimum wage. So raising the wage floor for the entire industry is one piece of the answer. Standards about scheduling — both number of hours and predictability of scheduling — are another piece of it. And we don’t see a path toward achieving this without the public sector setting standards for the industry.
Brancaccio: Right. In other words, some kind of government mandate for this. I mean, is there legislation pending?
Flaming: There actually has been legislation approved. There was Assembly Bill 257 in California, which would have created this government oversight. But then the fast-food industry was able to get a referendum on next year’s ballot on the law. So it’s on hold right now.
Brancaccio: But Daniel, I totally didn’t ask the basic question. I mean, when you see levels of homelessness, you know, a lot of people work for fast food. But were you surprised at the extent of the problem your analysis uncovered?
Flaming: I was surprised and we held a briefing for fast-food workers in our building in Los Angeles, and they told their stories, and it really was heartbreaking, [stories] of parents with kids intermittently homeless. These are grown-ups doing the heavy lifting that we depend on. And they really have a pretty tough time of it. So yes, I found it upsetting both at an individual level and at an industry level.
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