the audit

Audit Notes: Fast Food welfare, finance in the doctor’s office, sharing economy

Taxpayers subsidize McDonald's & Co. with $7 billion a year
October 18, 2013

Researchers from Berkeley and the University of Illinois have found that most fast-food industry workers are paid so poorly that they receive public assistance, something that costs the federal government $7 billion a year.

Contrary to industry propaganda, your typical fast-food worker isn’t some teenager needing gas money: The median age is 28. Reuters:

Data from the U.S. Census Bureau and public benefit programs show 52 percent of fast-food cooks, cashiers and other “front-line” staff had relied on at least one form of public assistance, such as Medicaid, food stamps and the Earned Income Tax Credit program, between 2007 and 2011, researchers at the University of California-Berkeley and the University of Illinois said…

Twice as many fast-food workers enroll in public aid programs than the overall workforce because of the low wages, limited work hours, and skimpy benefits their jobs afford them, according to the Berkeley study.

But even those who work full-time are struggling. More than half of these families are enrolled in public assistance programs, the researchers said. This costs taxpayers nearly $7 billion per year, more than half of which is in health insurance costs.

— Jessica Silver-Greenberg has a good watchdog report in the Times on how dentists and doctors are teaming up with the finance industry to offer credit to patients in their offices.

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In dentists’ and doctors’ offices, hearing aid centers and pain clinics, American health care is forging a lucrative alliance with American finance. A growing number of health care professionals are urging patients to pay for treatment not covered by their insurance plans with credit cards and lines of credit that can be arranged quickly in the provider’s office…

The American Medical Association and the American Dental Association have no formal policy on the cards, but some practitioners refuse to use them, saying they threaten to exploit the traditional relationship between provider and patient. Doctors, dentists and others have a financial incentive to recommend the financing because it encourages patients to opt for procedures and products that they might otherwise forgo because they are not covered by insurance. It also ensures that providers are paid upfront — a fact that financial services companies promote in marketing material to providers…

While medical credit cards resemble other credit cards, there is a critical difference: they are usually marketed by caregivers to patients, often at vulnerable times, such as when those patients are in pain or when their providers have recommended care they cannot readily afford. In addition to G.E., large banks like Wells Fargo and Citibank, as well as several specialized financial services companies, offer credit through practitioners’ offices.

— Tom Slee shreds Peers, a new astroturf group for the “sharing economy,” which is appropriating the language of progressive politics to con people into protecting its corporate interests: fighting regulations that they don’t like.

Andrew Leonard from Salon has been fol­low­ing the story, and tells us that fund­ing comes from “mission-aligned inde­pen­dent donors”. So that’s wealthy back­ers with a finan­cial inter­est in the shar­ing econ­omy. This is not grass­roots, it’s astroturf…

The shar­ing econ­omy is not an alter­na­tive to cap­i­tal­ism, it’s the ulti­mate end point of cap­i­tal­ism in which we are all reduced to tem­po­rary labour­ers and expected to smile about it because we are inter­ested in the expe­ri­ence not the money. Jobs become “extra money” just like women’s jobs used to be “extra money”, and like those jobs they don’t come with things like insur­ance pro­tec­tion, job secu­rity, ben­e­fits – none of that old econ­omy stuff. But hey, you’re not an employee, you’re a micro-entrepreneur. And you’re not doing it for the money, you’re doing it for the expe­ri­ence. We just assume you’re mak­ing a liv­ing some other way…

The shar­ing econ­omy is the cen­tral­iza­tion of global casual labour. Investors invest because indi­vid­ual shar­ing econ­omy com­pa­nies have the poten­tial for global reach, col­lect­ing a lit­tle from each of mil­lions of trans­ac­tions around the world, and fun­nelling it to California.

As Slee says, “If there is one thing that makes me angry, it is peo­ple appro­pri­at­ing the lan­guage of col­lec­tive and pro­gres­sive pol­i­tics for finan­cial gain.”

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.