Study says low wages cost US $153bn a year

The US government spends roughly $153bn a year to support the families of low-wage workers, according to a new study released days before thousands of workers are set to strike for higher wages in cities across the country.

Nearly three-quarters of all recipients of public assistance programmes - including Medicaid health insurance and food stamps - are members of families in which at least one member works, according to the study by the University of California-Berkeley's Center for Labor Research and Education.

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

More than half of all fast-food workers and nearly half of childcare and home care workers rely on public assistance, the study found. Many workers in those industries are set to strike in 200 cities on Wednesday in what organisers say will be the largest ever protests for higher wages and union rights, following rallies and walkouts throughout the country over the past two years.

Wednesday's strikes will come two weeks after McDonald's - which has become the main target of the national wage hike movement - announced that it would raise the wages of roughly 90,000 employees in the US. The average McDonald's employee will earn more than $10 an hour by the end of next year, compared to the national federal minimum wage of $7.25.

That decision seems to have backfired on the company, with critics charging that the increase is superficial because it only affects employees at 1,500 company-owned stores - and not those at roughly 12,500 franchisee-owned restaurants. Though McDonald's exercises control over many aspects of the business - from portion sizes to branding - the company has long argued that franchisees are responsible for setting wages.

The study adds fuel a national debate over income inequality that has become a major theme in the ramp up to the 2016 presidential election. In a video announcing her campaign's launch on Sunday, presumptive Democratic nominee Hillary Clinton said "the deck is still stacked in favour of those at the top", while her Republican rivals have also touched on the subject.

Robert Pollin, co-director of the University of Massachusetts-Amherst's Political Economy Research Institute, co-authored a paper in January that argued that companies could easily raise hourly wages to $15 and, with a period of adjustment, avoid any job or profit losses.

"[Businesses] are able to pay close to destitution wages and still attract workers because [employee] incomes are subsidised . . . by tens of billions of dollars" from taxpayers, he said.

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