Low Minimum Wage Means Taxpayers Are Subsidizing Corporations

In the news this week is a story about an Ohio Wal-Mart that has set up bins in its employee-only section asking for food donations for needy fellow workers.

This story reminded me of a “New Rules” segment on Bill Maher’s show a few months ago when fast food workers were striking. Maher pointed out that a high number of minimum-wage workers have to use federal programs like food stamps and Medicaid to survive, and that this means the American taxpayer is subsidizing these large corporations. In other words, part of Wal-Mart and McDonald’s profit comes straight out of your tax payment.

Maher said,

If Colonel Sanders isn’t going to pay the lady behind the counter enough to live on, then Uncle Sam has to. And I for one am getting a little tired of helping highly profitable companies pay their workers.

A site called “Good Jobs First” has a report on use of Medicaid by employees of various corporations, divided by state. Wal-Mart stands out, frequently with the most employees on Medicaid in a particular state, followed by fast food companies and grocery stores. (Here’s another article with lots of links.)

CNN reported in June:

The cost of low wages at Wal-Mart are at the center of a new report released last week by the Democratic staff of the House Committee on Education and the Workforce.

The report details assistance that includes not only Medicaid and food stamps, but subsidized housing, reduced-price school breakfasts and lunches, subsidies for home heating, the earned income tax credit, and child care subsidies.

Factoring in what taxpayers contribute for public programs, the report estimated that one Wal-Mart supercenter employing 300 workers could cost taxpayers at least $904,000 annually.

That comes to $3000 a person per year. If each employee works 40 hours per week for 50 weeks, that’s 2000 hours (of course part of the problem is that Wal-Mart doesn’t allow employees to work full-time to evade federal regulations), means a pay increase of $1.50 an hour would cover this cost.

A DailyKos story from last year on this issue reported:

At over $446 billion per year, Wal-Mart is the third highest revenue-grossing corporation in the world. Wal-Mart earns over $15 billion per year in pure profit and pays its executives handsomely. In 2011, Wal-Mart CEO Mike Duke – already a millionaire a dozen times over – received an $18.1 million compensation package. The Walton family controlling over 48 percent of the corporation through stock ownership does even better. Together, members of the Walton family are worth in excess of $102 billion – which makes them one of the richest families in the world.

Our American system of capitalism is deeply flawed. Proponents of the “free market” claim that Wal-Mart is just paying its employees what the market demands. This is completely false; there is nothing “free” about this taxpayer-subsidized system of low-wage employment.

Can you feel the resentment rising? How long can the American people bear this injustice? Maybe as we learn that this is hurting all of us, we will stand up together and demand change.