Are We Subsidizing the Wal-Marts and McDonalds of America?

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I’m not a huge fan of Wal-Mart, although I can say I’ve strolled the aisles. For me it isn’t just their employment policies, their enormous size and leverage on domestic suppliers, or that they aimed to profit off the deaths of their employees. It’s my compassion for fair employment and the burden it places on the public.

Often, employees are paid a wage that even at full-time employment is below the poverty line. Because of this, companies such as Wal-Mart (and McDonalds, Burger King, Ross etc.) provide information on federal assistance programs to their employees. I’m glad they do, but the propensity of such employee need troubles me.

Wal-Mart employees alone, not including all the other retail chains that employ similar tactics, cost taxpayers around $2,100 per employee per year according to the Democratic Committee on Education and the Workforce (2004) as well as sworn testimony. Using todays employment numbers, if the figure remains true that means we spend well over $2 billion dollars a year (some estimates suggest $2.66 billion). This cost is represented in hundreds of millions of dollars in food stamps, free/reduced school lunches, subsidized housing, and healthcare costs (the list continues). I don’t stand by the committee’s numbers, but recognize the total amount is significant.

This isn’t just Wal-Mart, it is McDonalds and Burger King, RadioShack, Dollar General, Ross etc. If you were to add up the costs for providing workers (not “moochers”) government assistance we would be talking in the tens or hundreds of billions dollars. Why? Because employers can’t pay a living wage, it isn’t as profitable. (Fun fact: If you add up the wealth of the Walton Heirs of Wal-Mart, 6 people, you’d have the entire wealth of the bottom 41.5% of American households combined, about 48.8 million households and 150 million people.)

I don’t have a problem with companies squeezing aspects of their business to save the consumer money. As a whole, the society is likely better that way – we get things cheaper and have more money to buy other stuff. That being said… When society has to subsidize the cost cutting of a business, so that every taxpayer pays for the benefit of the minority I have a problem.

People know that I support the “safety-net,” but we should close the “loophole” on businesses who help offset their low wages with government pay. The result is a market distortion that allows businesses to pay lower than market level wages, because the remaining wages will be paid by the government. That is not right, that is not moral, that is not American.

One step to reduce our budget deficit, as well as those who are on government assistance, is to force companies to adopt living wage standards. We can then use that additional money for tax-cuts or whatever else you prefer to offset any loss in employment. (Yes, standard theory is that when you raise the “minimum wage” you reduce employment). But think of the jobs we are talking about, will Best Buy really fire another computer associate because they are forced to pay him/her another dollar an hour? Well, they still need a body there to sell computers- so I doubt it. And Burger’s aren’t going to build themselves – at least not yet.

One comment on “Are We Subsidizing the Wal-Marts and McDonalds of America?

  1. Reply Robin Feb 6, 2013 8:02 pm

    This has been my biggest issue with Walmart, and thanks to this blog I am aware there are other big chains who do the same. While at the same time helping people complete new hire documentation they simultaneously show them how to sign-up for welfare. This purportedly has been done at Walmart and perhaps others by the wealthiest few whom it seems reasonable to believe they can easily afford to pay an extra buck or more an hour to their employees in order to prevent their wages being subsidized by Mr. and Mrs. Taxpayer. It isn’t right, and until Walmart, or others who employ similar practices own up to their moral obligation to pay living wages, I refuse to frequent their business. I would rather pay 30 cents more a gallon of milk on principal of doing the right thing. It’s how I choose to vote my conscience, and I wish others would follow suit until big box chains such as Walmart stand up and take notice, and change their employment practices for the better.

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