Walmart and McDonalds have most workers on food stamps and Medicaid, study shows
washingtonpost.com
washingtonpost.com
> Sanders accused companies such as Walmart and McDonald’s of relying on “corporate welfare from the federal government by paying their workers starvation wages.”
This relies on a mistaken theory on how wages get set. No one gets paid based on what they need. If that were true, lottery winners would continue to work for free. If federal benefits to their employees were cut, the employees wouldn't have any more bargaining power to demand higher wages. On the contrary, they'd probably be inclined to work longer or take on additional work to make up for the loss in benefits, pushing wages further on. You saw exactly that relationship when unemployment benefits were extended during the pandemic and many people chose not to work because it would cut off their benefits or they had enough in benefits to not work for the time being.
[0] https://www.cnbc.com/2021/08/04/early-end-to-federal-unemplo...
> The enhanced payments create a tricky situation for restaurant owners, especially in states such as Georgia and Alaska that are looking to restart businesses in the coming weeks. Nationally, median hourly pay in food-service occupations was $11.65 in 2019, or $466 for a 40-hour week. In some states, restaurant workers could be receiving double their usual pay on unemployment benefits.
Natural experiments and studies are very difficult and easy to manipulate. So I think we can use first principles to tell us that if you pay people not to work, they will be more inclined to not work. I think you would need to definitively prove this not to be the case
https://www.wsj.com/articles/coronavirus-relief-often-pays-w...
BUT, your statement that increased benefits give leverage to workers to demand more pay also rings true. If the worker can simply quit, and go looking for a new job, without becoming homeless, then that’s leverage. So that would increase wages.
I think maybe both are true but in different situations: if you start at zero benefits, and start adding benefits, at first wages will decrease in equal measure. But then once the benefits become great enough that the worker can live on them alone for some period of time, it starts to push wages back up again.
That would be my guess as to what’s going on.
I'd rather pay people to not work, personally.
How is that the same as eating and breathing?
What percentage of the population do you think can do that?
This thread is about WalMart and McDonalds employees. The vast majority of them can't go a month without an income source (a paycheck). Zero percent of them can live off 4% of their net worth per year
- https://www.lesswrong.com/tag/typical-mind-fallacy
- https://en.wikipedia.org/wiki/Fundamental_attribution_error
When we allow the minimum wage to stagnate, we indeed make a national decision to absorb the impact with federal programs.
>This relies on a mistaken theory on how wages get set. No one gets paid based on what they need.
Is that what Sanders' statement implies - that wages are set based on worker needs? I don't think he needs to be interpreted that way.
Indeed. This article says nothing about the total number of employees McD's and Walmart have. It's committing the same error as heat maps that aren't adjusted for population (See https://xkcd.com/1138/)
> This relies on a mistaken theory on how wages get set. No one gets paid based on what they need. If that were true, lottery winners would continue to work for free.
IMO, every for-profit corporation bases pay on one thing: How easy you are to replace.
Unless you work a job that pays commission, you are not paid based on the value and profit generated by your work. Software engineers don't have high salaries because their work is profitable, they have high salaries because finding good SEs is difficult.
> If federal benefits to their employees were cut, the employees wouldn't have any more bargaining power to demand higher wages.
Workers that are easily replaced will always have zero bargaining power. Unionizing may help, but they still won't have much.
> On the contrary, they'd probably be inclined to work longer or take on additional work to make up for the loss in benefits, pushing wages further on.
More likely, they'd be looking for a second job. But that's hard, since a lot of retail and fast food jobs try to keep people under 30 hours/week so they don't have to pay benefits, while also expecting full-time availability, with a schedule that changes every week.
> You saw exactly that relationship when unemployment benefits were extended during the pandemic and many people chose not to work because it would cut off their benefits or they had enough in benefits to not work for the time being.
And some are quitting because they're tired of being treated like garbage.
https://pdx.eater.com/2021/9/1/22652642/portland-restaurant-...
> This article says nothing about the total number of employees McD's and Walmart have. It's committing the same error as heat maps that aren't adjusted for population
If you have evidence that the percentage of employees on government assistance in WM and McDs is lower than that for other large employers (or even the same), I'd very much like to see it.
I strongly suspect that the evidence will show the opposite - that it will confirm the rankings
That's what you get for demolishing every ounce of bargaining power of the unions. Corporate overlordship where workers are exploited like it 1870. (Slight hyperbole, of course.)
Walmart is a top 4 employer in every state. That stat is meaningless.
"Walmart was found to have employed about 14,500 workers receiving the benefit, followed by McDonald’s with 8,780"
This is a ridiculously small number of people relative to the total headcounts. The reason is because if you work a reasonable number of hours at Walmart or McDonalds, the only way you qualify for government aid is if you are disabled or a single parent.
If we were to tax Walmart and McDonalds an extra levy for each employee that receives benefits (as the article says Bernie Sanders wants), it would simply be giving these employers a financial incentive to stop hiring disabled people and single moms.
I don't see that as a good thing. I look at it from the opposite point of view. It's a good thing these employees are getting government aid. It's clearly helping them get employment and be productive members of society. If anything, I think the benefits should be expanded and we should subsidize more low skill individuals. The Negative Income Tax is a commonly cited method of faciliting this.
The companies need to be taxed for every single employee that is on benefits. If the tax is high enough they will either increase how much they pay or fire the struggling employees, I doubt future employees will be in a different set of circumstances. Companies are incentivized by profit. If there is a behavior that you don't want to happen tax or fine it. If the behavior remains, increase the tax/fine. Instead these companies get slaps on the wrist or even rewarded.
That's...stupid. Taxing employment just encourages more capital intensive, less labor intensive business models, further straining public support systems. Specifically targeting employment at the low end is even worse than general employment taxes.
Instead, payroll taxes should be eliminated with the revenue replaced by raising progressive income taxes and/or equalizing capital income taxes with general income taxes, so that labor isn't a specially tax-disfavored income source. This will make it cheaper to employ workers at any after-tax income level, and also make labor-intensive business models less tax-disfavored compared to capital-intensive models, redistributing gains of economic activity to labor.
It's true that technological progress will makes that naturally more sensible over time without using tax policy to make labor artificially more expensive through extra taxes.
> Companies that already embrace automation are getting rid of the workers
That's...tautologically true, yes.
> We as a society should get ahead of this and ensure that the people who need help are able to get it.
Shifting the tax burden from labor by not taxing labor income more than regular income (via payroll taxes) which in turn is taxed more than capital income (which, as well as not paying additional psytoll taxes, has a special, lower rate) of a fairly simple way to do that, or to reduce the number of people that need help, depending on how you look at it. Punitive taxes on labor income and employment make the problems worse. Additional punitive taxes on employment aren't a solution.
> I'm also curious why we need to make it cheaper to employ workers?
The reason we need to make it cheaper to employ workers at any given level of take-home pay is that it directly increases effective wages and reduces poverty.
> What does society gain from having people work for 40 hours a week but still live in poverty?
It... doesn't. That's why need to have the government stop taking a bigger chunk out of pay to workers than any other income-generating transaction.
Who is that helping?
It's self-evident that someone working full time should earn enough to support themselves and their family.
> We should want to see more employers raise the fraction of their workers on welfare benefits
Why would you want that? That just means subsidizing worker salaries for these companies.
Win-Win!
The question is, how are we going to get the corporations to pair a honest salary? Because I don't think they are going to do so by themselves. Just think of how much they are willing to spend on lobbying against a minimum wage of $15/h.
The US has fairly low regulations with regards to employment of workers and also quite low taxes, but struggles with honest worker wages.
Germany on the other hand has high worker regulations and not particularly low taxes. Worker payment there is quite honest.
Food stamps is awful though.. But I thought that McDonalds employees can take unsold food home? I know they can here, one of my friends worked there when he was young and he'd often bring home a big bag of burgers ;)
That's why you have vast expenditures in the management that go largely unquestioned while there's a constant pressure to pay workers as little as possible.
That's why it is beneficial for McDonald's to spend millions on lobbying instead of raising the pay for their workers by once cent.
McDonalds made $1.76 in the third quarter of 2020 billion over the same period. That's 9000 USD per worker. I'm pretty sure that there are a lot of families that could make good use of that money.
Giving McDonald’s corporate raises of $9k/quarter would mostly just move middle class and upper middle class further up, excepting a few corporate stores.
Seriously. All that money these companies are making; it is exploitative profit. Even if distributing it among workers "only" rises the middle class a bit higher, at least that money goes into hands that have an immediate need for it. It not going to corporate buy-backs would be a win in itself.