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If The Welfare System Subsidises WalMart Then Should We Ban Welfare To Stop Subsidising WalMart?

This article is more than 10 years old.

There's a report out from a part of Congress that insists that the various welfare programs on offer in the country subsidise WalMart. Given that WalMart does indeed make very decent profits it would seem that the logical answer to this complaint is that we should stop having welfare programs so that we no longer subsidise WalMart's profits. That is, of course, an absurd conclusion: so there must be something wrong with the original contention for the logic there is entirely sound.

The report comes from the Democratic part of the House Committee on Education and the Workforce.

Prepared by the Democratic staff of the U.S. House

Committee on Education and the Workfororce

No, really, that's what it says on the cover. Clearly, WalMart's rapacious pursuit of profits has left Congress with insufficient funds for a spell checker*.

The heart of their argument is this:

While employers like

Wal-Mart seek to reap significant profits through the
depression of labor costs, the social costs of this low-wage
strategy are externalized. Low wages not only harm workers
and their families – they cost taxpayers.

When low wages leave Wal-Mart workers unable to afford
the necessities of life, taxpayers pick up the tab. Taxpayer-

funded public benefit programs make up the difference
between Wal-Mart’s low wages and the costs of subsistence.
This public subsidization of the low-wage model of
companies like Wal-Mart received significant attention in the
early 2000s. With wage stagnation, income inequality, and
federal budget deficits of increasing concern to public policy,
this issue is due for a re-examination.

Accurate and timely data on Wal-Mart’s wage and
employment practices is not always readily available.
However, occasional releases of demographic data from
public assistance programs can provide useful windows into
the scope of taxpayer subsidization of Wal-Mart. After
analyzing data released by Wisconsin’s Medicaid program,
the Democratic staff of the U.S. House Committee on
Education and the Workforce estimates that a single 300-
person Wal-Mart Supercenter store in Wisconsin likely costs
taxpayers at least $904,542 per year and could cost
taxpayers
up to
$1,744,590 per year – about $5,815 per
employee.

Let us, just for a moment, assume that this is true. That the existence of Section 8 vouchers, the EITC, Medicaid, subsidised school meals and the like (all of which the report mentions) means that WalMart's labour is subsidised. For WalMart can get away with paying such low wages only because the taxpayers chip in. The obvious response to such a situation is that we should stop paying such subsidies so that we stop subsidising WalMart's profits. And I really don't see anyone at all out there suggesting that we should do away with Section 8, the EITC or Medicaid.

The answer to this conundrum is of course that WalMart's profits are not being subsidised in this manner. It is the lifestyles of the employees which are being subsidised: and rightly so. And they should indeed be subsidised by taxpayer money as well.

It's a sad fact that some people simply don't have the skills to make a living in this society of ours. The truly incapable for example: and we do all think it right that we chip in a little bit of our own incomes, through the tax system, to aid in taking care of those who simply cannot take care of themselves.

It's also true that there are those whose working skills, quite probably through no fault of their own, enable them to earn a living which is lower than we feel our fellow citizens deserve. The logic of what to do about this is exactly the same as it is about those who truly cannot manage anything. It is us, as a society, that is determining that these incomes are "too low". We cannot therefore demand that someone else pick up the cost of raising those incomes to what we consider moral. We're the people doing the moral insisting so it must be us that puts our hands in our own pockets to raise those incomes to what we feel is moral. Thus, if we do indeed think that wages are too low somewhere, it really is us, through the tax system, that should be coughing up the cash to raise those wages. For the subsidy is not to the employer: it's to the living standards of those workers. We're demanding that our fellow citizens get more money: so it should darn well be us who are paying that more money. We don't get to feel righteous and just on other peoples' dimes, after all.

The rest of the report seems to rely upon an earlier report from Demos. One that I dealt with back here. No, I'm sorry my little chickadees, but raising retail wages really is not going to expand the economy.

*Two points about this gag. Firstly, every writer of anything makes typos and I'm no different. It's "there but for the grace of God go I" rather than schadenfreude here. The second is something called Muphry's Law (no, it is Muphry's, not Murphy's) which states that any piece correcting or laughing at a typo, spelling or grammatical mistake will contain at least one worse than the original being complained of.