Subsidizing Poverty in America

November 4, 2013

Tags: McDonalds, Minimum Wage, SNAP, Walmart
Posted in: #99Percent

Researching my upcoming book, Ghosts of Tom Joad: A Story of the #99Percent (April 2014), I learned these things:

Most Jobs are Minimum Wage Jobs

All those jobs being created we keep hearing about? All those people who say if you don’t like working for minimum wage, go get a better job?

The answer: In order, the jobs that account for the most workers in the U.S. right now are retail salespeople, cashiers and restaurant workers, and janitors. All of those pay minimum wage or nearly so.

Actually, all this talk about minimum wage is missing a big point: more Americans work for sub-minimum wage than for minimum wage. People who get tips only have to be paid $2.13 an hour. And that lousy $2.13 has not changed by law in twenty-two years due to lobbying by the restaurant business. And if a business “requires” its servers to “share” tips with the dishwashers, well, then they only need to pay the dishwashers two bucks thirteen instead of minimum wage. Owners are doing O.K., though, as you may have seen restaurant prices go up a bit in the last twenty-two years. A McDonald’s hamburger cost 15 cents twenty-two years ago.

Cheap Stuff is Expensive

Back to that Big Mac you’re enjoying. One reason that it is pretty cheap (and why Walmart is cheap, et al) is that those businesses get away with paying below a living wage because you, the taxpayer, subsidize the employees’ wages. The gap between what the majority of employed people earn through the minimum wage, and what they need to live a minimum life, is made up by federal and state benefits. Nearly three-quarters (73 percent) of enrollments in America’s major public benefits programs are from working families. They work in jobs that pay wages so low that their paychecks do not generate enough income to provide for life’s basic necessities.

The number of people using food stamps (now called SNAP, or Supplemental Nutrition Assistance Program) increased by 13 percent a year, every year, from 2008 to 2012.

The cost of public assistance to families of workers in the fast-food industry alone is nearly $7 billion per year. That money, which might rightly be paid by McDonald’s and Burger King and KFC, is instead paid by the taxpayers, money lenders to a government that is far more interested in subsidizing business than in caring for the nation as a whole.

McDonald’s workers alone account for $1.2 billion in federal assistance used per year, every year. Just for grins, know that McDonald’s CEO Donald Thompson last year took home $13.7 million in salary, $5.46 billion in personal profits and $5.5 billion in stock. Supersize that sir? No thanks, already there.

So Get a Job, Loser

The rejoinder at this point is that sad as it all is, low wages mean low prices for us all. Who wants to pay more at Walmart? I mean, we work for a living.

Leaving aside the obvious, that via taxes spent on feeding low wage workers we the taxpayers are already paying virtual higher prices, the argument is garbage. If McDonald’s doubled its employees’ salaries, a semi-livable wage of $14.50 an hour, a Big Mac would cost only 68 cents more. No, no, the low wages paid are not part of keeping prices low; they are the key to keeping profits high. Last year the top seven minimum wage employers collectively earned $7.44 billion in profits, paid $52.7 million to their highest-paid executives and distributed $7.7 billion in dividends and buybacks. You want fries with that?

Maybe the solution is for minimum wage workers to, well, work harder, you know, pull themselves up by their bootstraps. Problem is of course that most businesses prefer to keep their lowest paid workers below full-time to avoid the costs of paying benefits; an estimated 87 percent do not receive health care through their employer. But even full-time hours, if they exist, are not enough to compensate for low wages. The families of more than half of the fast-food workers employed forty or more hours per week still need to be enrolled in public assistance programs.

Hungry in America

Here now in America we are reaching for a zero-sum point where wealthy people have come to believe that to gain anything requires them to take it from someone else. WalMart and the fast food giants, already awash in billions in profits, still fight even tiny increases to the minimum wage, even when it hardly would matter.

We have people hungry in America. We have created a system where even working a full time job is not enough to take care of a family. We have created disposable workers, who matter to no one. Sad for sure, but think further, to what it all means to the future of our society. Without commitment and community, things won’t continue to work for long. In the history of the world, no one has ever washed a rented car.

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