When it comes to paying its floor workers, Wal-Mart is one stingy company. It is so stingy that that the government often is forced to subsidize its employee’s health and housing costs. Here is how one author summarizes a recent congressional report examining this issue:
“For a 200-employee Wal-Mart store, the government is spending $108,000 a year for children’s health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. The report estimates that a 200-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee. That translates into a total annual welfare bill of $2.5 billion for Wal-Mart’s 1.2 million US employees.”
These facts are often taken as a damning indictment of Wal-Mart’s labor practices, but are they? I will argue that they are not, and that, even if accurate, these facts give liberals no reason to dislike Wal-Mart. There may be other reasons to dislike Wal-Mart, but I don’t address them in this article.
To see why these facts are not damning, travel back with me to the mid-1990s when welfare reform was all the rage. Back then, an often noted problem with welfare was that it discouraged work. If a welfare recipient found work, their benefits would be cut by about 70 cents for every dollar they earned, so getting a minimum wage job didn’t “pay.” In response, many liberals argued that welfare benefits should not be cut if the recipient found work – or at least not cut as sharply. In short, many liberals found nothing wrong with the idea that the government should subsidize low-wage labor. Indeed, in 1993, Bill Clinton embraced this idea by expanding the Earned Income Tax Credit, which can raise the annual income of a low-wage worker with children by as much as 40 percent. Liberals favor this program, believing that the state should subsidize low-wage workers.
Return now to the statistics about how much the government spends on a typical Wal-Mart employee. All they show is that taxpayers are subsidizing Wal-Mart’s low-wage workers. But this is not something that liberals generally oppose.
Liberals think that the government has good reason to subsidize low-wage labor. They think that the government should pay the health-care costs of the poor, and other costs like housing and job training. So why vilify Wal-Mart on these grounds?
The answer must lie in the idea that the burden of providing health care should fall on employers and not on the government. But why should it? Notice that this is an especially odd argument for a liberal to make since liberals tend to think that the government has an obligation to provide universal health care. Perhaps the thought is that Wal-Mart in particular ought to increase its wages because its wages are low relative to other companies in the industry (say, Costco). But Wal-Mart’s low wages are reflected in its extremely low prices, which benefit the working poor. An increase in wages would lead to an increase in prices, which would hurt the millions of people who save a lot of money by shopping at Wal-Mart.
What really bothers people about Wal-Mart, I think, is not that the government subsidizes some of its workers, but that if Wal-Mart increased its prices ever so slightly (even five cents an item), the price increase would be virtually imperceptible to customers, but Wal-Mart could then afford to pay its employees decent wages. But even a small increase in its prices would make Wal-Mart susceptible to more ruthless competitors. After all, Wal-Mart operates in an extremely competitive market environment. It would be unfair to force Wal-Mart, and only Wal-Mart, to raise its prices. A fairer solution would be to force everyone to raise prices ever so slightly and use the proceeds to help make work pay. That, however, is a government subsidy. It is a tax. It is precisely what liberals have always defended. They have always supported government efforts to subsidize low-wage labor. A tax, say, on corporate profits to be used to help the working poor would be fair and honest. Why they want to single out Wal-Mart, however, is beyond me.