This is a completely ridiculous assertion because if Walmart didn't employ these people, then taxpayers then they would be required to be subsidized by the taxpayer even more. Focusing on wages is missing the point. The problem isn't that people aren't being paid enough because America has the richest residents in the world, excluding tax-haven countries. The problem that housing and healthcare costs are too high, both of which are controlled by a policymakers that refuse to understand how incentives work. Even if you could magically squeeze higher wages from Walmart profits without destroying the economy, most of these wages would go towards these government-protected rent seekers. See housing in the Bay Area as the most obvious example of this.
Walmart earns $13k of profit across each of their 2m employees. One could make the argument that if Walmart had to pay each employee an extra (say) $3k annually [1], management would instead choose to shut the whole thing down and return capital to the shareholders, which would be a choice available to them. But I don't find that argument compelling in the slightest, and Walmart does not have any compelling IP that would preclude letting management shut it down and have the likes of Target/Kroger fill the gap in the market.
1 - an additional $3k annually would be transformative to the life of the average Walmart employee.
Your numbers are off. Walmart's pretax income was ~$19B, so that's ~$8k profit per employee.
>One could make the argument that if Walmart had to pay each employee an extra (say) $3k annually
If they were pressured to increase wages, they would adjust their business model to employ fewer, "more productive" employees (e.g. invest more in automation). The government would still have to subsidize the cost of living of those who would have otherwise been unemployed.
3,000 / 1,936 = $1.55 more pay per hour. Nothing to sneeze at when you make minimum wage (which they don’t all make), but hardly “transformative” imo.
Honest question: why not make it $5k or $10k?
Is there something magic about $3k that leaves Walmart employees unaffected, and — if so — why will $5k not achieve this?
> The problem that housing and healthcare costs are too high
Why can't these both be problems? Low skill labor could be exploited to pad corporate bottom lines and housing and healthcare costs could be unreasonably high due to governmental policy. These two things can both be true.
This is a pretty extreme claim to make without evidence.
Or Walmart could pay them a living wage directly, and just lower it's profits a little. That's how it works in every other developed country on the planet. Even Australia with it's $21.38 minimum wage and healthcare for all has only 3.5% unemployment [1]
[1] https://tradingeconomics.com/australia/unemployment-rate
I agree that the US can increase its minimum wage without significantly increasing unemployment, but it can't do so nearly as much as Australia. For one, Australia has a lower minimum wage for youth. More importantly, Australia has vast mineral resources that are in high demand, so that creates a higher demand for lower-income labor.
How do you think they amassed that fortune?
(Hint - they did it by paying their employees an extremely low wage.)
Walmart gross profit for the twelve months ending October 31, 2022 was $146.292B, a 2.14% increase year-over-year.
Walmart annual gross profit for 2022 was $143.754B, a 3.54% increase from 2021.
Walmart annual gross profit for 2021 was $138.836B, a 7.33% increase from 2020.
Walmart annual gross profit for 2020 was $129.359B, a 0.2% increase from 2019.
Net income is about 9 Billion [2]. If the company were nationalized and turned into a worker cooperative, it could increase the pay for each of 2.3 million workers about 3.9k/year before it starts going out of business.
https://www.investopedia.com/ask/answers/101314/what-are-dif...
https://www.macrotrends.net/stocks/charts/WMT/walmart/net-in...
Ah, no, because Net Income is showing how much money is left after the Walton's pay themselves billions of dollars.
The company is making more than $100 billion in profit every year, and increasing every year.
That's a massive false dichotomy. There are options are vastly more options beyond "Walmart employs these people" and "Walmart doesn't employe these people". For example, Walmart could just... pay them more.
> Even if you could magically squeeze higher wages from Walmart profits without destroying the economy, most of these wages would go towards these government-protected rent seekers.
Walmart pays out billions in dividends every year and makes billions in profit. Asking that their business actually be sustainable and not rely on employee exploitation shouldn't be some bold proposal and if Walmart is incapable of existing without relying on its employees being on government assistance, then maybe Walmart shouldn't exist at all.
Essentially it's that if Walmart didn't employ they poor, they'd become a burden on the state. Which is the same argument used to defend the exploitation of workers in banana republics.
They go on to say that the government is the cause of high rents, by pointing to San Francisco which has the highest rent in the nation. An argument which is trivially dismantled when we look at rural areas like the ones in my state where housing costs are increasing so quickly that people are having to move away. Which is due to real estate speculation:
https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
When we fit a curve to the data, we see that we're in the middle of a class war between the owner class and the worker class. Owners want to own even more so that they can quit working and have workers support them. Workers are so beat down and disenfranchised by 40 years of trickle-down economics that they're too divided to organize or even vote for candidates that would actually fix the problem. So they vote in fear to keep things the way they are. It's so tragic to think about that most people don't.
Until we examine these root fallacies from first principles, we're stuck. Just how the owner class likes it.
This is a completely bad-faith interpretation of my comment. The OP and I were both talking about the cost of government services. If you want to frame that as a burden, that's on you. Banana republics didn't provide their citizens with trillions of dollars of government services.
> An argument which is trivially dismantled when we look at rural areas like the ones in my state where housing costs are increasing so quickly that people are having to move away
I guessed what state you lived in before I looked at your profile. Check where all the recent immigrants are coming from. NIMBYism in California is so bad that its effects spilled over to the entire west coast.
I'm concerned though that so often the government is blamed for problems started by the private sector. I might go so far to say that regulatory capture is the issue. Maybe unintended consequences are at play.
But in my state, a certain potato and beef producing corporation irreparably damaged the high desert through unregulated grazing. Old growth forests were clearcut a century ago. Rivers and lakes are polluted with chemicals and heavy metals from mine tailings. We needed regulation constantly, but never got it until it was too late.
So what feels counterculture in California, stuff like conservatism and the demand for smaller government, has had devastating consequences for red states like mine. I'm the minority here. I've been disenfranchised my entire life. We rely on you all to vote for the environmental protections that we have been gerrymandered out of voting for ourselves due to decades of entrenched one-party control.
Also after sleeping on it, I realized that my "root fallacies" comment was a bit heavy-handed. I have my own blind spots from being radicalized by the constant division sewn by amoral politicians who got their playbook from guys like Newt Gingrich. But I've known that provincial glorification of half-truths wielded for political gain my entire life. What I was trying to say there is that we need a common context based in truth or we'll never be able to communicate civilly and settle our disputes. Which I believe is what you were getting at with your comment here.
https://en.wikipedia.org/wiki/Earned_income_tax_credit
there are going to be headlines like "Walmart is subsidized". The EITC is one reason why the minimum wage wasn't raised for so long in the US.
The idea is that there are some workers (say teenagers working at the supermarket) who don't have to earn a "living wage" to support a family (if they did get a living wage then prices would go up and the living wage would be more and the cycle would repeat...) so rather than setting wages for them to be high enough to support a family we don't have, the government subsidizes people who are raising families on low incomes directly.
> say teenagers working at the supermarket
This flawed assumption is where the theory went wrong, IMHO. The EITC is designed around (say) 5 years of a young worker's life, but our labor market requires people in those roles through 5 decades of their lives. Low-wage employers have grown dependent on people of all ages to work for "teenager" wages through to retirement.
> The EITC
It's not just the EITC. Full-time low-wage employees don't really have any money, so they are subsidized by an array of federal and state programs. EBT/food stamps, Section 8/rental assistance, etc. Low-wage employees receive a lot of direct payments from taxpayers. (This is good!)
In any case, it's worth discussing whether it is appropriate for companies like Walmart (profit per employee: $13k) to be allowed to pay their staff at such a rate that the taxpayer then has to pick up the tab for their employee's food stamps.
Either case -- yes, it is totally accurate to say that employers are being subsidized by
I'd be open to a UBI-type subsidy that is NOT means tested (everyone get it) to replace all the programs you've mentioned above, which are means tested.
This is an important argument! The counterargument is that we Americans tried it that way, and to summarize: it did not work out very well. By which I mean the outcome was broadly considered, across decades, not congruent with American values and preferences, which tilted toward electing representation to correct the situation. Which is not to say this wouldn't work elsewhere, just that America is not "elsewhere."
> I'd be open to a UBI-type subsidy that is NOT means tested (everyone get it) to replace all the programs you've mentioned above, which are means tested.
This would be an interesting experiment and IMHO is more intriguing that rehashing experiences that have already been repeatedly rebuffed by Americans.
Actually no, it did work really well. The first century in the US saw leaps and bounds of economic growth, and for the common person most of all.
Of course, generally things are better off today, after having benefited from all that early growth. Still, the pace of advancement has slowed, and most of that slowdown has come from people thinking they can redesign society.
Well that's what I think. Do you have any proof backing up your statement that I'm wrong and "the cycle would repeat" or are you just repeating talking points from someone else?
What I'll say though is that there is a real lack of thinking about "second order effects" of policy from people that are quick to subsidize things.
It is interesting right now to see Britain stuck in a place where it seems to have gotten stuck several times since 1900 in which (1) the economy is screwed up, (2) prices are rising, (3) workers in critical industries are on strike, (4) the effects approximate a general strike, (5) strikes screw up the economy more... And politicians are screaming "can't you just take one for the society as a whole" and "if we give you a raise this year prices will go up and you'll ask for a raise next year..."
In Britain it is worse than the US because they are so dependent on trade and have a non-dominant currency. It is not unusual at all for them to have violent swings in prices of fuel, food, and other imports, and when you consider the "wage-price" spiral inside the country you also have to consider the effect of Britons having more nominal money in their pocket to spend on imports, how that effects exchange rates, etc.
No, it's a misunderstanding of supply and demand. When you raise the price of something, doesn't matter if it's labor or oranges, demand goes down. "Minimum" wage laws result in unemployment for lower-skilled workers, preventing them from getting valuable experience. Everyone who works decides what their minimum is; but somehow "minimum" wage proponents don't trust low-wage earner to decide for themselves so they prefer them to be unemployed instead because they don't understand that this is the result of those policies.
Low wage jobs with no career prospects are just preying on people for whom the alternative is homelessness.
people have the option of taking those jobs or not so I'm not sure how this is "preying"
1. Get lucky enough to land a good low paying job where advancement is likely 2. Take the shit job while you hope to find #1 (assuming you have the time and energy to keep job hunting while dealing with life/taking care of a kid/going to school part time/etc) 3. Get evicted for not paying rent and become homeless. You aren't even allowed the option of homesteading/living off the land, because it's all private property and some rich jerk who never uses it will eventually end up calling the sheriff on you. 4. Say fuck the system and become a criminal.
People are tired of spending their entire life on option #2, burning half their monthly paycheck on substandard, overcrowded living accommodations. These jobs are a trap, and companies that have roles of this sort should be forced to either build progression into them, or compensate workers better. If a business can't turn a profit without exploiting its workers it shouldn't be a business.
You always have the option of not taking the job and look for a higher-paying one.
If those 1.7m employees were all on $10 an hour for 2000 hours a year, that's 34b.
If you doubled that wage to $20 an hour that would result in an extra $34b in costs at most. Revenue would have to go from $437b to $471b, a 7.8% increase.
that's not how the world works
if they were paying them a "living wage" then they wouldn't hire low-skilled teenagers at all; if you raise the price of salmon roe to the same by weight as caviar, few people will buy salmon roe instead of caviar
and this is exactly what happens irl: "minimum" wage laws increase teenage unemployment, preventing them from getting experience, which no one (other than economists) factors into "wages"
"minimum" wage laws drive salaries down from low to zero (i.e. unemployment) for low-skilled workers, preventing them from getting more skilled
You hear this a lot, but I haven't seen any data that support it. According to census data, among "householders" (presumable the head of a given household) in the bottom quintile, 68% do not work, 13% work part time, and only 18% work full time. 62% of households in the bottom quintile have zero workers in the home.[0] In both the bottom and second-lowest quintile, the mean number of earners per household is less than 1!
[0] https://www.aei.org/carpe-diem/explaining-income-inequality-...
The argument against living wage isn't bootstrapping a strategic industry or national defense, it's so that e.g. Walmart can earn $13k in profit per employee instead of (say) $10k profit per employee. It's definitely a legitimate public policy discussion as to whether subsidizing businesses like these is an appropriate use of taxpayer funds.
Walmart--like every other employer--pays the minimum required to attract workers. The welfare state exists, so of course Walmart and workers take this into account when determining an agreeable wage--why wouldn't they? This isn't nefarious behavior on Walmart's part--it's an unintended (if unsurprising) consequence of the welfare state.
Blaming the market for responding to state intervention seems silly.
I think we're on the same page for the most part. My hesitation stems from this common framing of the problem as one that--at least rhetorically--originates with Walmart. To me, this framing seems to have less to do with the actual problem, its cause and potential solutions, than with political convenience. That wouldn't be a concern if the folks writing the bills drew a line between rhetoric and policy, but I'm not sure that's a reasonable expectation these days.
It seems to me that the origin of the problem is with the nature of the welfare state, and that solving the problem at its root will require changes to the welfare state and the incentives that it creates. I'm not saying we should blow it up the welfare state, but if we can't even admit that our problems are of our own making, we've got zero chance of solving them.
I really, really, really hate this framing. The whole point of these programs was to help people regardless of their employment status. The alternative is saying that only people without jobs should ever use a social service.
No one in their right mind would say that a single-payer health plan would "subsidize corporations" by making employees cheaper. So it seems wrong to accuse SNAP or Title IX of doing the same.
I think the only caveat is there is much debate about where to set the minimum wage, and it's not crystal clear what is the appropriate number. So for that debate I do think it is reasonable to use as a proxy "is the employee paid enough to not qualify for means-tested social assistance programs," because there is obviously a relationship in practice between the minimum wage and the amount ultimately spent on social assistance. This is only really true because the means-tested programs phase out as income increases, which would not be true of single-payer healthcare (so the argument doesn't make sense in that case).
So to provide an analysis that is mathematically only going to favor one approach seems a bit jaded to me.
Defer payments/maintenance to other areas of life. If they own a home maybe they decide to defer maintenance. If they can save a few bucks, maybe they avoid the Dr even though they're sick. They drive a less reliable car. Their food is lowest tier. Clothes are from thrift. Repairs are DIY, or help from a friend/family member.
> If they own a home
What home? We're talking about a cohort of people who work full-time jobs and still qualify for food stamps. Unless they inherited, they do not as a rule own homes.
> They drive a less reliable car.
Or cars.
But yes, they skimp on everything, and then the taxpayer kicks in for their food, (frequently) shelter, healthcare, etc.
I highly recommend Hand to Mouth by Linda Tirado for a first-hand look into being working poor in America.
From the Article living wage in Onondaga County is $70,200. The Fed has MHI in that county at $65,000, which I know is enough to afford a home in Onondaga County. As a rule, the median owns a home.
> But yes, they skimp on everything, and then the taxpayer kicks in for their food, (frequently) shelter, healthcare, etc.
Social spending isn't going to the median family.
> I highly recommend Hand to Mouth by Linda Tirado for a first-hand look into being working poor in America.
I don't need to read a book about it. I lived it. My friends and family still live it. Your comment is very condescending, typical of the coastal liberal.
The median isn't the working poor. We're talking about two different groups of people.
> Your comment is very condescending, typical of the coastal liberal.
I offered a book I found informative to a stranger as something positive. I'm not a coastal liberal, but I do find your response unwarranted. I do genuinely hope the rest of your day goes better.
Most poor people are children under 18. I guess technically, you can work at 16, so some of them probably dropped out and work full-time, but it's definitely not the norm.
Most poor "adults" - are people >65 who aren't working full-time either.
Sure, most poor "18-65" year olds in the US work - but a large amount of these people that are "poor" are poor simply because they have kids (i.e. you're poor with the same wage if you have 2 kids but not if you have 0 kids) or because they work part-time... because they have kids.
This is an opportunity for you to learn more about yourself and grow! For some reason it helps your ego/reinforces your worldview to believe (and repeat!) that "most poor people are children under 18 or seniors" which is easily disprovable. So you should think about why you want to believe that, and what about your worldview would need to change if you accepted that that's not true (because it absolutely isn't!).
[2] https://econofact.org/employment-and-poverty
I should've added that college students make up a large chunk of poverty as well, and the disabled (non-working)...
Using conservative rates for child poverty, you get:
* ~32% of the entire poverty population is children <18
* ~18% are disabled and don't work
* ~16% is seniors
* ~10% is college students
* ~6.5% is single mothers
* ~6% don't work (either looking for work or not)
* ~10% is everyone else - including dual-parent HH, single father HH, disabled people that do work, etc...
The idea that most poor people (as defined by the definition of poverty in the US) are single people working full time jobs is not possible. The poverty line is BELOW a full-time minimum wage job, and it includes money received from government transfers like SNAP, etc...
Only ~29% of the poor work full-time jobs - because by definition it's quite difficult to work full-time and be "in poverty".
If your definition of poverty is something else - then sure - maybe most people in that "poverty" are full-time workers.
> Most poor people are children under 18. I guess technically, you can work at 16, so some of them probably dropped out and work full-time, but it's definitely not the norm.
> Most poor "adults" - are people >65 who aren't working full-time either.
The first bullet point in your quoted source:
> Of the 40.6 million Americans living in poverty in 2016, 56.1 percent were working-age adults, 18 to 64. Important shares of those living in poverty are children and adults aged 65 and older (32.6 percent and 11.2 percent respectively, in 2016).
I don't know why you included all these other bullets in your response. Are you just hoping that by adding extraneous information, that it would make it seem like your original statement was correct? Or that you were saying something different from what you actually said?
Not alone. My experience is that most of “those people” live with spouses, families, and roommates.
This isn’t necessarily preferable, but this is how most people survive. When I lived in Manhattan, it was super common for a married couple to split a studio. And most people I knew in their 20s would have 4-5 people splitting rent.
And everyone chose this. Some left the city (like me) and some grew their careers and eventually bought or rented their own space.
The good news is that people were mobile so no one was forced to live there.
How do those people live, then? Subsidies from elsewhere. As noted elsewhere, this can be in the form of living with family, cash payments from family, transfer payments from government, illegal side hustles, etc.
A concrete example: when people say that Walmart is subsidized by taxpayers, what they mean is that Walmart can employ hundreds of thousands at below-subsistence wages only because the taxpayers will provide for their employees so that they can afford basic necessities. In the parlance, they do not provide a living wage, but their employees are still able to live due to government largesse. (I'm picking on Walmart because they are typically the employer of the largest cohort of government transfer payments in a state.)