Companies pay so badly, workers need taxpayer-funded aid

 

Bill Knight column for 12-17, 18 or 19, 2020

 When you drive by a local big-box retailer, “dollar store” or fast-food joint, there’s a chance you’ll be passing a place where you and other taxpayers are underwriting companies paying workers lousy wages.

That’s according to the nonpartisan Government Accounting Office’s recent reports criticizing Big Business and Big Government.

Many full-time workers at some of the country’s largest and most profitable corporations get wages so low that they qualify for the Supplemental Nutrition Assistance Program (SNAP, or “food stamps”) and Medicaid, according to the report, titled “Millions of Full-time Workers Rely on Federal Health Care and Food Assistance Programs.”

“At a time when huge corporations like Walmart and McDonald’s are making billions in profits and giving their CEOs tens of millions of dollars a year, they’re relying on corporate welfare from the federal government by paying their workers starvation wages,” U.S. Sen. Bernie Sanders (I-Vt.) , who asked for the independent government study. “That is morally obscene.”

The watchdog agency found that about 70% of the 21 million Americans receiving federal aid – separate from people who qualified for assistance because of the pandemic – work full-time. Nevertheless, employees cited in the report aren’t paid enough to lift them above poverty levels, so taxpayers essentially subsidize profitable businesses that force their workers to accept low wages.

Walmart recently reported net income of $5.14 billion for its most recent quarter, while McDonald’s reported net income of $1.76 billion for the same period.

“U.S. taxpayers should not be forced to subsidize some of the largest and most profitable corporations in America,” said Sanders. “It is time for the owners of Walmart, McDonald’s and other large corporations to get off of welfare and pay their workers a living wage.”

The GAO lists the top 15 employers whose workers are paid so badly they qualify for government services, in alphabetical order, as: Amazon, Burger King, CVS, Dollar General, Dollar Tree, Dunkin’ Donuts, FedEx, Home Depot, McDonald’s, Subway, Target, Taco Bell, Walgreens, Walmart and Wendy’s.

(Since the year covered, Amazon, Costco and Target all raised their workers’ minimum wage to $15/hour.)

Meanwhile, GAO in a routine review said that unemployment reports of newly laid-off workers issued weekly by the Labor Department are inaccurate.

That means that policymakers have difficulties understanding the real jobless situation.

The agency blamed flawed data-collection procedures.

Weekly jobless-benefit reports of initial claims – which have been running at 20 million-plus combined weekly for months – may be off; things could be worse than reported.

For example, Arizona for the week of June 27 reported 2.3 million new jobless-benefit claimants for all the programs, state and federal. But it didn’t even file a report covering the following week, which ended on Independence Day.

“Had Arizona submitted data, DOL likely would have reported a significant increase in claims from the prior week instead of a decrease” of 200,000 jobless claims nationwide, GAO said. “Arizona stopped reporting data that week due to suspected fraud in the Pandemic Unemployment Assistance program, according to DOL officials.”

There are differences between people filing for unemployment benefits in each state and those actually claiming their benefits. Problems occur because the Labor Department was using the number of people filing for claims in states as a substitute for the number of people receiving benefits nationwide. Inaccurate counts result due to large backlogs in processing historic levels of claims from coast to coast, delaying final statistics.

The GAO recommends that the reports add a clarification that the numbers are estimates and may be incomplete, and also that the Labor Department pursue other ways to collect up-to-date information.

Previously, economists and commentators have pointed out that the traditional jobless reports most often cited by administrations and news media omit thousands of unemployed Americans.

A more complete picture is the Bureau of Labor Statistics’ seasonally adjusted “U-6” report, which includes total unemployed citizens plus “all persons marginally attached to the labor force, plus total employed part-time for economic reasons, as a percent of the civilian labor force, plus all persons marginally attached to the labor force.”

Other “wild-card” factors influencing real joblessness are the number of people working part-time who’d prefer to work full-time, and “discouraged” workers (defined by the BLS as folks not looking for work because they think no jobs are available for them or there were none for which they would qualify).