I’ve been saying for a long time that we don’t really need to change the minimum wage. No, that does NOT mean I believe that businesses have been paying their employees appropriately.
We have way too many folks who lack the ability to end the week with money in their pocket. And, that’s not because they are spending money frivolously. No, they are simply not being paid an adequate wage.
So, why don’t I want the minimum wage raised? Because startups need a way to grow their business. And, most startups (not franchises) end up paying their staff more money as they grow, when they have it.
But, it’s the larger firms- the McDonald’s (where the franchise typically has three or more units and gross revenue over $ 2.5 million), the Hobby Lobby, WalMart, among many, many others- that are clearly profiting at the expense of every American citizen.
As I’ve stated over several years (here’s one early example), these companies underpay their staff. And, then those employees need subsidies from the Federal Government (whether it’s Obamacare for health insurance, Food Stamps {now called SNAP), or the Earned Income Tax Credit), their State Governments (Medicaid, energy assistance, rent subsidies), and local entities (community assistance, health centers, school breakfasts). So, it’s not surprising that the profits these firms claim are really funds they’ve stolen from American citizens who must keep the roof over the firms’ employees.
Let’s consider just one firm as an example. It will make exactly how this (doesn’t) work absolutely clear. In 2013, Americans for Tax Fairness studied Walmart and its employees in just one state- Wisconsin. Amazingly, a Walmart SuperCenter cost American taxpayers as little as $ 904,542 to as much as $ 1.75 million a year in employee living assistance. That works out to $ 3000 to more than $ 5800 for each of the Walmart workers.
Obviously, WalMart just wouldn’t be diddling its workers in Wisconsin. Those policies would obtain nationwide. So, extending the median shortage ($ 4415) to the 1.4 million WalMart workers across the means that the US citizens were subsidizing WalMart to afford its claim to have earned some $ 3.7 billion in profits that year.
And, it’s not just WalMart, as I said above. McDonalds earned some $ 1.2 billion in profits in 2013 the same way. So, 21% of their $ 5.6 billion in profit was due to underpaying their employees and having the US citizens pick up the slack. (By the way, the rest of the fast food industry demanded another $ 5.8 billion from the US citizens, above and beyond what McDonald’s did.)
Let’s jump to a more recent fiscal years. After all, Walmart announced they would pay more of their employees higher wages (that means $ 9 or $ 10 an hour, not $ 15). But, since Walmart keeps most of their staff at 34 hours a week (they call that full-time employment), it still means staff members are going to be coming to the Federal/State/Local governments to help make ends meet. And, if both the husband and wife work for WalMart, there is not a single subsidy offered by governments to which these married staff members would not be entitled.
So, that’s where my idea makes sense. Instead of raising the minimum wage, I want us to assess each moderate to large firm (the programs starts with those entities that have 50 full time equivalents or $ 2.5 million in gross revenue a year) a tax – dollar for dollar- for each subsidy we citizens have to provide their staff.
This payback is really easy to compute. After all, the state and federal governments have a copy of the W-2 for each employee, plus they know how much of a subsidy (for each program) they provide that same social security number. Now, our governments just hand the bill for those subsidies to the employer- with a 10% overhead add-on- to cover the program administration and employee matching.
The employer then has a choice for the next year. It will either reimburse the government for its subsidizing their staff (plus a 10% penalty) or it will pay its employees enough to not draw upon the resources of the US citizens.
Either way, we citizens gain. We either have more money for infrastructure or lower taxes.
And, we finally will know what are the real profits that these firms earn. Without saddling someone else with the bill for shortchanging their staff.
this is a problem we have over here too. Here some of the biggest private employers pay the minimum wage, but not enough full time hour vacancies. Your solution is an interesting one. Too simple to ever happen of course! 😉
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I don’t know if it’s too simple, Gordon.
But, I admit that I don’t know how well the ‘matching’ would work on your side of the pond. On this side, it’s so simple.
While I don’t claim to be an expert economist or anywhere near…it seems to me that there has to be some personal responsibility on individuals as well. I don’t disagree that businesses should pay fair wages, and I do think a raise in the minimum wage is due (just not the ridiculous hike being called for by many). What many forget about the minimum wage is that it isn’t intended to be a “living wage”. It’s for high school students, summer jobs and the like. Regarding people that work that still have to rely on food stamps, etc….it’s a broken system, to be sure! I worked as an Employment Consultant for a number of years, and was shocked and discouraged by the way that the “system” encouraged people to not work. I think an overhaul is in order. Both of the system and in society’s views on personal responsibility.
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Oh, Susan, you’re badly mistaken- or have been taken in by politicians who want you to believe same.
The minimum wage was- and still is- on the books to set a floor on what any employer can pay a worker. And, as has been true since I’ve been working, a significant percentage or workers earn just that – or a few pennies more. (This concept that only teenagers and summer jobs was proven wrong recently when a survey of fast food workers was completed. Very few of their employees met the teenage/summer job classification, and very few of their workers exceeded minimum wage.)
And, your anecdote about people not wanting to work has zero bearing on this situation. When we have fast food company workers relying on your and my taxes to subsidize their living, because their employers pay minimum wage and then boast about their profits- all earned from not paying adequate wages; when Walmart claims a profit that is at least 85% of the subsidy that is provided their employees via Food Stamps, Welfare, AFDC, and the like- that is, indeed, the problem. These folks are working- but not being paid adequately. And, the US citizenry is subsidizing Walmart, McDonalds (and its franchisees), etc to enable them to accumulate profits.
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