WalMart the Welfare Queen?

By Nathan Barton

Does WalMart collect $2.6 billion a year in corporate welfare from the government?  Well, according to Freedom Force, the mega-corp does. That is, IF you buy the logic of Michael Snyder, who calculates how full-time employees of WalMart collect an average of $5,815 a year ($420,000 per store) in welfare benefits because they aren’t able to make it on WalMart’s poor salaries.  (Now, I admit that  Mr. Snyder took a lot of his “facts” from a Bloomberg article, not exactly the best source for someone who loves liberty. But then, nobody forced him to use that source, or fail to check it out.)

Now, there is no doubt that WalMart makes a LOT of money.  And has a lot of employees.  Some get minimum wage (currently $7.25), and some get a lot more.  There is a movement to double the minimum to $15/hour (for among others fast-food workers and Walmart).  There are supposedly 1.2 million WM workers in the US (according to Freedom Force and Bloomberg, but WalMart claims 1.3 million), so the argument goes that if every WalMart worker gets another $6,000 a year, $6.978, call it $7 billion, comes out of WM’s $17 billion in annual profits: shucks, less than half.  Except that “Freedom Force” can’t use a calculator or do the math, because $7.2 is a LOT more than the 2.6 they claim.  And for the average, “full-time worker” (getting 30 hours per week of work as defined by the Fuehrer and ObummerCare), their base pay is now $11,310 (if they just get minimum wage), and this would increase it to $17,310 ($11.10 per hour).  (Except that an enemy claims that the average low-end WalMart employee was already getting $22,000/year in 2013.)

But you then have to add “benefits” (actually, mostly taxes: FICA and Medicare, and unemployment).  Employers pay 7.6% for the first two of each employee’s wage (the employee also pays 7.6% out of their wage) and then 6.2% for unemployment (employees pay nothing directly).  So that increase of $6000 per year in base salary adds another 13.8% to the payroll cost, or $828 per employee.  For 1.2 million, that is another $994 million.  (Not counting increases in state and local taxes.) So we are talking $8.2 billion: or about half.  Of course, if the minimum wage for WM was $15, up from $7.25, we would see the payroll costs go up by (let me calculate this) $13,758 per employee, or $16.5 billion.  That would leave just $490 million in WalMart profits.  Plenty, I’m sure. Except that WalMart’s profits might not be $17 billion next year… (and don’t forget those extra 100,000 employees that WalMart claims.) So, if WalMart loses money, what happens?

Some other things to think about:

a.  WalMart employees are not slaves: they are not forced by WalMart to work there: they can go find other jobs.  At least theoretically.

b.  WalMart (and most all companies AND agencies AND others) don’t pay people based on the cost of living of the employees, such as how many dependents they have, or what their house payment (or rent) is, or all the rest of things that determine what welfare they are eligible for. They are paid for the WORK they do.  Frankly, WalMart HAS an employee quality problem (as do most businesses): I find that a lot of the “associates” that they have aren’t doing $7.25/hour worth of work, much less $10 or $15/hour work.

c.  WalMart’s profits don’t all go to the Walton heirs: there are a LOT of shareholders, including many mutual funds and many retirement funds.  So when you suck up almost half of the profits, someone loses money. Is it okay for WalMart investors to be on the dole, just not their employees?

d.  Profits are what fund further investment, whether it is new stores or new products or anything at all.  And it is what people invest to get. If WalMart has no profits, the future of the chain is pretty dismal.

How disappointing, but it appears that “Freedom Force” has a different definition of “freedom” than I do.  I am not saying that WalMart is a perfect or even a good company, and I’m not saying that WalMart isn’t riding on the government’s coattails.  But the problem with WalMart employees sucking up $2.6 or $7.2 billion dollars of government welfare is definitely more the fault of the government – and maybe even the employees themselves – than it is of WalMart.  There are better ways to get people off welfare rolls than bashing a private company using bogus numbers and faulty reasoning.

Mama’s Note: In addition to the business and their investors, two groups lose ever more with each ratchet of the “minimum wage” laws. The least skilled workers and young people just starting out can’t produce enough to earn it, so their jobs are usually eliminated. This, unfortunately, can even pressure people in this group to engage in prohibited or outright criminal behavior. The other group that loses, even more, are the poorest of the customers. Whether the prices rise above their ability to pay, or the business folds altogether, they have fewer ways to meet their needs. And people who don’t understand the market or have a false idea that businesses should be charities, this often spurs them to calls for even higher “minimum wage.” A vicious cycle indeed.

About tpolnathan

Follower of Christ Jesus (christian), Pahasapan, Westerner, Lover of Liberty, Free-Market Anarchist, Engineer, Army Officer, Husband, Father, Historian, Writer.
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2 Responses to WalMart the Welfare Queen?

  1. One dimension seems to be missing from your analysis. A couple of useful factoids:

    – When people spend “food stamps,” they do so at Wal-Mart. In fact, Wal-Mart is the single largest recipient of such spending — 18% of every “food stamp” dollar spent in the US is spent at Wal-Mart. That’s roughly $13 billion per year going into Wal-Mart’s bank account.

    – Wal-Mart spend more than $7 million lobbying politicians last year. One of the main focuses of that lobbying? Please, please, PLEASE don’t cut “food stamps.”

    It’s one thing not to blame a business for the environment it has to work within. But let’s not kid ourselves: Wal-Mart works hard to shape that environment to its own advantage using government force.

    Like

    • MamaLiberty says:

      No dispute over those things, Thomas. But every smart person takes as many “tax breaks” as they can manage, and probably votes to shape the business and tax environment to their own advantage as much as possible. It’s a matter of scale, not intention here. How long do you think WalMart could exist without playing the corporate/government game?

      The answer is to stop the theft, and eliminate the government from business altogether. How to go about that is the million dollar question.

      Like

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