By Lauren McCauley
Originally posted at CommonDreams.org
Although a notorious recipient of “corporate welfare,” Walmart has now admitted that their massive profits also depend on the funding of food stamps and other public assistance programs.
In their annual report, filed with the Security and Exchange Commission last week, the retail giant lists factors that could potentially harm future profitability. Listed among items such as “economic conditions” and “consumer confidence,” the company writes that changes in taxpayer-funded public assistance programs are also a major threat to their bottom line.
The company writes:
Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, which are outside our control … These factors include … changes in the amount of payments made under the Supplement[al] Nutrition Assistance Plan and other public assistance plans, changes in the eligibility requirements of public assistance plans …
Walmart, the nation’s largest private employer, is notorious for paying poverty wages and coaching employees to take advantage of social programs. In many states, Walmart employees are the largest group of Medicaid recipients.
However, this report is the first public acknowledgement of the chain’s reliance on the funding of these programs to sustain a profit.
According to Stacy Mitchell, senior researcher with the Institute for Local Self-Reliance, the irony of their admission is that Walmart “is the company that has done, perhaps, more than any other corporation to push people into poverty.”
Citing a Penn State study, Mitchell told Common Dreams that research has proven that “when Walmart opens a store, poverty rates are negatively impacted” and that the more stores that have opened in a particular county, the worse it is. “This is a company that everywhere it goes it creates poverty.”
In addition to their own worker’s low wages, Mitchell explains that Walmart, because of their enormous size and market power, have “held down wages for the whole sector.”
As a retailer that specifically targets a low-income demographic, Mitchell adds that the “insidious genius” of their business model is that “they have so squeezed American workers […] many feel that their only choice is to shop at Walmart.”
The International Business Times reports:
Prior to the earnings report, Walmart Chief Financial Officer Charles Holley said the company didn’t anticipate how much the end to such programs as the unemployment benefits extension would affect it. Specifically, reductions to the Supplemental Nutrition Assistance Program that went into effect on Nov. 1, the first day of the company’s fourth quarter, pose a potential concern. The cuts led to a between $1 and $36 reduction in SNAP benefits per household, or up to $460 a year. Congress is debating reinstating the extension to the program and making the benefits retroactive to Nov. 1, something Walmart would clearly consider beneficial to its growth.
Previously, Walmart has joined forces with Big Food labels such as Coca Cola and Kelloggs to lobby the United States Department of Agriculture and Congress against any measures that would restrict SNAP use to healthy food choices. According to an earlier study by Michele Simon at Eat Drink Politics, in just one year, nine Walmart Supercenters in Massachusetts received more than $33 million in SNAP revenues.
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Wow, just came across this article of Wal Mart paying $17.60 starting wage. Why would Wal Mart pay so much? Why don’t they just drive down wages since they have the power to do so? This article proves Wal Mart pays market price for labor just like everyone else.
http://www.aei-ideas.org/2014/06/a-report-from-the-bakken-oil-fields-where-the-jobless-rate-is-0-9-and-walmart-is-paying-2-4-times-the-minimum-wage/?utm_source=aei&utm_medium=facebook&utm_campaign=060914
That is a very misleading title. Notice the “depends on” is the authors words, not WalMarts. In fact, its a blatant lie. WalMart, in the contents of this article, never admitted that. The only thing WalMart admits to is that welfare payments affect their bottom line. That’s just being honest. WalMart did not create the welfare state we live in, liberals did. Of course liberals will not blame themselves for the situation they created, so they have to blame someone, namely WalMart. If WalMart paid their employees the $15/hr wage that their employees recently lobbied for, WalMart would price themselves out of the market and end up like Detroit. Lets say WalMart just closed shop, would we be better off? All the employees would be out of a job, minimum wage is better than zero wage, if you ask me. Also, those very same former employees, and everyone else, would have to pay higher prices at another store. Stacy Mitchell’s argument just does not hold water. Did WalMart put a gun to any ones head and say You must work for us or, you must shop here? No, they did not. However, the government did, by force, say, all you working people will give us (a large) part of your salary so we can give it to nonworking people, thus creating the perpetual welfare class that WalMart actually helps, not hurts. It also forced the manufacturing sector(and all businesses) to comply with monumental amounts of regulation(union wages, minimum wages, paid medical, insurance, not being able to fire their own employees, ADA compliance, etc., the list goes on and on) which drove them to leave this country, which really is the cause of poverty in this country, not WalMart. The solution is for other businesses to compete. But think about it, if you wanted to start a business(in any sector) and hire people(for a good wage of course and lift them out of poverty), is it WalMart that makes you think twice, or the government regulations?
I would argue that the WalMart CFO was being surprisingly honest by admitting cuts to public assistance programs would negatively impact the company’s growth forecast. What the title of the article was trying to convey is that if most WalMart employees were paid a living wage and not partly dependent on public assistance to survive, profits going towards WalMart CEOs would not be quite as high. The welfare state (regardless of who created it) has in effect become a corporate welfare state. It’s true Detroit once had powerful unions, but we must remember that mass auto factory shutdowns started occurring across the country during a time of high profits and the start of deregulation which rewarded corporations for outsourcing jobs to other countries. Dubious swap agreements with Wall Street bankers also played a role in bankrupting Detroit. So if WalMart closed shop would we be better off? Not the WalMart CEOs but the majority of us would be. Because of their economic power WalMart has an outsized influence on international labor and trade policy and industry standards throughout the supply chain.
From http://walmart1percent.org :
Walmart store openings destroy almost three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.
Walmart cost America an estimated 196,000 jobs – mainly manufacturing jobs – between 2001 and 2006 as a result of the company’s imports from China.
Walmart workers average just $8.81 hour. This translates to annual pay of $15,576, based on Walmart’s definition of full-time. This is less than two-thirds of the poverty line for a family of four, and well below what most families actually need to get by.
Walmart pays less than other retail firms. A 2005 study found that Walmart workers earn an estimated 12.4% less than retail workers as a whole and 14.5% less than workers in large retail in general. A 2007 study which compared Walmart to other general merchandising employers found a wage gap of 17.4%.
Taxpayers subsidize Walmart’s low wages and poor benefits. Just one Walmart store costs taxpayers an estimated $1 million in public assistance usage by employees, according to a new report from the Democratic staff of the U.S. House Committee on Education and the Workforce.
In many of the states across the country that release such information, Walmart is the employer with the largest number of employees and dependents using taxpayer-funded health insurance programs.
Despite all the damage they have done to US workers and communities, a 2007 study found that, as of that date, Walmart had received more than $1.2 billion in tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments around the country. This number has surely increased as Walmart continues to receive additional subsidies.
Meanwhile, the Waltons use special tax loopholes to avoid paying billions in taxes. According to a recent Bloomberg story, the Waltons are America’s biggest users of a particular type of charitable trust that actually allows the donor to pass money on to heirs after an extended period of time, without having to pay much-debated estate and inheritance taxes. According to Treasury Department estimates reported in Bloomberg, closing the two types of loopholes the Waltons appear to use would raise more than $20 billion over the next decade.
From politifact.com :
The Walton family, which owns Wal-Mart, controls a fortune equal to the wealth of the bottom 42 percent of Americans combined.
Rather than reduce the average worker’s pay and benefits in this country, better pay and benefits should be fought for in all countries. I’m all for fair competition, small business and entrepreneurship, but corporations like WalMart and big government are both to blame for creating the current un-level playing field.