No-one’s asking the important question anymore

Earthbound Misfit wrote:

How McDonalds, Burger King (and Wal-Mart) Pick Your Pocket, Even If You Never Spend a Dime There

The short answer is that they pay their employees so poorly that the majority of fast-food workers are also on public assistance. So what happens is that the Federal treasury (that’s *us*, folks) subsidizes those companies’ labor costs.

. . .

Why are we subsidizing these greedy ******s’ labor costs? When you hear the GOP and the Tea-baggers screaming about “welfare queens”, why aren’t they yelling at Wal-Mart and McDonalds?

The answer is easy: Those corporate welfare kings have the money for lobbyists and lawyers. A single mother working at McDonald’s or Wal-mart isn’t making campaign contributions to The Canadian Usurper or the Tea Party Caucus.

There’s more at the link.

She starts from the left side of the political spectrum, unlike me, but in this case she’s absolutely correct.  These corporations are, indeed, taking advantage of government programs to reduce their own expenditure on employee benefits. However, I respectfully submit that she may be missing the most important point – namely:


The fact that these programs exist, and are heavily subsidized by the taxpayer, allows – even encourages – companies to make use of them to reduce their own costs.  That’s precisely what’s happening with Obamacare right now.  Because it exempts part-time employees working less than 30 hours per week from its onerous (and very expensive) requirements, a lot of companies have converted as many as possible of their employees to part-time status.  They now earn less money, and aren’t eligible for the same benefits that they formerly enjoyed as full-time staff . . . precisely because the government has set up financial conditions (incentives and/or penalties) that encourage companies to treat employees like this.

Let’s be quite clear about this.  Companies – and individuals – operate in a marketplace with laws of supply and demand.  There are incentives for companies to attract and retain good-quality, loyal staff.  However, if expenses – increased taxation and/or fees, administrative overhead, complexity of complying with government regulation, and so on – are more costly to a company than those incentives, the same laws of supply and demand dictate that the company will choose the least costly option.  That’s precisely what the companies Earthbound Misfit castigates have done.  They’ve obeyed the laws of economics, instead of the ‘laws’ (more accurately, customs or values) of compassion and/or corporate responsibility (which don’t have the weight of economic necessity behind them).

If government did not provide and/or subsidize programs such as Obamacare, food stamps, etc., these companies would face greater demand from their employees to pay a living wage – one that would cover all basic needs.  Companies that did so would be able to take their pick of potential workers, while those who did not would struggle to attract and retain good staff.  However, when the law of the land removes that incentive, why should companies bother?  After all, they’re in business to make a profit, and their shareholders want that profit to be as high as possible.  Why should they pay higher salaries, or provide more expensive and comprehensive benefits, when they know the government will step in to level the playing field at taxpayer expense?

There are those who maintain that government should provide these programs, because it’s ‘our’ responsibility to provide for the needy among us.  Says who?  I can understand a religious motivation to do so, on the basis of one’s beliefs – but that’s a moral obligation, not one that can be made binding on those who don’t share one’s beliefs.  (“Separation of church and state”, remember?)  I can understand a philosophical obligation, too;  one’s conviction that ethical considerations demand that one care for one’s fellow human beings.  However, why should your ethical considerations require me to pay for their implementation?  What objective, non-subjective imperative – moral, philosophical or any other – requires taxpayers to automatically and unquestioningly subsidize programs such as Obamacare, food stamps, welfare or whatever?  Frankly, I can’t think of a single one.

(Marx could: From each according to his ability, to each according to his needs.  Socialism has enthusiastically adopted his diktat.  A very large part of today’s ‘welfare society’ in Europe and North America is based firmly upon it.)

Such programs may be desirable from any number of perspectives, but I find no justification whatsoever for making them a mandatory burden on the public purse.  In days gone by most of them were provided by religious and/or charitable institutions.  Those who felt the need could contribute to them, while those who did not could refrain.  (I think that’s a pretty good model for the arts, too.  Why force taxpayers to subsidize artistic expression that they find boring, or unattractive, or even morally reprehensible?  Why not let those who enjoy a given art form subsidize it with their donations, while those who don’t are free to ignore it?)  Unfortunately, those who seek power over us all too often impose their own preferences and choices on us by legislative fiat.  We end up being obliged to pay for things with which we may or may not agree.

The do-gooders and social reformers who have dominated our politics since World War II have basically ensured, through the programs they set up, that companies don’t have to pay a living wage, and that many people have to work two, or three, or even more jobs in order to make ends meet.  Furthermore, those programs have given rise to the ‘entitlement culture’ that cripples many of our citizens and communities.  See, for example, the following articles:

I agree with most of those perspectives.  The ‘do-good’ urge has given rise to the ‘entitlement culture’, which in turn has allowed corporations and ‘Big Business’ to fob off onto the US taxpayer many of the costs they formerly paid to or for their employees.  Who’s to blame?  We are, for allowing such programs to mushroom and multiply until they consume two-thirds of the federal budget.  Heck, when such programs benefit us directly – funding for local initiatives, or artistic expression of which we approve, or sports in which we participate – most of us actively encourage and support them!

Here’s yet another example of that mindset.  By following some of the links Earthbound Misfit provided, I came across an article titled ‘New Data Show How Big Chains Free Ride on Taxpayers at the Expense of Responsible Small Businesses‘.  Here’s an excerpt.

The public cost of ensuring that employees of these companies have health insurance and enough to live on represents, in effect, a hidden corporate subsidy.

Even Whole Foods, a high-end chain run by a self-proclaimed “Conscious Capitalist,” makes the list, with about 17 percent of its employees enrolled.

“By the end of the summer, I’ll have six Whole Foods stores within 15 minutes of me,” said Michael Kantor, who co-owns Cambridge Naturals, an independent health store that pays 100 percent of the health premiums for full-time employees and half for part-time.  Kantor has spoken out in favor of raising the minimum wage, which could lift many retail employees out of working poverty and enable them to afford insurance.

Again, more at the link.  Bold, underlined text is my emphasis.

Notice Mr. Kantor’s proposed solution – more legislation.  He wants to force companies to pay more by legislative fiat, so that employees will earn enough to buy insurance.  In other words, he wants one government program to compensate for the damage he believes he’s suffering from a different program!  If he feels so strongly about the matter, why doesn’t he, as a matter of conscience, pay his employees more on his own initiative?  Can it be that – gasp! – he can’t afford to, for reasons of economics?  Can it be that he wants the government to make that decision for him, so that everyone suffers under the same burden, and thus he won’t be disadvantaged?

Why not get rid of all the programs, and start with a level playing field?  Think about it, folks.  It’s a hard and unpalatable concept . . . but it’s the only way I see out of this mess.  If you have a better idea, please tell us about it in Comments.



  1. I agree with your view more than the other. But one of the big costs to businesses, which they pass on to their customers, is complying with regulations and paying (and/or avoiding) taxes. If a lot of these government programs and regulations went away, then the minimum wage would be a lot closer to a living wage (not that it is supposed to be, but that's a different rant) because the cost of things would fall. Personally, I like the FairTax idea – get away from pretty much ALL government subsidies, and sudden cut-off numbers, and simplify a LOT of things. So it'll never happen. Incentives change behavior – align incentives with desired goals, and it'll happen on it's own. When you create a maze of perverse incentives and all hell breaks loose, don't say no one could have predicted it – they did, you just were not listening.

  2. I never quite understood how anyone that thinks a government that can decide a minimum wage won't make an effort to impose a maximum wage and seize assets. With that accomplished – and that's exactly what they're doing – the government controls all labor and everyone becomes pawns to a ruling class elected by those willing to give up their freedom for a few trinkets.

  3. Leftists rarely think of what actions their legislation will cause. For every legislative action, there is an unforeseen reaction.

    I noted that Walmart made a net profit of $17B on a gross profit of $469B. Stated in other terms Walmart spent $452B on wages, inventory, taxes and utilities to make a profit of 3.76%, which is a pretty thin margin. Taking into account inflation, very little profit was made.


  4. I clicked though to that study, and it is really insidious.
    Low-wage jobs are traditionally the way that low-skill people gain entry into the job market. Raising the minimum wage kills jobs. Giving people who are supporting their families in minimum wage jobs a government check, with the amount structured in such a way that any increase in wages leads to increased net household income, has been shown to increase employment in an area — 1.5% increase in employment for each 10% increase in EITC. Using the amount spent by the government on EITC as an argument for an increase in minimum wage (which will lower the number of jobs available for low-skill people, and freeze many out of the job market entirely) just seems evil to me.

  5. Actually, as someone who employs relatively unskilled people and pays a relatively low wage in a fairly low margin business, I gotta tell you that I am actually competing with the Federal and State governments for workers.

    Here's the thing. Most of them have no ambition to work anyway, and those that do would rather take the benefits that the government(s) give..SO they only work the minimum amount allowed until they get to the level which then threatens their freebies from the governments.

  6. This is a great example of why government *spending* is at least as harmful to the economy as government taxation. Every dollar spent by a government distorts the economy away from what all the non-governmental entities would have spent/done. Eventually, what results is a far cry from what the economy would have been without government interference. Add in the distortion causes by the Federal Reserve, and you have (Ta-Da!) the dreaded Business Cycle. Government is like a half-blind old geezer (it's OK, I'm over 60) driving along, oversteering more and more until the car runs off the road (recession). At which point the rest of us get to foot the bill for buying a new car (Quantitative Easing)so the game can re-start. Washington delenda est!

  7. I'm going to be the bleeding heart here, I guess.

    According to the study in question, one can estimate that about 15% to 18% of people in minimum wage jobs are living in households that are below the poverty line.
    Those individuals are (depending upon number of dependents) eligible for a number of welfare programs, but the largest government expenditure on them (according to my reading of the study estimates) is the earned-income tax credit.
    The earned income tax credit requires that you be earning money. Above $0 and up to a threshold the more you earn (by working more hours or by pay increase) the bigger your check from the government. Above another higher threshold, the more you earn the lower your check, but the ratio is tapered so that it is always advantageous to work more or to get a pay increase.
    Each time there has been an increase in the EITC, the number of low-skill people employed had increased. And the signs are that it has had a strong effect in moving those families above the poverty line as they advance in jobs and responsibilities over time.
    I think part of the problem people have with social spending is that so often it demonstrably makes things worse. The EITC is spending that has positive results, and we must remember that there are externalities to poverty that are also a cost on us all.

  8. @Douglas2: But who says the government should be providing that assistance in the first place? Who makes that decision? And what about those taxpayers whose money is used, without so much as a 'by your leave', to subsidize that program?

    That's the problem with any and all government programs. They all cost us money. Some are essential, I think we can all agree on that: but for the life of me, I can't see that giving free money to (a) certain class(es) of people is a legitimate purpose of government.

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