New Report: Taxpayers Subsidize $153.8 Billion In Corporate Profits Due To Low Wages

Strikers march outside a Wendy's restaurant in Boston
Generosity, or largesse, is a desirable trait for most Americans in the habit of giving freely of their assets to aid other Americans in need without expecting anything in return. As a virtue, charity has always been widely accepted as one of the most cherished virtues throughout history. However, one of the primary requirements of generosity, besides giving without expecting anything in return, is that the recipient is “in need.” If American taxpayers realized their largesse was going to those who need it least, highly-profitable corporations, they would likely put an end to their generous ways in a heartbeat.

While most American taxpayers do not object to, and in fact are supportive of, their tax dollars going to help other Americans in need, most taxpayers would recoil at charitable giving to those who need for nothing. Likely most taxpayers are unaware they are spending over $153.8 billion annually to subsidize corporate profits due to low wages that keep millions and millions of American workers on public assistance programs. It is that lack of awareness that prevents massive outrage against Republicans for  opposing raising the minimum wage.

This week on tax day, April 15, workers across America are planning to protest for higher pay and union representation for low-wage workers living in poverty and reliant on social safety nets to survive. The higher minimum wage protests are being organized by Fight for 15, a national worker movement engaged in the uphill struggle against Republicans to raise the federal minimum wage to $15 an hour. The federal minimum wage is a pathetic $7.25 an hour that prevents a person working full-time at that rate from bringing in enough income over the course of a year to live above the federal poverty line for a family of two; with any children the poverty level is below dire. Subsequently, workers earning minimum wage cannot survive without depending on at least one form of government assistance if they are extremely frugal and pool their resources with another family.

The poverty wages Republicans claim are more than sufficient for Americans, or too high according to Republicans who want the minimum wage abolished, is an abomination and an insult to highly productive American workers. They are also costing taxpayers over $153.8 billion each year according to a recently released report from the University of California, Berkeley. The reason taxpayers are being tasked to supplement worker wages, and provide corporate welfare subsidies for profitable corporations, is because when hard working families are forced to subsist on low-wage jobs just to survive, they have little option but to depend on government social programs. These include Medicaid, the Children’s Health Insurance Program (CHIP), Earned Income Tax Credit (EITC), Temporary Aid to Needy Families (TANF or welfare), and food stamps low-wage workers rely on just to make ends meet, barely.

The new Berkeley report examined how much the states and federal government spends on social safety net programs and discovered that the federal government spends about $127.8 billion per year, and states collectively spend about $26 billion per year on assistance programs for working families. Now, that $153.8 billion a year is not only being spent to help other Americans live, something most Americans are willing to provide for their struggling fellow citizens, it is yet another instance of taxpayer-funded corporate welfare. American taxpayers should not have to subsidize businesses that are already reaping profits on the backs of their highly-productive and low-paid workers and Americans’ tax dollars as well.

The study, “The High Public Cost of Low Wages” found that besides stagnant and poverty-level wages, the dearth of employer-provided benefits mean that minimum-wage workers in the United States are even more reliant on federal and state-run public assistance programs than previously thought. What that means for taxpayers is that their tax dollars are taking up the slack and subsidizing highly-profitable corporate employers who refuse to pay a living wage; that and only that reason is why there is a need for a federal minimum wage in the first place. Many employers, particularly large corporate employers will never pay decent wages without a federal minimum requirement and since  Republicans refuse to even entertain raising the minimum, it is left to taxpayers to “bear a significant portion of the hidden costs of low-wage work in America” according to the report’s authors Ken Jacobs, Ian Perry, and Jenifer MacGillvary.

The report revealed that 73 percent of Americans enrolled in the nation’s major assistance programs are members of working families. It is noteworthy that the $153.8 billion of taxpayer money spent annually is on “working families” and not, as Republicans claim, lazy moochers who need to learn the culture and value of hard work. After the 73 percent of Americans receiving some assistance who are working at low-wage jobs, the rest are children, the elderly and disabled Americans.

What is telling is that despite the recovering economy, record corporate earnings, and robust Wall Street gains, millions of workers are not being compensated at a rate commiserate with economic gains at the top. According to the report’s research, when adjusted for inflation, wage growth from 2003 to 2013 was either flat or negative for the entire bottom 70 percent of the wage distribution. To make matters worse, and cost to taxpayers higher, the number of non-elderly Americans receiving insurance benefits from their employer fell from 67 percent to 58 percent in 2013. One of the study’s co-authors and chair of the Berkeley Labor Center said “When companies pay too little for workers to provide for their families, workers rely on public assistance programs to meet their basic needs. This creates significant cost to the states.” And, a significant savings to corporations that translates into higher corporate earnings and greater compensation packages for CEOs.

Many Americans may think only fast food workers impact social safety net spending, but the study revealed that dependence on public assistance “spans a diverse range of occupations, including fast-food workers (52%), childcare workers (46%), home care workers (48%), and part-time college faculty (25%).” Add in retail employers such as Walmart and Target, and it is easy to understand why taxpayers are subsidizing corporations to the tune of $153.8 billion annually.

A few low-wage employers, like Walmart and McDonald’s, have announced pay raises in recent months to go into effect in the next year or so, but workers say it is not enough and they are hardly exaggerating. For example, McDonald’s plan to raise minimum wage by a whopping 10 percent that still will only affect a very small percentage of the company’s workers. Increasing the minimum wage by 10 percent will mean a worker will earn $7.98 per hour; that will still keep an employee in dire poverty and taxpayers on the hook for $153 billion annually as opposed to $153.8 billion. McDonald’s claims it has no control over how much its franchises pays their workers, but the corporation is a staunch opponent of raising the federal minimum wage and a major Republican donor.

The majority of  Americans do not oppose their hard-earned tax dollars going to help those who need assistance and many believe Republicans are barbaric for cutting what little low-wage earners receive now. However, it is highly likely they oppose those tax dollars going to subsidize payrolls of large profitable corporations that happily take the $153.8 billion in savings as higher earnings. It is a travesty that corporate mainstream media is not reporting where taxpayer dollars funding social safety net and assistance programs is really going, because if they did the outrage against Republicans refusing to consider raising the minimum wage would certainly produce results.

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21 Replies to “New Report: Taxpayers Subsidize $153.8 Billion In Corporate Profits Due To Low Wages”

  1. It’s so much better to subsidize the NFL, and the professional hockey, baseball etc. than the little sport leagues and school breakfast for kids.

    Having nice stadiums is nice. It gives us the illusion that we have a prosperous city and that all is well.

    The poor people, well, they did not want to do anything with their lives and they deserve what they get. Now if we could just send all the poor people to live out of town, or underground (like trolls), we would have a truly dreamy city.

    We keep moving to different areas, to get away from those nasty poor people (they wear the same clothes, and are not to be trusted) but they keep following us, we just do not know how to get rid of them…

  2. So the brief response to those old doofs who whine and wail about their tax money going to Those People is,

    “So you support an increase in the minimum wage, so people can earn enough to support themselves without relying on government assistance?”

    And then enjoy watching a Conservative Brain writhing like a belly dancer as it tries to remember the catechism on Free Market Principles, dredging up the standard rationalizations and euphemisms for “Let those bastard poors starve in the gutter, I got mine, Jack.”

  3. Strange, this morning I decided to research the number of Billionaires in the U.S. (From the 79+ Billion- to one million)
    These are the people who get large tax breaks, so they can become even richer. The number of Billionaires in the U.S. far exceeds any other country. Being a paltry Millionaire is nothing compared to these Billionaires.
    All the Koch’s, many of the Walton’s and Bill Gates who numbered Number one.(All in the high 70+billion)
    The Koch’s do nothing for the good of the country (only self, Walton’s the same) except for their idea of being a Christian.
    Bill Gates is well known for his contribution to health care. Of all the other(Many) billionaires we do not hear of any contribution to the well being of country and It’s people. I was astounded by the shear number of Billionaires in our country. Never saw a Bush name at all, so it seems they are the very poor of the very rich? Not even having one Billion to their name.
    The Koch’s are among those who create their…

  4. Packs so they can sponsor their idea of what a good candidate is. They create more then one, so they can contribute more. Like the 31 million given to Cruz. The Koch’s have many, as do other very rich men who contribute to the Candidate of their choice.(Answerable to them)THAT is what we now have in our Congress. MEN not answerable to the people BUT answerable to the very rich. If, this to change, it is up to the voters….

    The Koch’s as far as I can tell have not given to Cruz, but this was as an example.
    their is a man, don’t know his name, that has done just that, Create a number of Packs to give to Cruz. 31 million to date.

  5. The game is rigged. When you have millionaires writing the laws you can be quite pookie and billy bob will not benefit.

    They are so greedy they even take your pensions to benefit their friends

    While Jeb Bush was governor of Florida, state pension officials committed at least $1.7 billion to financial firms whose executives were “Pioneer” fundraisers for his brother’s presidential campaigns. To achieve Pioneer status, the fundraisers had to amass at least $100,000 worth of bundled contributions to one of George W. Bush’s campaigns.
    http://www.ibtimes.com/george-w-bush-fundraisers-whose-firms-received-florida-pension-deals-under-jeb-bush-1880624

  6. What we obviously need to do is get rid of all of our U.S. Govt. officials who are now selling and or giving this country and 99% of its citizens and residents, plus all its resources, to their Elite 1% corporate masters. Soon we “THE PEOPLE” won’t ever own anything or have anything else to do but “serve” our new GOP “masters” and their “elite” corporate “GODS”. Forever!!! In my opinion. WTF!!!

  7. “Wally World” (Wal-Mart), the epitome of Vampire Capitalism, gets more than $2 BILLION by themselves.
    How many times have I correctly said/written that the Bush 43 tax policies, the black heart of the GOP’s Upward Wealth Redistribution program, is responsible for this?
    More importantly, when will enough people acknowledge those truths?

  8. Senator Rand Paul, hoping to become president, says he is a tight-fisted libertarian working on behalf of beleaguered Americans to cut spending and stop waste.

    But if you look at what he has done, rather than what he says, a completely different story emerges.

    In just one deal, Paul wasted a quarter-billion dollars. The terms resemble the old Soviet central planning model, which Paul claims he abhors.
    http://www.nationalmemo.com/for-the-record-rand-paul-libertarian/

    You might think $250 million being wasted would have made every newspaper and broadcast news program in Oregon and Washington, where the burden comes to about $90 for every family of four.

  9. Its about time to make the UNITED STATES OF AMERICA have some new “TAX-POLICY” changes made into law that will benefit the 99%. Not the truly “evil” 1%!!! In my opinion.

  10. OK then there is no reason not to raise their taxes. It’s OUR money. Isn’t that what the right is always screaming?

  11. Raising minimum wage will not change this problem. As the old saying goes if we give everyone a million dollars we would have a country of poor millionaires. Why? Well business 101 tells you why.
    As a business owner this raise will not come out of my pocket or the pocket of my business. It will come in higher prices for my goods and services. In other words the customer will pay for it. It will come out of your pocket. That is called inflation. So thereby negating any effect the increase will have. Going right back to the same if not worse conditions for people.
    We have in this country an employers market. So when interviewing im am going to take the guy willing to accept minimum rather than somebody wanting $9 or $10 an hour. Until that changes wages may go up but the COL will also go up, maybe even more.
    What we need is to quit being the leading importers and back to the leading exporters of goods in the world.

  12. You are brainwashed. Raise wages for the poor and they will spend the money, thereby creating an economic boon. Raise profits for the rich and they will park it in offshore accounts to get out of paying taxes.

    Workers produce more in value than they cost. The rich consume more than they produce.

  13. Yes, there are a lot of “Walmarts”–Home Depot, Gordon Food Service, Olive Garden/Red Lobster, and TONS of others. They tell their workers it’s because of POTUS that they can’t work more than 32 hours a week (so they don’t have to give vacation and medical benefits). And then they will only pay minimum wage. No wonder corporations are reaping billions in profits!

  14. Conservative Economics deliberately impoverish people so the rich can get richer. They even have fancy terminology to justify their greed, like “wage inflation” where the idea is that people are supposedly getting paid too much. It’s not just tax cuts for the rich that are a problem, it’s the assault on living wages, PTO, and working conditions.

    Anyone that works for a living that votes for a conservative (especially in the Republican Party) simply doesn’t understand they are voting to make themselves poorer. Right wing economics is all about jacking up corporate profits by making you work longer, harder, and faster for less.

  15. The Kochs may have many hounds in the 2016 hunt, but
    Walker’s their chosen bitch for it’s union busting record.

  16. As many buckets of dollars as we have spent in these last unending wars, we could have given every citizen in this country a million dollars!

    What would you have done with it?

    We would have spent it on education and schools and bridges and to create self employment jobs, instead of waiting for the “never-arriving-trickle-drip” from the greedy corporations.

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