It Can Happen Here: Corporate Welfare and Nevada Jobs

NV Food Service Jobs WagesThe eligibility level for SNAP benefits for a family of four is estimated at 130% of the federal poverty level ($23,550).

“A household is defined as a person or a group of people living together, but not necessarily related, who purchase and prepare food together. Households, except those with elderly or disabled members, must have gross incomes below 130 percent of the poverty line. All households must have net incomes below 100 percent of poverty to be eligible. Most households may have up to $2,000 in countable resources (e.g., checking/savings account, cash, stocks/bonds). Households with at least one member who is age 60 or older or a member living with a disability may have up to $3,250 in resources.” [SNAP]

The median wage reports from NV-DETR should be interpreted to mean that half the employees in this job category fall below the annual income in the second column.

And the point of all this?

The point is quite simply, we don’t get to have it both ways.  We can’t continue to employ people at wages which make them eligible for public assistance and then expect not to have to pay for the public assistance to help (as in the case of SNAP) to put food on the table for their families.   The second point is that this isn’t a situation that occurs in some highly generalized national way — it’s right here in the Silver State.  Worse still, it’s happening in the most prominent sector of the Nevada economy — hospitality and food service.

And so, we get stories reporting a McDonald’s employee being advised to seek public assistance by her employee resource hotline. [BusinessInsider] A study finds that over one half of Wal-Mart’s employees make less than $25,000 per year. [BusinessWeek] It’s already been reported that one Wal-Mart in Wisconsin could cost taxpayers some $900,000 including such “subsidies” as Medicaid, home heating assistance, reduced price school lunches, and Section 8 housing assistance. [HuffPo]  These and other stories led one columnist to call Wal-Mart the new “Welfare King.” [Salon]

Why Do The Welfare Kings Worry?

Inflation.  There is nothing a lender (banker) likes less than inflation. Even the prospect of inflation causes the vapors.   Thus, the banker’s political allies offer such bromides as the following:

“Where would the money come from to pay minimum wage workers a higher rate of pay? It would come from the customers of those businesses. When the cost of doing business rises, those businesses have to raise the prices of their products. This happens across industries and across the economy. The end result is inflation. Workers are making more money, but that money is only buying what their former wage purchased.”

Sounds right, but … the issue at the present is that wages aren’t keeping up with current levels of inflation, much less drive any inflation.  [CSMonitor] Even if we calculate that the full cost of the wage increase is passed along to customers, the research doesn’t support the contention that a wage-price spiral will ensue from improving the minimum wage:

“Past research on how business costs rise with minimum wage hikes indicates that a 10-percent minimum wage hike can be expected to produce a cost increase for the average business of less than one-tenth of one percent of their sales revenue. This cost figure includes three components. First, mandated raises: the raises employers must give their workers to meet the new wage floor. Second, “ripple-effect” raises: the raises employers give some workers to put their pay rates a bit above the new minimum in order to preserve the same wage hierarchy before and after minimum wage hike. And third, the higher payroll taxes employers must pay on their now-larger wage bill. If the average businesses wanted to completely cover the cost increase from a 10-percent minimum wage hike through higher prices, they would need to raise their prices by less than 0.1 percent.” [BTFE]

However, nothing seems to alleviate the never-ending terror of the financial sector (banks) that something will cause the dollars they lent to customers will be repaid in dollars of slightly less value (inflation).

…even if this costs us more to sustain the individuals and their families hired at current minimum wage levels. Out of Our pockets.  Not to put too fine a point to it, but American taxpayers — including Nevadans — are being asked to subsidize corporations which do not pay living wages to their employees, at the same time those corporations and banks are demanding that the federal government reduce its expenditures for social safety net programs.

If lower income workers are feeling like they are in a Grand Bind — it’s because they are.

*Annual median wages are not included because the levels of wages do not include earnings from tips.  The Nevada minimum wage for tipped employees is $8.25 per hour.

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