Secret Subsidies to Huge Corporations

Photo by Ron Dauphin

The ever interesting Greater Greater Washington recently asked “How much will Walmart cost DC taxpayers?

The argument: some of Walmart’s employees are earning a small enough amount, and draw so few benefits, that they actually still qualify for public compensation. GGW’s authors call this a “backdoor subsidy” to Walmart’s workforce–and interesting angle, no doubt.

Now, I think it’s a little deceptive to say that Walmart is costing DC taxpayers money in this scenario, since that assumes that the people getting those benefits would have had jobs to begin with if Walmart wasn’t around. But I won’t belabor the point.

The authors point to a study (PDF) which claims that it would only cost Walmart two cents on the dollar to give their employees the same benefits packages as their competitors give. They then carry this line of thought to its logical conclusion and suggest that the DC Council might force “large retailers” to pay a higher minimum level of compensation.

Now, I am extremely skeptical of studies like this, even when they are peer-reviewed, which this one was not, or printed in an academic journal, rather than merely presented to an advocacy group.

But you don’t need to share my skepticism of such things, and we don’t have to have a debate about the complicated question of determining just how much it would actually cost. There is a much simpler solution to the problem of “secret subsidies” than to increase the intrusiveness of regulations in the District. That solution is to get rid of those subsidies.

I’m not talking about eliminating public health benefits to low income individuals. I’m talking about changing the criteria for getting those benefits so that people who make as much as Walmart offers are no longer eligible for it.

Then we can leave things to people’s own choices–either they can keep their public benefits, or they can work and earn as much as Walmart can get them. If this”backdoor subsidy” is as significant as the post implies, then it might be that Walmart would have to start offering more benefits in order to attract as many workers as they need. Or it could be that enough people would be willing to give up the public benefits for what Walmart offers–be it what they would actually make to begin with or the possibility to make more later on–that Walmart wouldn’t have to.

Either way, the primary problem that the authors appear to be concerned with–taxpayer funds going to Walmart employees–would be entirely solved.


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