Walmart is known to the general public for its low prices, but those low prices come at a different sort of cost; estimates place the expense of covering Walmart workers’ food-stamp costs at $300 million a year.
A study in the U.S. Committee on Education and the Workforce found that a 300-employee Walmart store can cost taxpayers anywhere from $904,542 to $1.75 million every year.
However, a new analysis runs by American Public Media’s Marketplace shows that there is a very easy – and very affordable – way to get Walmart employees off food-stamps.
The solution lies, of course, in raising employees’ wages.
According to research conducted three years ago by an analyst at IBISWorld, the average wage for Walmart sales associates is $8.81 an hour. This same figure was cited in the congressional report by House Democrats. In 2012, most Walmart workers made less than $25,000.
In order to get workers off of food-stamps, Marketplace estimates that Walmart would have to raise its average wages from $8.81 to $13.83.
As many as 15% of the company’s employees in Ohio stores are on food stamps. If that same rate is applied to the rest of Walmart’s workforce, Marketplace estimates that the company needs $4.8 billion to lift average wages across the U.S. enough to get all workers off food-stamps.
If $4.8 billion seems like a huge number, that’s because it is; but Walmart is a huge company, and Marketplace estimates that it would need to raise prices by only about 1.4 percent to cover that cost.
In other words, increasing the cost of items such as macaroni and cheese by a single cent would make a big enough difference that Walmart workers would no longer need food stamps to survive.
Notably, Walmart spokesman Kory Lundburg maintains that the $8.81 hourly wage is inaccurate. Instead, he stated that workers make $11.83 an hour, and added that 99 percent of the company’s employees make more than minimal wage.
“We don’t know how they arrived at that number,” Lundburg said in a phone interview. “It’s so off it’s laughable that they even try to cite it.”
However, Walmart’s formula for calculating average wages has previously been shown to be “murky”, possibly excluding part-time and temporary workers and including supervisors to drive up the apparent average.
Walmart officials have confirmed that the chain takes in about 18% of the country’s food stamps.
President Barack Obama was in Michigan Wednesday to push his agenda of raising the federal minimum wage. The president expressed a desire to hike wages in his 2014 State of the Union address and has sought to make it a key issue during this year’s midterm elections.
In a speech, delivered at the University of Michigan, the president attacked Republican lawmakers who oppose the idea.
"You've got a choice," Obama said. "You can give America the shaft, or you can give it a raise."
The president would like to see the minimum wage raised to $10.10 per hour. He argues that doing so would help many families struggling in poverty to make it into the middle class.
"It would lift millions of people out of poverty right away," he said, according to the Associated Press.
The sizable federal wage hike is not likely to pass through Congress, though. The Senate’s second-ranking Democrat, Sen. Dick Durbin of Illinois, said Wednesday that if Republicans, who control the House of Representatives, block a minimum wage proposal, he would be open to a compromise.
"What we know for certain is $10.10 isn't going to get through the Senate, much less the House,” said Sen. Susan Collins, R-Maine.
The opposition at the federal level means that it would be up to individual states to raise wages. Currently, there are 34 states debating the issue. The president’s real motive for his speech, then, may have been to provide support to those statewide initiatives, according to the New York Times.
Michigan Democrats, who would like to raise the state’s minimum wage, face stiff opposition. The state’s legislature is controlled by the GOP, and Gov. Rick Snyder is also a Republican.
A Washington Post blog indicates that state Democrats are attempting to stir emotions and create a grassroots effort to increase wages. A coalition known as Raise Michigan is trying to get an initiative put on the November ballot that would gradually raise the hourly income of the lowest paid workers to $10.10 over the next three years. They have until May 28 to collect 258,000 signatures to make a vote possible.
It is hoped that Obama’s appearance in the state will generate enough publicity to make that happen. A recent poll showed that 65 percent of Michigan voters support raising the minimum wage.
An elderly Pennsylvania woman received a bill for $1,200 from a contractor whom she hired to shovel and sweep snow for her one time.
The contractor said that he can’t run his business on minimum wage, which is $7.25 an hour. Instead, he appears to charge $400 an hour.
The 88-year-old, who told WJAC-TV she wished to remain anonymous, said she saw an ad in a newspaper for Tri-County Chimney Service. She called Tri-County to remove snow from her five window awnings and the top of her carport.
"With a senior citizen, I thought, well surely he wouldn't … If he would've said $500, I wouldn't have thought so much about it, but $1,200 really is hitting the bottom of the barrel,” she said.
She said she was so shocked that she didn’t want to argue with the man and wrote him a check for $1,200.
When WJAC-TV contacted the owner of Tri-County Chimney Service, Mike Robson, he claimed the figure was fair.
Robson said he worked on her house for two to three hours. He called the woman’s home a high-risk job that comes with insurance and liability.
Another local business, Milkie’s Landscaping, told WJAC-TV it only charges $40 an hour for the same service.
Another snow shower is forecasted for Johnstown Thursday, but the woman will think twice before hiring anyone to remove snow again.
"I was careful, but he caught me off guard," she said. "I think when you're 88 years old, surely in the name of God, somebody's not going to pull stuff like that on you."
Pennsylvania citizens reported sky-high electric bills this winter – some of them three times the normal amount.
"These spikes in the price of electricity are alarming and have put many consumers, especially the poor and elderly, in a dire situation," Pennsylvania Attorney General Kathleen Kane said in February.
A major topic in recent political debate has been the U.S.’s federal food stamp program, which many Republicans claim is detrimental to the economy and many Democrats claim is necessary for the thousands of individuals that depend on the assistance each month.
According to the Center for American Progress, there may be another solution to the food funding issue. The think tank recently analyzed the effect raising the minimum wage would have on the Supplemental Nutrition Assistance Program (SNAP), finding that the federal government could potentially save $4.6 billion per year. That figure would be reached by raising the minimum wage to $10.10 per hour, the Wall Street Journal reports.
The study argues that spending less on benefits and requiring businesses (in addition to the government) to spend more on individuals could actually have a positive impact on the economy, rather than the relatively draining one some welfare programs can have. Those welfare programs, of course, are necessary, but it’s time that the government take an innovative approach to solving the economic problems as well as the social ones. The minimum wage increase offers an opportunity to exactly that.
Although $4.6 billion in one year seems like a large sum, the figure actually represents only 6% of the overall SNAP budget. For comparison, however, the updated farm bill that recently made its way through Congress included a 10 year plan to reduce food stamp spending by $8 billion overall.
Support for raising the minimum wage has been gaining momentum in recent years, with low wage restaurant workers protesting in order to gain a $15 wage. Vermont Gov. Peter Shumlin and Connecticut Gov. Dan Malloy recently wrote a CNN article claiming that they’re taking actions “to raise the minimum wage in [their] states to $10.10 an hour by 2017.”
Whether or not the slight wage increase will have a profound effect on food stamp benefits remains to be seen, but it certainly will benefit many individuals.
Gov. Rick Perry, R-Texas, told CNN Friday that the government shouldn't even set a minimum wage, let alone increase it.
Perry appeared on a "Crossfire" panel with Illinois Gov. Pat Quinn (D), who said Illnois is grateful to President Barack Obama for "saving the American auto industry" and creating jobs in his state.
"And I still haven't heard from Rick about the minimum wage," Quinn added.
“I don’t think — I don’t think it’s government’s business to be setting the minimum wage out there,” Perry said. “And even the CBO said if you want to get rid of a half a million jobs between now and 2016, raise the minimum wage.”
The report from the Congressional Budget Office projected that raising minimum wage would increase wages for 16.5 million people and reduce employment by an average of 500,000 workers.
“Here’s the issue, Pat, and you’ve got to believe this,” Perry continued. “At a time when jobs are at a premium in this country, the last thing you want to be doing is put policies into place that will kill jobs, and not only–”
“Putting purchasing power in the hands of consumers, they’re going to spend the money,” interrupted Quinn.
“And to tell the people that don’t have a job today, ‘I’m sorry but to help these folks over here, you’re not gonna have a job.’ That is the wrong message,” Perry said.
“The Federal Reserve Bank of Chicago says every dollar you raise on the minimum wage creates $2,800 in purchasing power. Seventy percent of our economy are consumers buying things,” Quinn argued.
President Barack Obama and congressional Democrats plan to make raising the minimum wage a key issue in the 2014 midterm elections, claiming it will help many low-income families. However, a report released by the nonpartisan Congressional Budget Office says that doing so may lead to job losses throughout the economy, according to a story in USA Today.
The president’s initial push was to raise the federal minimum wage from $7.25 an hour to $9, but he has since joined with Senate Democrats who want to raise it to $10.10. Such a hike could cost 500,000 jobs, says the CBO.
“The increase in the minimum wage would have two principal effects on low-wage workers,” the report is quoted as saying in the Washington Post. “The large majority would have higher wages and family income, but a much smaller group would be jobless and have much lower family income.”
An increase to $10.10 would affect about 16.5 million workers and pull some 900,000 families above the poverty line, says the report. The CBO points out that the numbers on job losses in the report are estimates and that the actual number could be “very slight” or as high as one million.
Republicans, zeroing in on the high numbers, sought to take away a top issue from the Democrats.
“Today’s CBO report shows that raising the minimum wage could destroy as many as one million jobs, a devastating blow to the very people that need help most,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.
The report put the Obama administration on the defensive. Chief economist at the White House, Jason Furman, downplayed the seemingly more dire conclusions of the report. In a conference call with reporters he said, “estimates do not reflect the overall consensus view of economists, who have said the minimum wage would have little or no impact on employment.”
While a minimum wage increase may likely pass the Democrat-controlled Senate, it is unlikely to get through the GOP-controlled House of Representatives.
Going into the November midterms, Democrats have already decided it is an important, and likely safe, issue. A recent poll conducted by the Washington Post and ABC showed there is support for such an increase among two-thirds of voters. But Democrats may need to tread lightly following the CBO report, as an increasing number of voters become concerned about jobs. A Gallup poll this month said nearly 25 percent of voters mentioned unemployment. That number is up from 16 percent a month ago, said the Washington Post.
Sen. Mark Pryor (D-Ark.) says he opposes raising the federal minimum wage from $7.25 to $10.10 an hour because “it’s too much, too fast.”
“I know $10.10 still isn’t a whole lot of money, but I think it’s too much, too fast,” Sen. Pryor told Bloomberg News. “I’m not supportive of that.”
Sen. Pryor also gets donations from the National Retail Federation and the National Restaurant Association, which represent stores and restaurants.
Bloomberg News notes that the median household income in the state of Arkansas was $40,112 in 2012, while the nationwide median was $51,017.
A Quinnipiac University poll in Jaunary found that 71 percent of Americans support raising the minimum wage.
If the minimum wage were raised to $10.10, it would lift about 5 million Americans out of poverty, according to a recent study by University of Massachusetts-Amherst economist Arindrajit Dube, notes The Huffington Post.
While the State of the Union address always has the attention of the nation, President Obama’s latest stood in contrast to the tough year his administration faced. You know, the one that saw the government shut down, an unproductive Congress, and the troubled rollout of his signature health care plan. Of course, the State of the Union is the most deliberately crafted speech and was delivered by one of the best oratory Presidents in recent memory.
The speech—which clocked in at just over an hour—was packed with the hopes of President who feels as if he can no longer rely on the legislature. From the climate to the temperature of the economy, from immigration to retirement planning the President suggested that he was tired of waiting for them to get their legislative acts together and said he plans to use his Executive authority to address these problems. “America does not stand still,” He said, “and neither will I.”
The President called for action on the immigration issue, where a bipartisan bill died on arrival in the GOP-controlled House of Representatives. He also resurrected the idea of retirement accounts (in the form of a government bond) that has appeared in a number of budget requests but has never been acted on by the legislature.
With respect to the economy there is very little a President can do—yet still the narratives on both sides insist that it lives and dies by White House policy—and President Obama relied on tried-and-true aspirations that rarely manifest in reality. He called for more high-tech jobs and called for revisions to the tax code that are generally accepted by both parties (specifically an expansion of the Earned Income Tax Credit). Although his proposal to raise the minimum wage to over $10 has met with resistance from both sides.
Responding to his critics, President Obama also suggested that the U.S. reduce its surveillance programs and limit the use of drones. The speech ended with an emotional acknowledgement of Army Ranger Cory Remsburg who had lost vision in one eye as a result of the war in Afghanistan. Yet, the President doubled-down on his desire to leave “a small force of Americans” in Afghanistan for training and “counter-terrorism operations to pursue any remnants of al Qaeda.” Conspicuous by its absence was any reference to the controversy surrounding the cutting of military pensions.
The speech itself was a success; of course it is almost impossible for it to not have been. What bears watching is the President’s use of Executive power to address these issues. The expansion of White House powers has continued for at least the past 30 years, but rarely has a President faced such a hostile and unproductive Congress. Perhaps his threat of acting alone will spark action in the legislature, but with the mid-term elections upon us this seems unlikely.
Los Angeles will soon require the highest minimum wage in America if three city council members have their way.
"We know it will improve lives,” Councilman Mike Bonin said. “We know it will bring folks into the middle class.”
While the motion would only raise the minimum wage for hotel workers, Bonin added that he would like to implement the change citywide.
The change will begin in hotels, if passed, because the hotel industry is largest low-wage industry in the city. If the minimum wage were raised to $15 an hour, hotel workers would be able to avoid taking second jobs and relying on public assistance.
The effort, called Raise LA, has been underway for a year and led by nonprofit Los Angeles Alliance for a New Economy. Volunteers for the nonprofit have garnered support from more than 700 businesses.
Despite the monumental support, some hotel owners argue that the lodging business is still recovering from the recession and plan to lobby against the measure.
Executive director of the Hotel Association of Los Angeles Bob Amano argued that the raise would hurt business, force job cuts and create higher rates for customers. In effect, future development investors would be more frugal.
If the raise is enacted, it would not apply to LA hotels with union contracts, which has led Amano to believe the campaign is a ploy for hotels to sign union contracts.
“Is this about living wage or is this about gaining union membership?” Amano said.
The measure is expected to pass, as 14 of the 15 council members are Democrats and generally in favor of labor.
Illinois gubernatorial candidate Bruce Rauner is calling for a $1-an-hour cut in the state’s minimum wage, a move Democrats describe as “class warfare” targeting the state’s working poor.
Rauner, who would decrease the minimum wage from $8.25 to $7.25 if elected governor, insisted that the change would foster competition.
“I will advocate moving the Illinois minimum wage back to the national minimum wage,” Rauner said during a local radio broadcast report. “I think we’ve got to be competitive here in Illinois.”
The unusual stand puts Rauner at odds with the other three Republicans who plan to compete in the gubernatorial primary. Though Rauner’s competitors are uninterested in raising the state’s minimum wage, they have no interest in lowering it.
Rauner is even more unlike current Illinois Gov. Pat Quinn, who wants to raise the minimum wage to $10 an hour.
“We’re talking about people who are cleaning and busing tables, people who are caring for our elderly, people who are working in support of people with disabilities,” Quinn said. “To take $2,000 a year from those who are earning minimum wage is not only cruel and shameful, it also hurts our economy.”
Democrat Rep. Lou Lang criticized Rauner for the move on Tuesday, noting that he had seen plenty of anti-poverty plans but never pro-poverty plans.
Lang added that Rauner must be “delusional” if he believes the General Assembly would agree to the change, and that the age of robber barons has ended.