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Friday, December 9, 2016

Dec. 18 (Bloomberg) — We’ve already looked at the benefit to McDonald’s of having its workers subsidized by state and federal aid. Now, its Walmart’s turn. Recall our discussion last month on the related subject of “How McDonald’s and Walmart Became Welfare Queens.” We learned that employees of these two companies are often the largest recipients of aid in their states.

McDonald’s recently found itself in the spotlight, courtesy of its “McResource” line — the company help line that helps its poverty-level, full-time employees enroll in various welfare programs. A recording of that McResource line sparked outrage, driving this issue into public view.

More recently, Walmart’s holiday public-relations headache began when a Canton, Ohio, store decided to hold a food drive for needy local families for the holidays. What made this a PR nightmare was that the needy families were full-time Walmart employees who were working in the store holding the food drive.

Thus, our questions over the arc of these columns about some of the largest retailers in America — Walmart is the single largest private employer in the country; McDonald’s, the largest fast-food chain – are simply this:

—What should it mean to be employed full-time in America?

—Should taxpayers be supplementing the salaries of these often minimum-wage workers at large profitable firms?

—What would it mean if higher salaries were mandated by an increased minimum wage?

Walmart has 2.2 million employees, including 1.3 million hourly workers. It employs 1.2 million people in the U.S. alone. Gross revenue is $475 billion, generating profits of $17.20 billion. It dominates the discount retail space, and according to Bloomberg, has a 66.70 percent market share.

The size of Walmart is sometimes difficult to visualize. To put it into some context, consider the following: 100 million shoppers patronize Walmart stores every week. Walmart has twice the number of employees as the U.S. Postal Service, a larger global computer network than the Pentagon, and the world’s largest fleet of trucks. Americans spend about $36 million dollars per hour at the stores. Walmart now sells more food than any other company in the world, capturing one of every four dollars spent on food in the U.S. The average American family of four spends over $4,000 a year there. Each week, it has 200 million customers at more than 10,400 stores in 27 countries. If the company were an independent country, it would be the 25th largest economy in the world.

Given the sheer size of Walmart, how it pays “associates” is likely to have an outsize impact on their local and state communities, according to a number of studies.

Walmart’s low wages have led to full-time employees seeking public assistance. These are not the 47 percent, lazy, unmotivated bums. Rather, these are people working physical, often difficult jobs. They receive $2.66 billion in government help each year (including $1 billion in health care assistance). That works out to about $5,815 per worker. And about $420,000 per store. But the federal and state aid varies widely; in Wisconsin, a study found that it was at least $904,542 a year per store. (See the accompanying chart.)

Why, I keep asking myself, do we effectively want to subsidize a private company’s employees? Wouldn’t it make much more sense to raise the minimum wage to a level that a full-time worker could support the average American family of four? Just $11.33 puts a 40-hour employee over the poverty line. The costs of this increase would be borne by the company and its consumers — not the taxpayer.

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