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Capitalism Has Jumped The Shark... Walmart Has Food Drive For Its Own Employees.


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How McDonald's and Wal-Mart Became Welfare Queens

By Barry Ritholtz Nov 13, 2013 9:23 AM ET

It seems that welfare queens are back in the news these days. The old stereotype was an inner-city unwed mother -- that’s dog-whistle-speak for black -- having multiple babies to get ever bigger welfare checks (throw in a new Cadillac and the myth is complete). Regardless, welfare reform of the 1990s ended that narrative.

No, the new welfare queens are even bigger, richer and less deserving of taxpayer support. The two biggest welfare queens in America today are Wal-Mart and McDonald's.

This issue has become more known as we learn just how far some companies have gone in putting their employees on public assistance. According to one study, American fast food workers receive more than $7 billion dollars in public assistance. As it turns out, McDonald's has a “McResource” line that helps employees and their families enroll in various state and local assistance programs. It exploded into the public when a recording of the McResource line advocated that full-time employees sign up for food stamps and welfare.

Wal-Mart, the nation’s largest private sector employer, is also the biggest consumer of taxpayer supported aid. According to Florida Congressman Alan Grayson, in many states, Wal-Mart employees are the largest group of Medicaid recipients. They are also the single biggest group of food stamp recipients. Wal-mart’s "associates" are paid so little, according to Grayson, that they receive $1,000 on average in public assistance. These amount to massive taxpayer subsidies for private companies.

Why are profitable, dividend-paying firms receiving taxpayer subsidies? The short answer is, because they can. The longer answer is more complex and nuanced.

Both McDonald's and Wal-Mart are engaging in perfectly legal behavior. The system was set up long ago in ways that failed to imagine companies doing this. Yes, they are taking advantage of the taxpayer, but they are also operating within the law.

Which means it is time to change those outdated rules.

The simplest solution is to raise the minimum wage. If full-time employees are living below the poverty level -- especially those with children -- its no surprise they are going to need public assistance. Raising the minimum wage over a period of time will eliminate much of this corporate welfare. The costs will be slightly higher prices at fast food restaurants and low end retailers.

The next proposal is more severe: Charge back the amount of public assistance any employee receives to the company he or she works for. It would be separate from tax filings, and simply be a direct penalty charged to the firm. I doubt there is much political will for this proposal, but I can see some people -- especially on the Left -- supporting it.

The most radical idea is bit of pure fantasy: Guarantee every person in America a minimum salary. That is a proposal under discussion today in Switzerland. Its hard to even imagine such a concept gaining traction in the U.S. outside of the Great Depression era.

My politics are pretty middle-of-the-road, and I find myself offended by subsidizing profitable companies this way. As a taxpayer, there are much better things I would like to see my monies go towards. Some rule changes are needed to end this wasteful spending.

We should get corporate welfare queens off of the public teat. Regardless of your politics, it is an issue that politicians on both the Left and the Right can agree upon.

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I see. If they were less profitable and helped people then it would be better. Being more profitable and helping people is evil. Profit = evil.

You're being the person in your avatar right now. I'm all for capitalism but this is a shameful scam. It's ******* insulting that Walmart would ask their customers to pick up their slack on providing for their employees.

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You're being the person in your avatar right now. I'm all for capitalism but this is a shameful scam. It's ******* insulting that Walmart would ask their customers to pick up their slack on providing for their employees.

Especially considering how much profit Walmart has made. If the company were suffering financially, this wouldn't be so revolting. But at a time when the company is hugely profitable, to pull something like this is just plain evil.

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You're being the person in your avatar right now. I'm all for capitalism but this is a shameful scam. It's ******* insulting that Walmart would ask their customers to pick up their slack on providing for their employees.

Yes, Im sure that WallMart does nothing for the needy. The fact that they only gave $319 million dollars to charity is good place to start. And this! Collecting food for needy employees. Im speechless.
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Yes, Im sure that WallMart does nothing for the needy. The fact that they only gave $319 million dollars to charity is good place to start. And this! Collecting food for needy employees. Im speechless.

Are you this dense? They are contributing to their employees being needy, and instead of giving less to charity and paying their employees more, likely due to complicated tax incentives of which I am not qualified to comment on, they instead ask their customers to pay fore their employees' meals.

But that's ok, because they give 320 million a year to charity. **** their employees. Amirite? #arkansaspower

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So let me get this straight- some of you guys think Walmart should pay people twenty bucks an hour to bag groceries? Seriously?

I'd prefer my tax dollars not going to subsidize these companies. When you pay your employees so terribly that individual Wal-Marts require around $1 million at minimum to subsidize their work force through programs like food stamps since they can't survive otherwise then I'd advocate them paying a living wage. When they start putting up food drives in their stores for their own employees after food stamp cuts and yet people defend this as them being nice then I'd say you have your head firmly entrenched up your ***. Pay your own ******* employees. Stop begging for handouts to get around that.

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Are you this dense? They are contributing to their employees being needy, and instead of giving less to charity and paying their employees more, likely due to complicated tax incentives of which I am not qualified to comment on, they instead ask their customers to pay fore their employees' meals.

But that's ok, because they give 320 million a year to charity. **** their employees. Amirite? #arkansaspower

It's not just the tax write offs regarding charity. They also give to charity as a form of advertising. It's mostly not altruistic.

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Are you this dense? They are contributing to their employees being needy, and instead of giving less to charity and paying their employees more, likely due to complicated tax incentives of which I am not qualified to comment on, they instead ask their customers to pay fore their employees' meals.

But that's ok, because they give 320 million a year to charity. **** their employees. Amirite? #arkansaspower

One last question. 5am comes early. How are they contributing to their employees being needy?
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I'd prefer my tax dollars not going to subsidize these companies. When you pay your employees so terribly that individual Wal-Marts require around $1 million at minimum to subsidize their work force through programs like food stamps since they can't survive otherwise then I'd advocate them paying a living wage. When they start putting up food drives in their stores for their own employees after food stamp cuts and yet people defend this as them being nice then I'd say you have your head firmly entrenched up your ***. Pay your own ******* employees. Stop begging for handouts to get around that.

Not just handouts to get around that, but they PROFIT FROM THE SALES OF THE DONATED FOOD!!

They're not asking people to bring canned goods from home. They're asking them to buy Walmart products to donate to the employees that Walmart won't help directly.

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Some of you guys need to come to terms with the modern economy. You can't ask Walmart to go out of business to accommodate a group of people who haven't done much to advance their station in life. Well, I guess you can, if you don't have any concern for the viability of a business.

Seriously, they are trying to help their employees and you guys are bitching. Who is the real enemy here?

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