Ky. voices: Ron Formisano is tired of his taxes subsidizing Wal-Mart

February 25, 2014 

Ron Formisano is author of The Tea Party: A Brief History (Johns Hopkins, 2012) and is working on a book about the consequences of inequality.


What kind of society is it in which the 40 highest-paid hedge-fund managers and traders take home $16.7 billion in 2012, and that's not too much? But $10 an hour for workers living just above, at or below the poverty level is too much?

What kind of religion makes alleged conservatives oppose giving the hardworking poor a living wage?

Aside from the morality of raising the minimum wage, there are strong practical reasons. A $7.25 minimum wage that is worth less than it was in 1968 is dragging down the economy.

Raising it not only will benefit millions of workers besides those who work for the minimum, it will pump money into the economy, create jobs, and benefit all of American society. Low-wage workers tend to spend most of their income.

Seldom mentioned in current debates over this issue is the fact that taxpayers subsidize those industries that pay the lowest wages. Why? Because those workers need to turn to taxpayer-funded safety net programs (Medicaid, fuel assistance, food stamps). Indeed, the Wal-Marts and McDonald's count on this, and advise their employees accordingly.

Message to Wal-Mart and McDonald's: I prefer not to subsidize you with my taxes, especially since the six Wal-Mart heirs have as much wealth as 42 percent of all Americans, while McDonald's CEO Don Thompson took home $13.8 million in 2012. Quit freeloading on my taxes, please.

Recently, more than 600 economists, including past presidents of the American Economic Association and Nobel laureates, signed a letter to President Barack Obama advocating raising the minimum; they agreed it would not hurt employment and would reduce the poverty rate. Now that 20 states have minimums higher than the federal standard, researchers have been able to compare their jobs pictures with those that have not, and have found "little to no adverse impact on employment."

Lobbyists for the fast-food chains cry crocodile tears over teenagers losing jobs. In fact the average age of minimum-wage workers is 35; many support families. Seventy-nine percent have a high school degree. About 46 percent have attended college or have college degrees.

People of color make up 42 percent of minimum wage workers.

The fast-food industry makes big money, a success that comes at a cost of billions to taxpayers. A study by economists at the University of California-Berkeley found that more than half (52 percent) of front-line fast-food workers needed to rely on at least one public assistance program, with an average cost to taxpayers of nearly $7 billion per year.

A recent study by the Democratic staff of the U.S. House Committee on Education and the Workforce measured collateral costs that Wal-Marts in Wisconsin passed on to taxpayers.

Counting the number of Wal-Mart workers enrolled in safety net programs, a single Supercenter costs taxpayers an estimated $904,542. Counting the totality of eligible recipients of aid for reduced-price school lunches and breakfasts, housing assistance, nutrition assistance, home energy assistance, child care and Medicaid raised the cost to taxpayers of one Supercenter to $1.7 million.

America needs more jobs, more jobs with higher wages, and more purchasing power to drive a consumer-oriented economy. A middle class whose wages and consumption have declined will also get a boost. Raising the minimum wage is a start.

Ron Formisano is author of The Tea Party: A Brief History (Johns Hopkins, 2012) and is working on a book about the consequences of inequality.

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