Bosses get $243 billion subsidy for paying low wages

Workers want bosses to pay them a living wage. Protest in Baltimore, May 2014.WW photo: Sharon Black

Workers want bosses to pay them a living wage. Protest in Baltimore, May 2014.
WW photo: Sharon Black

The capitalist class has found more and more ways to pay tens of millions of workers below-subsistence wages by shifting what should be the cost of wages onto government at various levels. This shift of wage and benefit costs off the payrolls of the bosses and onto the government amounts to a massive subsidy to many of the richest corporations and biggest employers in the U.S. for paying poverty or below-poverty wages.

Every dollar not paid by the corporations to keep their workers at a livable wage is another dollar in profit for fast food and big-box billionaires, as well as other companies that pay low wages.

Between 2007 and 2011, the federal government spent $243 billion a year on supplements for poor workers, according to a University of California study published in 2013. (Think Progress, Oct. 13, 2013)

The study focused on fast food workers, who represent a typical segment of the low-paid workforce, but included a broader section of low-paid workers. It aimed to show the “last line of defense between between America’s growing low-income workforce and the want of basic necessities.”

The study limited itself to the cost of food stamps (Supplemental Nutrition Assistance Program or SNAP), the Earned Income Tax Credit for low-income workers, and the TANF program (Temporary Assistance for Needy Families; formerly known as welfare). It did not include Medicaid and subsidized housing.

This dramatic number — nearly a quarter of a trillion dollars needed to supplement below-subsistence wages — flows from the enormous growth of low-wage jobs and the drastic rise in forced part-time employment in the United States.

Fast food and big-box workers paid below subsistence

Low-wage fast food workers were forced to apply for $7 billion in public assistance in 2013 through such programs as Medicaid and CHIP (Children’s Health Insurance Program), among others. Low-wage workers at a single 300-employee Walmart Supercenter are on average forced to apply for about $1 million in government benefits just to stay at the subsistence level.

A study by Americans for Tax Fairness, a coalition of 400 groups, showed that Walmart workers in 2013 were forced to apply for $6.2 billion in food stamps, Medicaid, subsidized housing, etc. Walmart has 1.4 million workers. (Forbes, April 15, 2014)

Forbes reported that McDonald’s workers had to apply for $1.2 billion in government subsistence benefits and workers at Yum Brands (Pizza Hut, Taco Bell and KFC) needed $648 million.

This situation has been intensified by the growth of involuntary part-time work. In 1968, 13.5 percent of U.S. workers were employed part time. In February, it was 18.5 percent. That amounts to 7.4 million workers forced to work part time when they need full-time jobs to survive. (, March 9)

Marx on wages and profits

Karl Marx gave a basic definition of wages in his analysis of capitalist exploitation which can help in understanding this situation. Under capitalism, all workers must sell their labor power to some boss in order to survive. The price of that labor power is the wage or salary.

But the wage received is far below the value created by the worker. The total value created by the worker belongs to the boss in the form of the product or service provided. The boss sells the product or service for money and gives the worker just enough to live on. The boss pays part of the money received for materials, machines, rent, interest, etc. What is left is surplus value — that is, the value created by the worker but for which he or she is not paid. This part is kept by the boss in the form of profit.

The way the boss raises profits is to take more surplus value. The main way to do this is to lower wages. The bosses get the government to pay for food through food stamps, Medicaid for the poor, subsidized health care and housing, etc. These are the basics of life that the bosses should pay for by giving workers a living wage.

By shifting their labor costs onto the federal government, the bosses raise their profits while paying below-subsistence wages.

It is this that is fueling the low-wage workers’ campaign — a just campaign whose goal must be to force the capitalists to pay a living wage, not just a barely subsistence wage, but enough to cover the cost of having a decent life.