COLUMN-A 'corporate welfare' claim vs Walmart and Amazon over worker benefits: Ross Kerber

By Ross Kerber

March 11 (Reuters) - Providing low-paid workers with government benefits like health insurance and food assistance is usually considered to be socially minded policy. But another way to look at the payments is as subsidies giving big businesses access to a large pool of labor able to work for less-than-living wages.

That's the critique of Sarah Anderson, Global Economy Project Director at the Institute for Policy Studies, a progressive-leaning think tank in Washington, D.C. In a new report she reviewed pay practices of companies she dubbed "The Low-Wage 20," or the 20 largest employers of low-wage U.S. workers.

Among her top findings: more than half of these firms reported 2024 median pay that would make a family of three eligible for food benefits under the federal Supplemental Nutrition Assistance Program, also known as SNAP, and for government-subsidized Medicaid health insurance benefits in most states. All the while, most of their CEOs earned hundreds of times as much per year.

The following transcript of our conversation has been edited for length and clarity. At the end I've published responses from the two top U.S. employers, Walmart WMT.N and Amazon.AMZN.O

Question: Sarah, could you talk about how you were able to develop the calculations?

Answer: I have worked on executive compensation issues for a long, long time. And this is a report that really connects those high CEO pay levels to low-wage worker issues. These are all companies that are in the S&P 500 and they're the ones that have the lowest median pay levels that they've reported to the SEC (U.S. Securities and Exchange Commission) and that also have a majority of their workers in the United States.

Q: You found a lot of these employees were eligible for things like Medicaid and SNAP food assistance, which are social benefits to lower-wage Americans.

A: We think that median pay number that the companies report themselves is a really good indicator of how many of their workers might be on Medicaid and SNAP. We don't have the exact figures because they're not required to report that, but there were a handful of state governments that have revealed specific data company by company, and Walmart and Amazon were at the top of all of those lists with really clear numbers in terms of how many of their employees are.

These benefits are at risk right now. So it's a good time to be having this conversation because these workers who are already having to stretch to pay their bills are going to be facing even more hardship.

Q: If I were an executive for one of these companies, I'm sure I would respond by saying, well, a lot of these are part-time workers who don't want to be working full time. And, the calculations for public assistance are based on household size. Maybe it's not realistic to expect a head of household, a three-person household, to survive on just one income in this day and age.

A: I would say that having a business model that is heavily reliant on part-time workers is a choice. It's a way to get around having to pay full benefits at a lot of these companies under the Affordable Care Act. Large companies have to provide affordable health insurance, or at least offer it to people working at least 30 hours a week. So if you can keep your workers, you know, at a lower hourly level, then you can get around that. I (also) question whether people are working part time because they want to work part time. A lot of people are having to work several part-time jobs to try to make ends meet.

You know, a huge share of the low-wage workforce are single parents. And for these companies to just abdicate their obligation to provide a living wage says a lot about their priorities.

Question: Surely mom-and-pop businesses face the same challenge. A lot of them can't pay their workers enough to get them above the thresholds for public assistance as well. What's the difference?

A: These should be the leading among the leading corporations of America. They're in the S&P 500. They set the standards for wages and other things. The other thing that just makes it so outrageous to so many people is to see the CEO pay levels at these companies. There's no owner of a small mom and pop that is making the $18 million a year, which is the average (for CEOs) in our low-wage 20. It's a business model that is based on really extracting from the people often who are the frontline workers.

Q: Something that jumped out at me, among the large employers in Nevada (a state cited in the study) is that a couple of public sector organizations, a school district and a county that have a lot of their employees eligible for public assistance.

A: That's true. I have to say I was dismayed to see the U.S. Postal Service was on some of these lists as well. It just gets to my broader view on this that having these extreme gaps between CEO pay and worker pay, where people don't feel like they're part of a team, it just doesn't bring out the best in people and that does have real costs in terms of lower employee morale and higher turnover rates.

COMPANIES RESPOND

Here is what a Walmart spokesman said about the study - "We offer a ladder of opportunity so people can build a career at Walmart, which includes a small percentage of our workforce that comes to us on public assistance. We hire them, train them and give them the chance to build a better life."

Here is what Amazon spokesperson Eileen Hards told me: “Amazon pay is among the best in the industry – well over double the federal minimum wage and significantly more than other retailers. Pointing fingers at Amazon over SNAP and/or Medicaid is a red herring when eligibility is based on total household income and size – and not individual wages."

"For example, two employees who work at the same site and earn identical pay in the same state can have completely different SNAP or Medicaid eligibility depending on whether they support children, elderly parents, or are the sole earner in their household. As we’ve said for years, what really needs to happen is a significant and large increase in the federal minimum wage—that would be a big boost for American families.”