Corporate Welfare

When politicians talk about welfare, they usually mean programs for people who are struggling — food stamps, Medicaid, that kind of thing. But why do so many people need those programs when they already have jobs?

A Government Accountability Office study found that millions of full-time workers at some of America's largest and most profitable corporations earn so little that they qualify for food stamps and Medicaid. Walmart topped the list in every state studied, with McDonald's right behind them. Seventy percent of the people on these programs work full time.

Think about what that means. These companies are posting billions in quarterly profits, paying their CEOs tens of millions of dollars — and you, the taxpayer, are picking up the tab for their workers' groceries and healthcare. That's not a safety net for workers. That's a subsidy for corporations.

When a company pays poverty wages, it doesn't save the economy money. It just shifts the cost from their payroll to your tax bill.

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The GAO study. In November 2020, the Government Accountability Office published a report (GAO-21-45) examining Medicaid and SNAP enrollment among workers at large employers. Drawing on data from 15 agencies across 11 states, the study found that 12 million wage-earning adults (ages 19-64) were enrolled in Medicaid and 9 million were in SNAP households. Approximately 70% of adult wage earners in both programs worked full-time hours (35+ hours/week). 90% worked in the private sector, concentrated in restaurants, department stores, and grocery chains. (GAO-21-45; GAO-21-410T (testimony))

Walmart and McDonald's. Analysis of the GAO data by Sen. Bernie Sanders' office found Walmart was one of the top four employers of SNAP and Medicaid beneficiaries in every state that provided data. Across nine states, Walmart had approximately 14,500 employees on SNAP and 10,350 on Medicaid. McDonald's was in the top five employers in at least nine states, with 8,780 on SNAP and 4,600 on Medicaid. (Washington Post; Sanders.senate.gov)

The scale of the subsidy. The Union of Concerned Scientists estimated that in Arkansas alone, food system employers benefited from more than $21 million per year in indirect subsidies through SNAP benefits compensating for low wages. One in ten U.S. workers lives in a household that receives SNAP. (Union of Concerned Scientists)

CEO pay context. In 2023, Walmart CEO Doug McMillon received total compensation of approximately $25.3 million. The median Walmart employee earned approximately $27,642 — a ratio of 916:1. McDonald's CEO Chris Kempczinski received approximately $17.8 million. The Economic Policy Institute found that CEO-to-typical-worker compensation ratios across major firms averaged 344:1 in 2022, up from 21:1 in 1965. (EPI)

The "corporate welfare" framing. The term reframes public assistance not as a benefit to workers but as a subsidy to employers who pay below a living wage. If these companies paid wages sufficient to keep their workers off public assistance, taxpayers wouldn't need to fill the gap. Sen. Sanders called it "morally obscene" that "U.S. taxpayers should be forced to subsidize some of the largest and most profitable corporations in America." (Sanders.senate.gov)

Related PM scripts: The Minimum Wage, The 50-Year Experiment, What Happens When You Invest in People