Business as Usual

January 27, 2016

 

We’ve all heard the debates from so called economists: “raising the minimum wage will make things worse,” “what I do is worth more than a flipping burgers! Keep the minimum wage low," and “they’re lazy, they don’t deserve a higher paycheck.”
Apparently, our corporations cannot afford to increase the wages of their lowest-paid workers. If they do so, it will raise costs of food, of gas, of living, of everything! Well... if we just look at a few basic financial statements of these companies and compare the costs of minimum wage increases with their profitability, the gap becomes staggering. These companies can more than cover the cost of paying a higher minimum wage to their low-level employees. Exhibit A (and the only exhibit for the sake of keeping your attention): Walmart.

 

In 2014, the U.S. government payed 7.8 billion dollars in food stamps to Walmart employees - only ten percent of its workforce. Fifteen percent of all food stamps are actually spent at Walmart. That means Walmart is also payed 11 billion dollars annually through food stamps, paid for by citizen tax dollars. Not only did taxpayers cover the cost of cheap labor for this company, but they also covered 11 billion dollars worth of annual revenue for the company on their balance sheet. You are paying for Walmart’s cheap labor while corporate staff continues to give themselves larger bonuses and wages annually. Walmart continues gain profits each year. You see, just by observing Walmart’s self-published public balance sheet and income statements, it is easily proven that enormous companies like Walmart can indeed afford to pay their employees higher wages instead of depending on “we the people” to subsidize their low-cost labor.

 

In that same 2014 year, Walmart made a total profit of 120 billion. If Walmart were to simply pay for that 7.8 billion dollars in food stamps themselves by offering better wages, the company would lose less than 7% of their profit that year, which would would easily be made up by a company like Walmart in 2 years if their growth continues on its five year trend.

Now remember, these numbers are from when Walmart was offering their employees minimum wage which was at most, 9 dollars per hour in a state like California, but typically only $7.25 in most states. Since then, Walmart has increased their hourly rates to 10 dollars an hour in 2015. That means they should have lost some profit gains right? WRONG! Walmart gained more profits in 2015 after raising their entry-level wages than in 2014 by more than 400 million dollars comparatively. Again, Walmart gained 400 million more in profits even after they raised their base pay above the minimum wage. Remember, the corporate workers were given bonuses and wage increases as well, typically more than a single base worker makes in a year. This general increase isn’t quite the raise needed to take all those low-level employees off food stamps, but if Walmart can afford an extra $2 per hour AND corporate bonus/wage increases AND grow their profits by hundreds of millions of dollars, imagine what they could actually be paying their employees while maintaining profitability each and every year.

 

We are paying as a nation to keep entry level workers from starving with our own tax dollars. If this were to change, what needs to be done? Do we stop giving them support and let them starve? This is hardly an option for any politician, and let’s be honest, that’s not what ANYONE in America should be about. Should we conduct business as usual? Well... inflation will only cause those poor people to become even more poor, meaning more tax dollars to more people to make up the difference. The answer seems clear: if we raise the minimum wage, the burden of responsibility will be shifted from your tax dollars/federal funds to the companies that provide income for their workers. It just takes some simple math from a public financial statement to see that these corporations can indeed afford this cost. Moreover, those companies will remain profitable, and perhaps will even increase profitability like Walmart has done on their own.

 

So what do you say? Business as usual? I guess we’ll find out in 2016.

 

All data and statistics are from public financial statements of Walmart and the U.S. Government. Dollar amounts were rounded down to give conservative estimates.

 

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