How Walmart's Bosses Get Rich off Welfare Abuse

By Carl Gibson, Reader Supported News

28 July 14

orget about the guy at the grocery store using food stamps to buy lobster. Walmart, the world’s largest retail company, is even more dependent on government welfare so it can make jaw-droppingly obscene profits. In fact, government handouts are the main reason Walmart is so profitable, and the billion-dollar corporation’s business model is centered around the continued dependence on social safety net programs. Walmart’s welfare abuse is costing taxpayers billions of dollars per year. It’s time to get them off the government teat and make them start paying their own way.

Paying Workers Poverty Wages

When Walmart pays its workers so little that they need food stamps to survive, they’re also investing in a steady profit stream. Even though their prices are roughly the same or even more than their local competition, Walmart’s excessive marketing of “low prices” makes them a first-choice supermarket for people living in poverty, including their employees. Its 1.4 million employees alone account for a huge revenue source for Walmart, as the company is the largest private-sector employer in the US.

Employee wages are so low that during the last holiday season, one Walmart in Ohio held a food drive for its own employees so they could have a decent Thanksgiving dinner. This video of Walmart workers sharing their own stories in time for last year’s Black Friday protests included footage of one worker talking about how other workers often had to loan each other money so they could pay their bills on time.

Walmart’s insistence on paying its workers so little is especially despicable, given that the company could pay workers much more without even changing any of its prices. The think tank Demos crunched the numbers and found out that if Walmart simply stopped spending billions every year on buying back its own stock to drive up the value of stock options owned by executives, it could pay workers an average of $14.89 per hour without increasing prices by a cent.

Excessively Compensating Executives

As the recession wears on for most of America, Walmart’s profits have soared to $16 billion on revenues of over $473 billion. Because of the company’s ousting of local competitor supermarkets in cities and towns across America, the working poor have few options when grocery shopping, often with the help of food stamps. Out of all of its revenues, food stamps accounted for $13.5 billion in sales for Walmart just last year. Walmart is using their soaring profits to give “performance-based” pay raises to executives, and using the performance pay loophole in the US tax code to dodge their federal tax obligations. The Institute for Policy Studies learned that taxpayers have had to pay for $104 million in the last six years (beginning at roughly the same time as the recession) for Walmart’s performance-based pay bonuses that topped out just short of $300 million. This would be enough in tax dollars to pay for 33,000 impoverished children’s free/reduced school lunches over the same time period.

Taxpayers cough up over $6 billion each year to pay for the social safety net programs that Walmart workers depend upon, like food stamps and Medicaid. Walmart’s abuse of the “accelerated depreciation” tax loophole costs US taxpayers another $1 billion per year, meaning the company gets to write off capital investments faster than they’re actually used. The Walton family itself, which makes just as much in 3 minutes of dividends as one of their hourly employees makes in an entire year, lists those dividends as capital gains, paying a preferential tax rate. That alone costs US taxpayers another $607 million.

As Americans for Tax Fairness (ATF) discovered, the annual $7.8 billion that Walmart leeches off of US taxpayers could instead be used to hire 105,131 teachers. In Alice Walton’s home state of Texas, $813 million could fund hiring 12,000 more teachers. Walmart chairman Rob Walton could see to it that the company pays employees fairly, saving taxpayers in his home state of Arizona $176 million. That alone could hire 2,500 more teachers in Arizona’s schools. Page 10 of the ATF report lists how much each state would gain in new tax dollars for public education if Walmart and the Walton family weaned themselves off of government welfare programs.

It’s time we stop demonizing the victims of this recession who use meager amounts of food stamps to stay fed, and focus on the real problem. Corporations who depend on government welfare, like Walmart, along with big defense contractors like Boeing, GE, and Verizon, have no business draining much-needed tax dollars that should be spent on essential programs like public education.

Carl Gibson, 27, is co-founder of US Uncut, a nonviolent grassroots movement that mobilized thousands to protest corporate tax dodging and budget cuts in the months leading up to Occupy Wall Street. Carl and other US Uncut activists are featured in the documentary We're Not Broke, which premiered at the 2012 Sundance Film Festival. Carl is also the author of How to Oust a Congressman, an instructional manual on getting rid of corrupt members of Congress and state legislatures based on his experience in the 2012 elections in New Hampshire. He lives in Sacramento, California.

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