Low Wages are Corporate Welfare?

Author: Vale

minimumwage cartoon The latest propaganda being disseminated by the liberal army is the concept that the government and taxpayers are subsidizing American corporations that pay their employees low wages.

  • The Claim

There are many skill-less employees who are earning low wages and to make up the difference in their lifestyle, they turn to government assistance "to survive," or so the argument goes. The other way that the liberals say it is that the corporations aren't paying a "living wage." The definition of a "living wage" is unclear, but apparently it includes cable TV and an cell phone*. The propaganda commanders realize that the "raise the minimum wage because people are poor" argument hasn't gotten a lot of traction for two reasons: 1) mainly because it is the worker's own choices that led to the outcome, and 2) nearly every study has found that increasing the minimum wage increases the unemployment rate. Because they know they can't win by attacking the issue head on, they decided to re-frame the argument. It's actually quite a clever tactic because it's hard to think of something that bothers Libertarians and Conservatives more than wasting public taxpayer money to subsidize other people's private enterprise. It may be clever, but it is nonetheless deceptive.

  • Same Arguments Rehashed

What caused a flurry of these articles to appear recently was a study that came out of the uber-liberal UC Berkeley where they estimated the cost to the taxpayer to be $7 billion a year for these low wage fast food workers. One point of contention I have with the presentation is that they use the word "families" throughout it, but what they really mean is households. Households don't have to contain children or partners, but the use of the word families implies this and I am sure this word choice was deliberately used to appeal to the empathy of the reader. Take that into consideration.

  • The Reality

But let's start with the obvious here. If the government didn't offer welfare and food stamps, it wouldn't cost taxpayers any of this money under discussion. Done. Maybe the solution is that we should stop offering government checks - problem solved. Would the liberals be happy with that solution then?

To understand their backwards thinking, if we hypothetically fire all of those workers taking government benefits, the end result would be a greater dependence on the government and they would need even more taxpayer money to make up the shortfall. Of course, neither situation is going to happen, but it is ridiculous to claim that the solution of employment to the problem of government dependency is actually the cause. The government isn't subsidizing businesses, the government is subsidizing individuals. The fact of the matter is that individuals are going to sign up for free money regardless of circumstances, if it is available to them. It's human nature. Businesses have nothing to do with this personal choice. Contrary to any legislation dictating what the minimum level of pay should be, businesses are the ones that have to determine what level of pay makes the additional hire a net positive. They aren't going to hire someone if that person is going to be a net drain on the business. For example, it doesn't make sense to hire someone for $11 an hour when that worker can only produce $8 an hour of value. And by that same token, it is not a business's job to ensure that everyone who works for them lives with all the luxuries they think they need* or pay someone more just because that person chose to have a family. If you want a better life, go out there and earn it!

  • Corporate Welfare?

It's also not corporate welfare as claimed by some. Once again, the individual is receiving the benefits from government dependency. The low wages are exogenous to the equation. Such an argument presupposes that businesses have an obligation to provide a lifestyle that every worker so desires just for the privilege of hiring them.  

  • My Take

The real funny thing to me is why are they focusing only on the welfare dependents that are working and only reporting that cost? The answer is because it fits their liberal agenda. They didn't compare the cost of those who are fully dependent on the government to those who are only partially dependent because that would shed light on that fact that the business isn't costing the taxpayer money, but in fact, saving them money. The latest figures show that only 22.3% of welfare cases and 30% of food stamp households are actually working. Those must be some pretty generous benefits if most of them have the luxury of not working. If they were really pressed, they would have no choice but to get a job. So if the total cost of poverty programs is $745 billion, what proportion of the total is attributed to the ones choosing not to work? That's what we really should be focusing on.


* One underlying problem is that poverty isn't poverty anymore. The Great Depression was poverty. India has poverty. Poverty in this country often includes many amenities that are not essential for survival. I'm sorry, but if you have cable TV, you aren't poor enough. If one were truly destitute they would not even consider spending the $70 a month for such a service. The poorest also manage to smoke at almost twice the rate of the general population. That $5.51 a pack, on average, is money that could be put towards survival if one were living right on the edge, which shows you what their true situation is. So not only are they wasting money on a bad habit, they end up leading unhealthier lives which increases the cost of Medicaid. Taxpayers get hit with a double whammy. The American Lung Association estimates the true cost of a pack of cigarettes to be $18.05 after factoring in health and productivity costs.

The end result is the taxpayer is not helping poverty but instead subsidizing people's lifestyle luxuries. If the government dependents didn't have the government to turn to they would simply be forced to allocate their money to more important necessities and miss out on a few luxuries that they have otherwise become accustomed to having the taxpayer pay for.


-2 # Keith 2013-10-30 21:21
Healthcare is essential for survival and denial of certain healthcare services amounts to the state depriving people of property(their own bodies) without due process of law.

The internet is also essential for basic liberty today also because it's the only way most people can read the laws under which they can be prosecuted. Without it, the wiretappers can have any dissenters arrested under obscure laws with selective prosecution.
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+1 # Vale 2013-11-16 12:02
Healthcare is property. Medicine, medical devices, the doctor's time and education, you name it. Not providing something is not the same as taking something away. You can see why your argument is specious when you follow this analogy: You didn't give me $100, so you stole $100 from me.

So how did people follow the laws before the internet existed? Do you actually think that even with the fastest internet connection on earth that 1 person is going to be able to read every law? And here is a newsflash: we will always have selective prosecution.

Anyway, internet connections are available at libraries, which are free, so the point is moot.
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+1 # Joe free market 2013-10-23 11:06
fine. Get rid of minimum wage. I'm all for it. However also get rid of drivers licensing, registration, safety inspections. Child services, environmental protection laws, zoning laws, enforcement of property rights outside of private property, federal health regulations, and effective perpetual intellectual property rights because these all either raise the cost of living in an anti-free market way for sub minimum wage earners, or create barriers for entrepreneurs from that class to enter the market on the grounds of production efficiency. You can't have it both ways. You either intervene in the markets with laws and regulations or you don't. If you intervene, expect the lower classes to push back when housing, food, and transportation costs are priced out of their range due to market interference... like minimum wage. Want a nice country club and homes far away from shanties? Own _ALL_ the land or accept minimum wage intervention. Be consistent when arguing about market intervention, please!
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+1 # Vale 2013-10-23 20:11
I'm not sure about the driver's licensing one but I am on board with most of the others. :)
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-1 # Keith 2013-10-27 01:12

You hit the nail on the head. These people aren't true believers in liberty. They believe in a new slavery. I applaud your consistency and convictions even though I disagree with libertarianism. Instead, I favor a limited government that provides a good safety net.
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