Economy & Trade

What The Bernie Sanders Amazon Welfare Fight Is Really About

It's less about food stamps and health benefits than it's about worker power.

Sen. Bernie Sanders (I-Vt.) plans to introduce legislation Wednesday that would tax companies like Walmart and Amazon for every dollar their workers receive in government food or health care benefits.

The bill isn’t really about collecting funds for food stamps or Medicaid ― it’s about making a spectacle of the low pay and bad working conditions at profitable businesses.

“A company like Amazon, which is owned by Jeff Bezos, the wealthiest person in the world, who is worth about $150 billion, whose wealth is increasing by $225 million every single day ― the American people should not have to subsidize Mr. Bezos,” Sanders told HuffPost in an interview. “He should pay his workers a living wage.”

The phenomenon of large firms leaving their workers poor enough to qualify for social safety net benefits has drawn attention from liberal policymakers since at least 2004, when congressional Democrats used payroll data to find out how many people who worked at Walmart stores also received Medicaid benefits, which are generally available to people with low incomes.

“When low wages leave Walmart workers unable to afford the necessities of life, taxpayers pick up the tab,” Democrats said in a 2013 version of their report, which found that low pay at Walmart stores in Wisconsin alone potentially cost the government nearly $1 million in safety net benefits. At that point, Democrats were hoping the report would bolster the case to raise the minimum wage.

Sanders has approached the issue from a different angle. His legislation would give employers a choice: Either pay better or pay the government back for what your workers receive in Medicaid, Supplemental Nutrition Assistance Program benefits, housing subsidies and school meals from the National School Lunch Program.

Sanders has seized on an April report from The Intercept and a think tank called the New Food Economy that found that large numbers of Amazon workers get SNAP benefits in several states, including one-third of its employees in Arizona. (His office has also cited a 2015 report by the University of California, Berkeley, Labor Center finding that low wages cost the government more than $150 billion annually in public benefits.)

As the formal introduction of his bill approaches, Sanders has been feuding with Amazon over its pay practices.

Using information from Amazon’s own disclosure to investors, Sanders pointed out that the median annual pay for an Amazon employee is only $28,446 ― 9 percent below the industry average for a material moving worker, according to the Bureau of Labor Statistics. Last week the company responded in a blog post, arguing that its own number is misleading because it includes part-time workers; its median annual pay for a full-time U.S. employee is $34,123, which is slightly above the industry average.

Amazon hasn’t provided a ton of detail about its workforce. In its most recent financial disclosure, the company said it had 566,000 employees at the end of 2017, but it didn’t say how many of those workers are full time. The company also said its employment levels “fluctuate due to seasonal factors” and that it uses temporary staffing firms.

Amazon spokeswoman Lindsay Campbell said most of the company’s workers are regular full-time employees most of the time. 

“Throughout the year on average, nearly 90 percent of associates across the company’s U.S. fulfillment network are regular employees who receive full benefits and stock options,” Campbell said in an email. 

Amazon said last fall it would add about 120,000 temp workers for the holiday season. The temps often receive similar hourly wages to other entry-level full-timers, but they typically don’t receive the same benefits ― including stock and performance bonuses ― and are often let go with little or no notice.

The Sanders bill would tax businesses for workers receiving benefits regardless of whether the workers are full or part time. He said he suspected that, like Walmart, Amazon used part-timers to avoid having to pay for health and retirement benefits. Labor advocacy groups have accused Walmart of increasing its use of part-time workers as a way of saving money and said that a majority of the company’s part-time workers would rather work full time. (Walmart also has a habit of leaving part-time employees out of the salary data it releases to the public, almost certainly because including them would drive down the pay averages.)

“What we believe is that half of the employees who work for Amazon have  salaries of less than $28,000 a year,” Sanders said in response to a question about Amazon’s defense that its part-timers pull down its annual salary data. “What I also know is, in the case of Walmart, is many of those workers are working 29 hours per week precisely in order to not be able to get benefits that they would get if they worked more than 30 hours per week.”

And while Amazon touts the number of jobs it created last year, it’s important to remember that such job growth doesn’t occur in a vacuum. Much of that has come at the expense of older brick-and-mortar retailers that can’t match Amazon on price and shipping speed. Some Amazon critics have urged cities to reject proposals for Amazon fulfillment centers, arguing they would ultimately undermine local retail.

The Sanders proposal is unlikely to become law. The House and Senate are currently debating a reauthorization of the Supplemental Nutrition Assistance Program, which helps nearly 40 million Americans buy food each month, but the two chambers have already voted on their respective versions of the legislation and are currently negotiating a final version.

Sanders complains that food stamps “subsidize” big companies, but basic economic theory would say the opposite is true ― that helping poor people survive without work income makes them less likely to take bad jobs. In response to the UC Berkeley study, for instance, one economist pointed out that SNAP benefits tend to decrease the labor supply, which, if anything, would put upward pressure on wages. “And if [food stamps] don’t lower wages, they can’t be thought of as subsidies to low wage employers,” University of Massachusetts Amherst professor Arindrajit Dube wrote in 2015.

That’s why it’s usually Republicans, not Democrats, who are mad that too many Americans receive SNAP benefits. During the food stamp debate, Republicans have continuously complained that businesses in their districts can’t find enough people willing to work. When it endorsed the House version of the food stamp bill, the U.S. Chamber of Commerce said the proposed stricter work requirements would be “likely to increase the size of the labor force” ― in other words, make more people willing to take jobs at whatever wage the firms feel like paying.

And a paper by the White House Council of Economic Advisers pointed to past research suggesting that when food stamps were first introduced in the 1960s and ’70s, work hours among female heads of households in some areas fell by 50 percent.

A better example of a policy that subsidizes employers would be the Earned Income Tax Credit, which pays benefits annually based on the amount a taxpayer has earned in a year. Research has suggested that the program reduces wages by making people more willing to accept lower pay, knowing they’ll eventually get a bonus from the government.

Matt Bruenig, founder of the left-wing think tank the People’s Policy Project, argues that people should take Sanders and others seriously, but not literally, when they agitate against a company whose workers receive welfare benefits.

“What really bothers people is low pay, and food stamp receipt is simply an indicator of low pay,” Bruenig said in an email. “Put differently, saying a company pays so little that their workers rely on food stamps is really just a more colorful way of decrying low wages, which is a fair thing to decry.” 

 


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