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POLITICS: PennAve

Walmart and McDonald's hit as 'welfare queens'

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PennAve,Joseph Lawler,Economy,Budgets and Deficits,Welfare,Walmart,Minimum Wage,Subsidies

Critics of big businesses have found a new line of attack against huge companies like McDonald’s and Walmart: calling them “welfare queens” for paying such low wages that their workers rely on government safety-net programs to scratch out a living.

The "welfare queen" line of criticism has taken off partly because of studies like a recent one from researchers at the University of Illinois and University of California Berkeley's Labor Center that found that federal spending on public assistance for fast food workers totals almost $7 billion a year, including Medicaid, food stamps and Earned Income Tax Credit refunds.

Those findings have been taken up by participants in living wage protests at fast-food outlets in cities across the U.S., instigated by groups like Fast Food Forward, a group with union backing that advocates raising the minimum wage.

A few events also have conspired to help perpetuate the corporations-as-welfare-queens accusation.

McDonald's drew outrage in July for providing workers with a sample personal budget that suggested getting a second job, and then again in late November when a group run by Fast Food Forward said a “McResources” hotline offering tips to employees directed one worker to sign up for food stamps and Medicaid. McDonald’s denied the accusations.

A Walmart in Canton, Ohio, held an in-store food drive — for its own low-income employees. Images from the food drive went viral.

Bloomberg View columnist Barry Ritholz validated the “welfare queens” meme with a series of articles in November and December criticizing Walmart and McDonald's as government moochers.

Sylvia Allegretto, one of the study’s authors and a professor at Berkeley, suggested that the appropriation of the Reagan-era term “welfare queen” to describe corporations is a product of increasing inequality and soaring corporate profits.

“I don’t know that I would call them ‘welfare queens,’ I really don’t like calling people names,” Allegretto said. “I think the important part of that story is to get the reality” that low wages for fast-food workers aren’t “driven by some kind of free market capitalism. These are policy-driven results.”

Groups like Fast Food Forward are seeking mainly an increase in the federal minimum wage.

Although most liberals — and even many conservatives — favor raising the minimum wage, not all agree with the new “welfare queens” line of attack, which involves an implicit criticism of assistance for working families.

Notably, President Obama’s top economic adviser, Council of Economic Advisers Chairman Jason Furman, called progressives’ denunciations of assistance programs as corporate welfare “puzzling” in a 1996 paper.

“The right response to Walmart is not to scale back these programs but to expand them in order to fulfill the goal of making work pay,” Furman wrote. Many safety net programs, especially following the 1996 welfare reform law signed by Bill Clinton, are intended to boost incomes while encouraging work.

Walmart and McDonald’s critics say they don’t want to cut the safety net but rather ensure that companies are paying “their fair share” by raising corporate taxes and adding minimum wage increases into the mix of support for low-income workers. Such a change would result in support for impoverished Americans showing up on companies’ bottom lines rather than in the federal budget. Furman, on the other hand, believes that Walmart already pays as much in taxes as a comparable company.

The White House supports raising the minimum wage, but its desire to reform corporate taxes and lower rates could run headlong into the growing sense that U.S. businesses are welfare queens.

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