The Class War at Walmart

CEOs at companies like Walmart and McDonald's continue to pull down multimillion-dollar salaries while their workers' wages stagnate. And the whole system is underwritten by what amounts to a massive public subsidy.

Nearly three-quarters of those assisted by programs designed to aid the poor belong to families with at least one member who is working. (Mike Mozart / Flickr)

In 2018, Walmart CEO Doug McMillon took home more than $23 million. By contrast, McDonalds’s Chris Kempczinski was paid a mere $18 million last year — falling just short of making two thousand times the median wage for workers at his company.

As many businesses across the country struggle to stay afloat amid rolling pandemic lockdowns, many of America’s largest corporations are doing just fine. Better than fine, in fact: it emerged this week that Walmart’s profits surged during the third quarter of 2020, exceeding $5 billion with McDonalds’s profits jumping almost 5 percent to just under $2 billion. The pandemic has proven especially lucrative for big retailers, the largest fifteen (including Walmart) collectively making $60.8 billion in profits in 2020 so far — an increase of $14.6 billion from last year.

All told, it’s a stark illustration of the extent to which the American economy works like a giant Ponzi scheme that thrives on the labor of workers paid next to nothing for the benefit of the exorbitantly rich. A deeply exploitative arrangement, it’s also one effectively subsidized by the taxpayer — as a new report published by Congress’s Government Accountability Office (GAO) makes vividly clear.

Commissioned by Bernie Sanders, who made the low wages of companies like McDonald’s and Walmart a centerpiece of his recent presidential campaign, the study uses data from February gathered from agencies across eleven states charged with administering Medicaid and the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps.

Tasked with analyzing the employment backgrounds of the roughly twenty-one million American workers who make use of both programs, the authors paint an astonishing portrait of how huge and profitable companies pay wages so low that many employees must turn to federal aid — or starve.

Walmart and McDonald’s, perhaps unsurprisingly, earned the singular distinction of being the two leading companies with workers forced to turn to Medicaid and SNAP — the former ranking among the top four employers of SNAP and Medicaid beneficiaries in every state.

Other large corporations to appear throughout the report include Amazon, Lyft, Burger King, and Dollar General. In some areas of the country, workers at Walmart and McDonald’s alone account for non-negligible percentages of those receiving aid from the two federal programs. Georgia, for example, had 136,130 working age recipients of SNAP in February (excluding the self-employed) with nearly six thousand, or 4.4 percent, employed at either McDonald’s or Walmart.

Among the report’s top-line findings are that roughly 70 percent of the 21 million workers receiving Medicaid or SNAP (twelve and nine million respectively) work full-time schedules of thirty-five hours a week or more. Unsurprisingly, the vast majority are employed in service jobs at businesses such as restaurants, grocery stores, and big retailers.

The GAO’s conclusions add to an existing body of research showing the extent to which profitable companies paying low wages are effectively subsidized by the federal government to the tune of billions and billions of dollars. A 2015 study by Berkeley’s Center for Labor Research and Education found that nearly three-quarters of those assisted by programs designed to aid the poor belong to families with at least one member who is working.

The decades-long stagnation of wages is a big part of the story. As the study noted, the real hourly wages of the median American worker were a mere 5 percent higher in 2013 than they were in 1979, with wages for the lowest paid decile of workers 5 percent lower. “Inflation-adjusted wage growth from 2003 to 2013,” its authors went on to observe, “was either flat or negative for the entire bottom 70 percent of the wage distribution.”

However you look at it, American workers have a raw deal — millions of those employed at some of the nation’s largest and most profitable companies are paid less than what’s needed to afford the necessities of life, let alone dignity or comfort. A bargain basement economy so exploitative that CEOs make millions while literally relying on government subsidies to stop workers from starving or dying? The roulette wheel of American capitalism could hardly look any more rigged if it tried.