One of the ludicrous notions that has infected our political discourse is that government jobs aren’t ‘real’ jobs (tell that to fireman when your house is burning down…). But a lot of private sector jobs are heavily subsidized by the government. I’m not referring to private contractors hired by the government, but jobs that are supposedly private sector. Low wage private sector jobs. How are these jobs subsidized? Food stamps (now known as SNAP; italics mine):
Saucedo, who earns $9.70 an hour for about 26 hours a week and lives with her mother, is one of the many Americans who survive because of government handouts in what has rapidly become a food stamp nation.
Altogether, there are now almost 46 million people in the United States on food stamps, roughly 15 percent of the population. That’s an increase of 74 percent since 2007, just before the financial crisis and a deep recession led to mass job losses….
While there are clearly some cases of abuse by people who claim food stamps but don’t really need them, for many Americans like Saucedo there is little current alternative if they are to put food on the table while paying rent and utility bills.
“It’s kind of sad that even though I’m working that I need to have government assistance. I have asked them to please put me on full-time so I can have benefits,” said the 32-year-old.
She’s worked at Wal-Mart for nine months, and applied for food stamps as soon as her probation ended. She said plenty of her colleagues are in the same situation.
So are her customers. Bill Simon, head of Wal-Mart’s U.S. operations, told a conference call last Tuesday that the company had seen an increase in the number of shoppers relying on government assistance for food.
About forty percent of food stamp recipients are, like Saucedo, in households in which at least one member of the family earns wages. Many more could be eligible: the government estimates one in three who could be on the program are not.
“If they’re working, they often think they can’t get help. But people can’t support their families on $10, $11, $12 an hour jobs, especially when you add transport, clothes, rent.” said Carolyn McLaughlin, executive director of BronxWorks, a social services organization in New York.
Basically, food stamps have become a “low wage support program”:
Over the past 20 years, the characteristics of the program’s recipients have changed. In 1989, a higher percentage were on benefits than working, but as of 2009 a higher percentage had earned income.
“SNAP is increasingly work support,” said Ed Bolen, an analyst at the Center on Budget and Policy Priorities.
And that’s only likely to get worse: So far in the recovery, jobs growth has been concentrated in lower-wage occupations, with minimal growth in middle-income wages as many higher-paid blue collar jobs have disappeared.
And 6 percent of the 72.9 million Americans paid by the hour received wages at or below the federal minimum wage of $7.25 an hour in 2010. That’s up from 4.9 percent in 2009, and 3 percent in 2002, according to government data.
Bolen said just based on income, minimum wage single parents are almost always eligible for food stamps.
“This becomes an implicit subsidy for low-wage jobs and in terms of incentives for higher wage job creation that really is not a good thing,” said Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, whose research shows raising the minimum wage would spur economic activity.
To phrase this another way, the service industries’ profits are subsidized by the food stamp program, along with other social services such as Medicaid and SCHIP. If a worker is earning eight dollars per hour at forty hours per week (if he can find forty hours of work in this economy), SNAP alone accounts for fifteen percent of that person’s gross income*. When you factor in other supports (Medicaid, SCHIP, Section 8, and the Earned Income Tax Credit), that percentage increases dramatically.
If these corporations didn’t receive subsidies and had to foot the bill for even the mediocre subsidies, they would be broke, or else have to raise prices–meaning your low prices are someone else’s poverty wage and welfare** dependency. Shrieking “Get a job, you bum” or “Stop freeloading” isn’t appropriate here, since American consumers, in many cases, are aiding and abetting this outcome (besides, the working poor are working). This is a result of specific political choices, such as weakening private sector unions–these jobs are not an ‘organic’ result of the market.
But government jobs with decent benefits and salaries are evil. And socialist. Or something.
*Don’t forget that all wages are taxed at 7.25% through the payroll tax. No exceptions.
**I’m using welfare colloquially to describe the entire system of social supports.