New Report Finds $153 Billion in Corporate Welfare – Majority of Taxpayer Funded Public Assistance Goes to People Who are Employed

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Over the past few weeks, I’ve focused on the many dangerous myths people are encouraged to tell themselves by the various power structures. These myths prevent critical thinking and make people far more malleable and passive. I’ve discussed the stock market myth and the Hillary Clinton myth in some detail, but today I want to expound upon the public welfare, i.e., food stamp myth.

This myth has two components to it, which work brilliantly to manipulate two different segments of the U.S. population. On the one hand, the wealthy and upper middle classes who do not need public assistance have generally bought into either one of two notions about it.

1) That their tax dollars are actually helping out the poor, and they are happy to pay their share of it.

or

2) That those on public assistance are intellectually and professionally inferior to themselves, and that these people are just lazy deadbeats who should get off the couch.

Interestingly, neither of these perspectives are accurate, but they serve the corporate-state perfectly. The reason is that by dividing the affluent classes into two false memes they never actually see the issue for what it really is. At the same time, public assistance is actually padding corporate profit margins at the expense of society. I discussed this a couple of years ago in the post, McDonald’s Math: You Can’t Survive Working for Us. Here are a few excerpts:

The key point I want to hammer into people is that food stamps are corporate welfare. They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins. Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

Guess what would happen if these companies failed to pay high enough wages and food stamps didn’t exist? There would be massive employee organizing and ultimately the companies would have to change tack. This of course doesn’t happen when the taxpayer makes up the difference, and that is exactly what they want. 

So as discussed, public assistance is actually padding corporate profits (just look at the stock market), while doing very little to improve the lives of the tens of millions who receive them.

This is actually brilliant in so many ways from a corporate-statist control perspective. It provides just enough to get by. Just enough so they don’t get out into the streets, yet not enough to be content, sovereign and proud. This is extraordinarily important, but before we get to that, let’s look at some excerpts from a recent Washington Post article titled, When Companies Pay Low Wages, Taxpayers End Up With the Rest of the Bill:

Nicole Beth Wallenbrock has a PhD in French literature and a part-time job teaching at the City University of New York, but her wages barely cover the cost of living for her and her son. She has been on food stamps for six months, she told PBS in February, and relies on help from her family and public assistance programs to get by.

“I have to accept whatever I can get,” she said. “It’s depressing. It makes me feel like a failure in a lot of ways.”

Wallenbrock is among millions of working Americans whose low wages are supplemented by government support. Families in which at least one member is working now make up the vast majority of those enrolled in major public-assistance programs like Medicaid and food stamps, according to a new study. It’s a “hidden cost” of low-wage work, researchers say, and it costs taxpayers about $153 billion a year.

According to researchers, this is the first time anyone has calculated how much is spent providing assistance to workers whose wages don’t cover their families’ expenses. The study, from the University of California at Berkeley’s Center for Labor Research and Education, found that most spending on public assistance goes not to the unemployed but to members of working families.

 According to the report, wages for the bottom 10 percent of workers are 5 percent lower than they were in 1979, once adjusted for inflation. Between 2003 and 2013, inflation-adjusted wages haven’t increased for anyone in the bottom 70 percent of earners. 

Working families — defined as a family in which at least one member works 10 or more hours per week for more than half the weeks out of the year — make up 61 percent of Medicaid enrollment and 74 percent of Earned Income Tax Credit recipients (it’s worth noting that the EITC is aimed specifically at low-income workers). They also represent a sizable chunk of people on food stamps (36 percent) and those who receive cash welfare through the Temporary Aid to Needy Families program (32 percent).

Many of those who rely on government support to bridge the gap between what they’re paid and what they need to live are in service industries, according to the study. About half of people working in fast food, child care and home care receive public assistance. 

So basically the industries where most of the jobs in this embarrassing recovery have come from.

“We’re subsidizing the profits of Wal-Mart,” Pickus, whose union represents health care workers, told the Hartford Courant. “They’ve lived this way as if this is the way things are. It’s an amazing sense of corporate welfare.”

Earlier in this post I discussed how the affluent are manipulated when it comes to their perspective on public assistance. Yet it works in even more insidious ways on those who depend on it; particularly for those who are employed or highly educated, but still need food stamps to get by.

Let’s take the example noted in the Washington Post article of Nicole Beth Wallenbrock, who has a PhD in French literature. This person is obviously not a deadbeat, nor is she unintelligent. Yet she is on food stamps, just like so many other employed people are. Importantly, she claims: “It’s depressing. It makes me feel like a failure in a lot of ways.” 

Think about this for a second. A person who is highly educated and made to feel this way about themselves is less likely to become politically active because they spend so much of their energy feeling worthless.

Not only that, but is someone trapped in this sort of despondent, negative psychological state ever going to rebel against the state? The hand that (embarrassingly in their mind) helps feed them? No, this person is going to be politically and emotionally damaged and isolated, and that’s exactly how the power structure likes it.

This is why it’s so important to destroy this myth, and make people like Ms. Wallenbrock understand that it is not them that is the failure. Rather, her dependence is an deliberate weapon utilized against her by a failed system. She needs to stop feeling bad about herself, rediscover her pride, and then fight back against the forces intentionally doing this to her. Until this myth is busted forever, nothing will change.

For related articles, see:

Another Government Scam – Small Business Administration (SBA) is Exposed as Corporate Welfare to Big Businesses

Walmart Admits in its Annual Report that its Profits Depend Heavily on Corporate Welfare

A First Look at a New Report on Crony Capitalism – Trillions in Corporate Welfare

McDonald’s Math: You Can’t Survive Working for Us

In Liberty,
Michael Krieger

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12 thoughts on “New Report Finds $153 Billion in Corporate Welfare – Majority of Taxpayer Funded Public Assistance Goes to People Who are Employed”

  1. Good article hit the nail on the head, esp regarding the taboo aspect of claiming benefits (here in the UK we have had a lot of “poverty porn” reality TV shows which serve to further stigmatise and alienate claimants) ie: Benfit Street, The Scheme

    The people I feel really bad for are the kids. Children who grow up normalised to the concept of being reliant on the state, and often view it as a birthright, they never quite develop a sense of ‘creating value’ or innovation they simply wait for the council to provide a house/income and quite often end up blaming immigrants for their lack of opportunities.

    It’s a vicious cycle, but as you correctly point out the taxpayer foots the bill, the corporations extract the value, and the impoverished just get scorned for being so damn useless..

    Reply
  2. You should seek to attain a copy of the Welfare guidelines and the jobs/works program and sub-programs.

    To summarize, the Welfare guidelines and jobs/works programs are Federally mandated to States to administer under threat of funding loses, and the States have the Counties operate and enforce.
    The jobs/works program is easier to research as many programs under it are online, but they are tedious to hunt for. In summary, one program is a mandatory job search that entails mandatory job leads meaning jobs you must apply for, and they tend to be low level governmental or governmental contracted jobs and often part-time, which isn’t enough to leave the program. The Welfare guidelines are setup like a contract in which gives a list of compliant guidelines and results for non-compliance incurring progressive penalties per sanction.
    I’ll just reference 2 guidelines:
    *Cooperate with governmental authorities and agencies
    *Follow medical advice unless given a medical note of exemption.

    Sanctions are setup:
    First sanction is 1 month no food or cash exempt medical
    Second sanction is 3 months no food or cash exempt medical
    Third sanction is 6 months no food or cash may include medical ineglibility
    Fourth sanction is 6 months no food or cash and includes medical inegilbility.

    Reply
    • Like so many other things, the “official” design of the system, is not how the system actually functions.

      In reality, enforcement of the mandatory job search requirements of the benefits programs requires A) the benefits recipient to fill out a “job search” log, and B) the worker or “case manager” to call and verify that those job applications were actually filled out.

      In the case of A): According to the 2003 report from the United States Center for Educational Statistics, 25% of adults in the U.S. are functionally illiterate. Another 25% are spread out somewhere between functionally illiterate and 8th grade level. The log sheets they turn in are probably not even legible.The worker can’t read it, and can’t call to verify, yet the recipient can’t be penalized for illiteracy, so the benefits are approved without verification of the job search.

      In the case of B): The administering organization (social services office, or unemployment office) is pretty much guaranteed to be overworked and understaffed. The case workers have enormous caseloads, quotas, time limits and deadlines. Even if they could read the job search log sheet, they don’t have time to sit around making phone calls to verify what is on the log sheet. Again, the benefits are approved without verification of the job search.

      The problem of lack of verification is compounded by the prevalence of online job application processes, which are again, difficult, if not impossible, to verify.

      The design of the system looks good on paper, but in reality, the actual functionality of the system encourages gaming the system, which anyone desperate enough WILL do.

      Karl Marx’s system design was broken in the same way.

    • (I should have said, “United States _National_ Center for Educational Statistics.)

      Furthermore, people who are working part time generally are exempt from the requirements to look for work.

      Hence, the corporate (with government collusion) tactic of giving them just enough work/wages so that they fall below the cutoff line and thus still qualify for food stamps, even if they don’t qualify for unemployment insurance or other benefits such as “cash aid”.

      Hence the widespread rise in part time employment.

    • And the punchline: Many of the case workers are themselves having their hours cut.

      It probably won’t be long until some of the cases they handle will be their own co-workers.

  3. I don’t buy the idea that low wage workers would be able to demand higher wages if the food stamps were cut off. That would weaken, not strengthen their bargaining position. It seems very probable that food stamps reduce the labor supply by making people less desperate for work, thus driving wages UP. When low wage employees are actually more productive than their wages indicate then they present a profit opportunity for a competitor to offer them more. If no one, including you, is willing to hire them at a higher wage, then in what sense are their services underpaid? And why attack the one employer that offers them a better deal than anyone else is willing to offer? And why must that employer, by virtue of making the best offer, consequently assume full responsibility for guaranteeing the worker a particular standard of living? It seems to me that if we are to help those who work hard but earn little the burden should be shared by all, including those who offer them no jobs whatsoever.

    Having said all that, I hasten to add that I read you regularly and this is a rare point of disagreemant. I am enormously grateful to you, Michael, for the topics you raise and for the perspective you bring to them. Your contribution to the public discussion is in my opinion beyond measure.

    Reply
    • “When low wage employees are actually more productive than their wages indicate then they present a profit opportunity for a competitor to offer them more. If no one, including you, is willing to hire them at a higher wage, then in what sense are their services underpaid?”

      Interesting statement. Business by its nature will penny pinch profit from wherever it can, legally and illegally, and has no inherent interest in the welfare of citizens in any country – especially the infamous “multi-nationals”.

      Over the past three decades as the U.S. economy went from a high-labor paying atmosphere to increasingly lower-labor paying across the manufacturing, farm and services sectors that we see today, one would tend to wonder how that was possible. The answer, I contend, is four reasons: (1) Financialization of the U.S. economy heavily towards players in Wall Street, (2) all the wonderful free trade agreements for “globalization”, (3) labor competition of the U.S. against 3rd world and developing economies whereby any given socio-economic class in the U.S. is unable to compete dollar for dollar against an equivalent socio-economic class in a different country and have an “equivalent” standard of living in the U.S., (4) full tilt towards mass importation of cheap labor from “blind” U.S. immigration policy as well as leveraging outsourcing, H1, L1 visa programs (H1 to replace U.S. workers of STEM jobs – traditionally engineering types and L1 to replace U.S. workers of TRADE jobs – traditionally plumbers, electricians, office workers, etc).

      In all of the above mentioned reasons, the common element is heavy lobbying and other methods of manipulation of the governmental structure to benefit business at the detriment of its own citizens. And, it is working quite well. If the trend continues for another decade the U.S. WILL BE financially and socially degraded into a 3rd world country.

      Having provided my reasoning as to why the U.S. is on the way down, it is NOT largely possible for the “common man” to get into a job that has a standard of living in the U.S. of yester-year where they face foreign competition due to mass immigration importation vis-a-vis “blind” border practice that we see now, H1 or L1 visa if the person has the unfortunate opportunity to be in a STEM or TRADE job…that is, unless they are moved directly into management; the other alternative is for the person to get into the financial market – already busting at the seams with people because that is the ONLY other place a good standard of living may be realized today. Since, for the “common man”, financial mobility upward is not feasible in today’s atmosphere there is no reason to be more productive (no reward), and no reason to move to another job when (taking geographic economic differences into consideration) the pay would be the same or less (no reward).

      So – for the “common man” working STEM / TRADE when looking at “When low wage employees are actually more productive than their wages indicate then they present a profit opportunity for a competitor to offer them more. If no one, including you, is willing to hire them at a higher wage, then in what sense are their services underpaid?” it should be fairly evident why increased productivity does not matter (as a form of leverage) and why unwilling to hire at a higher wage is. 🙂

  4. As I’ve come to understand the fuller implications of this issue, I have become more frustrated by just how dysfunctional a system like this inexorably becomes.

    Wages too low to live on, that are subsidized by taxpayers so shareholders can see out-sized profits, is fundamentally just another smoke & mirrors ruse by the elite. The idea that the market’s invisible hand will also always maximize societal good is so flawed that it is only the heavy-handed attempts by authoritarians to control everything that makes the “free market” look good. In truth, without a change of heart, the individuals who control resources will ALMOST ALWAYS do those things that enhance their wealth even if it impoverishes the many. This is a sad fact of flawed humanity but one that must be faced if we are to push through it. This doesn’t mean we should hand over power to a Politburo but it does mean naive and unexamined ideas that less regulation will bring us heaven on earth are childish.

    The other distortion that doesn’t appear to have been raised in the feature or comments is that the social welfare system allows people to make very poor choices regarding careers with the expectation that something will turn up. How many doctorates of French literature do we need? Apparently, fewer than we have. Just like financial repression of interest rates is akin to taping a penny in a fuse box, having a system that allows people to prepare for careers that are in low/no demand and expecting those who ARE working at jobs that have social value is a knot head answer to a non-question: Why shouldn’t I prepare for something I enjoy rather than what is paying living wages? The answer is because most of us don’t want to support others, no matter how intelligent or motivated they are, who have more choices than we may have about how to make a living.

    I’m pretty sure the number of Indian and Chinese French literature PhDs is dwarfed by ours; conversely, their engineering grad numbers are many times ours even when adjusted for population. That may be because if you train for the wrong career in those countries, you may find yourself among those hanging on the outside of train on your commute rather than in a comfortable inside compartment.

    Like most of what America suffers from, this is another example of what happens when a once-great people have seemingly lost the ability to reason their way from the observed to the obvious conclusion. A nation that conceived DisneyLand offers the most fertile soil for a people who insist on living in FantasyLand.

    Reply
  5. …and then everyone will be surprised when corruption skyrockets, and the resulting losses will be made up by cutting the hours of the investigators, who themself will need to have their claims reviewed by the corrupt case workers..

    Reply
    • It’s not primarily an issue of individual corruption, as it is an issue of coercion of individuals by a corrupt system.

      The benefits recipients are coerced into gaming the system (here’s X dollars, now go apply for Y jobs). The case workers are coerced into allowing that gaming of the system, and also to contribute their own gaming, in order to meet the demands of the system (meet their quotas).

      While there have always been those who game the system professionally in order to avoid work, today there are undoubtedly far more people who are not corrupt to begin with, but who become corrupted by the system itself.

      Because they don’t have any other alternative.

      Whenever someone’s unemployment benefits run out, the official “unemployment rate” (U3) falls – even if no one got a job. Those people are then channeled into the bottom tier benefits programs where they’ll probably have to lie in order to eat.

      Then, the corporate/government (according to Mussolini, corporate+government is the exact definition of “fascism”) propaganda says that if they are “lucky” (nicely ironic), they can get a part time job. (Ref: Keiser, “casino/gulag”.)

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