$10.10 an hour: Raising the minimum wage was a good start, but tax dollars subsidize profits from low pay

Hundreds of protesters are confronted by police near the McDonald's Corp. headquarters in Oak Brook, Ill., Wednesday, calling for a wage increase for full-time workers who still qualify for food stamps. In effect, this is a taxpayer subsidy for profitable corporations that do not pay living wages.

Recently, Connecticut became the first state to raise its minimum wage to $10.10 an hour. It was an important victory. Tens of thousands of workers across the state will take home more money. It is an important first step in combatting the inequality that has long been ingrained in our economic system. But we can, and should, do more.

The Connecticut Working Families Party has long been an aggressive advocate for an economy that works for everyone, not just the rich. Often that means pushing for tried and true policies we know will work, like raising the minimum wage, and ensuring that taxes are fair. But it also means introducing new ideas. These new policies have the potential to help average families just as much as tested policy ideas, and also have the potential to change the conversation we have about our economy entirely.

This year, the Connecticut Working Families Party, along with allies, fought for just such a new idea: ensuring that large, profitable corporations aren't passing their labor costs on to taxpayers and abusing public assistance programs to pad their own profits. This bill did not pass through the General Assembly this year because both Republicans and Democrats have voted against it, killing the legislation in the Finance committee. And that is exactly why we need minor parties, like the Working Families Party, that push for new and innovative policy solutions. We are committed to holding these large corporations accountable because it is the next step to creating good jobs that workers and their families can actually survive on. We aren't satisfied with small fixes; we are here to create real and positive change for families across the state.

Our economy has changed. According to a recent study by the National Employment Law Project, most of the jobs we lost during the 2007-2008 recession were middle- to high-income jobs, but the jobs that are being created in the recovery are concentrated in low-wage industries. Today there are 1.85 million more low-wage jobs at places like fast-food chains and big-box retailers. In comparison, there are nearly 2 million less middle- to high-wage jobs. As the middle class shrinks, low-paying service jobs are the new normal.

Large, profitable corporations, like McDonald's and Wal-Mart, often systematically pay their workers such low wages and poor benefits, that workers then must rely on government aid programs to survive. These companies are dodging their responsibility to their workers and taxpayers are subsidizing their profits. To address this bad behavior, the legislature was considering charging these large companies a fee for each worker paid substandard wages. If the companies don't pay a standard wage to their employees, they would at least help the state offset the cost of aid programs like food stamps, Medicaid, and more.

These companies are massively profitable and can afford to pay their workers a wage they can survive on. For instance, last year, Wal-Mart made $17 billion in profits, McDonalds made $5.46 billion, and Yum! Brands made $1.59 billion. But workers cannot survive on the wages they are being paid. According to the Economic Policy Institute's Family Budget Calculator, a worker with one child working full time in the Hartford metro area would have to earn $28.19 per hour to meet her family's basic expenses. Consequently these workers are being forced to rely on public assistance programs. Sometimes companies are even directing their workers on how to apply for these programs. NELP reports that a typical Wal-Mart Super Center costs taxpayers between $900,000 and $1.7 million in public assistance to their workers.

Your tax dollars are essentially subsidizing these companies' profits. A recent study by researchers at the UC Berkeley Center for Labor Research and Education found that the fast food industry costs American taxpayers nearly $7 billion annually because its jobs pay such low wages that 52 percent of fast food workers - even those who work full time - are forced to enroll their families in public assistance programs.

But by charging them a fee for each worker that receives taxpayer assistance, the company will either raise workers' wages, or pay into a fund that will help the state cover the costs of assistance programs. The General Assembly estimated that if this program were to go in to effect next year, it would raise more than $100 million to help offset the state's costs. When legislators voted to defeat this proposal, they put large, profitable corporations ahead of taxpayers and low-wage workers.

We must do better.

Lindsay Farrell is the executive director of the Connecticut Working Families Party.


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