In the late 19th and early 20th century many corporate owners began offering their employees various benefits — like meal plans and basic health care. If you’ll think back to your high school social studies class, you’ll recall that this movement was called welfare capitalism. Ring a bell?
Although at first blush it may sound like corporate owners were providing benefits out of generosity, their intent was to stave off some of the support that was emerging around radical labor elements–like socialism and communism–and not-so radical labor elements–like trade unions.
Welfare capitalism was essentially liberalism doing the hard work of fighting communism. (Despite what many may think today, liberals and communists are two distinct political types). Corporations also strongly felt that they were better arbiters for deciding what was good for Americans than the people, and the government they elected. If you’re lucky enough to work for an employer who gives you health insurance and retirement benefits, you have the architects of welfare capitalism to thank.
But somewhere along the line corporations got tired of being so benevolent. The old communist fear was gone and they learned that profit margins would increase by eliminating welfare capitalism opportunities. Still more, they realized that perhaps allowing government to foot part of the bill wasn’t such a bad idea after all. Welfare capitalism became corporate welfare.
Today, corporate welfare refers to the handouts given directly by governments to corporations. For example, if a local government promises a break on property taxes to persuade a company to relocate to their city, that would be an example of corporate welfare.
Corporate welfare also includes less direct handouts to corporations. These less direct handouts, which large corporations like Walmart and McDonalds are among the primary recipients, result from pushing their employees onto the safety net. Some corporations pay their employees so poorly that they are forced to rely on Medicaid (and even food drives in the case of some Walmart stores last Christmas season) in order for employees to survive.
The minimum wage law that failed to pass the Senate last week sought to change that. That law would have raised the minimum wage to just over 10 dollars, allowing more working Americans to get off food stamps and Medicaid. And the cost to consumers like you and me? Well, one study estimated that the increase at your local Walmart would be equal to a one cent increase on the cost of a DVD. However, Senators Hatch and Lee roundly rejected the wage increase. It is worth noting that while rejecting a $10.10 per hour minimum wage, both of our Senators make about $211 per hour.
In Utah, about 4.9% of the working population is paid at or below minimum wage. That’s 37,000 people who are barely making enough money to cover their rent and living expenses–let alone the expenses that lead to a better quality of life, like education.
Substandard living wages suggest that Hatch and Lee are both more loyal to a few corporations than they are to tens of thousands of their constituents. They won’t vote to increase the standard of living for poor Utahns, but they’re more than willing to increase the standard of living for already flush corporations. To the extent that employees making minimum wage are forced to rely on the government’s safety net to prop up what their wages should be covering, Hatch and Lee’s future nay votes will amount to a public subsidy to private businesses.
Welfare capitalism may not have been a perfect solution, but corporate welfare is certainly worse.