Food Stamps Don’t Keep Wal-Mart’s Prices Low, They Keep Its Profits High

The same company that brings in the most food stamp dollars in revenue—an estimated $13 billion last year—also likely has the most employees using food stamps.”

The name of the mammoth food stamp-reliant company is no secret: Wal-Mart.

As journalist Krissy Clark notes in Marketplace’s valuable new series “The Secret Life of the Food Stamp,” Wal-Mart benefits from food stamps in multiple ways, as taxpayers both underwrite the company’s food sales and also subsidize its payroll costs.

There is no doubt that food stamps (and a host of other public subsidies from Medicaid to home heating assistance to the Earned Income Tax Credit and beyond) reduce Wal-Mart’s employment costs substantially. A study released last year by staff of the U.S. House Committee on Education and the Workforce found that a single 300-employee Wal-Mart Supercenter may cost taxpayers anywhere from $904,542 to nearly $1.75 million per year.

Consider that the working people who turn to food stamps to supplement inadequate wages are demonized as society’s lazy “takers”—a young Wal-Mart employee who enrolled in food stamps to help support his pregnant partner told Marketplace that previously “I'd always considered people who use food stamps as just taking advantage of the government.” Yet the company itself continues to be seen as a paragon of free enterprise, notwithstanding the tens of billions of dollars in subsidies through the same program.

Marketplace has done a great service by shining light on a key public misperception, illuminating the low-wage employers who benefit most from programs like food stamps. Yet an important part of the story still gets missed. It’s probably intended to be a rhetorical question when part II of the food stamp series asks: “Are Wal-Mart’s prices so low because its employees are on food stamps?” But the answer is no.

In reality, it’s not Wal-Mart’s low prices that taxpayers are subsidizing—it’s the company’s mammoth profits.

Wal-Mart made $17 billion in profit in 2013, and spent $7.6 billion buying back shares of its own stock—further consolidating the company’s ownership in the hands of the Walton heirs, already among the wealthiest people on the face of the earth. As my colleague Catherine Ruestchlin and I explain in our 2013 study, these stock buybacks did nothing to boost Wal-Mart’s productivity or bottom line. They contributed zilch to cutting consumer prices or keeping those prices low. But if, for example, funds from this financial maneuvering were redirected to Wal-Mart’s low-paid employees, workers would each see a raise of $5.83 an hour. As a result, the overwhelming majority of Wal-Mart workers would no longer need to turn to food stamps to supplement their wages. Other observers have found additional ways the company could substantially boost pay (and reduce reliance on food stamps) without increasing prices. Yet Wal-Mart has made a decision to continue its dependence on food stamps and other public subsidies.

It’s no surprise that Wal-Mart itself works to obscure the pivotal role of its corporate decision making. David Tovar, Wal-Mart’s vice president of communications, told Marketplace that since Wal-Mart is the nation’s largest employer “its work force is bound to reflect the country’s current economic realities, including growing rates of food stamp use.” This statement passes the buck impressively, overlooking the role that Wal-Mart has played in shaping the country’s current economic realities—in creating an America where millions of people who get up and go to work each day are nevertheless paid too little to feed themselves.

The truth is that Wal-Mart and all the other large and profitable retailersfast food companies, and other corporations that fatten their bottom line by letting the public feed their employees have made a business decision to shrink their payroll on the taxpayer’s dime. It’s up to us to decide whether to continue allowing them to do it.