I know that this blog tends to reiterate certain themes, but we all have our preoccupations. Those who are regular readers will recognize a couple of mine: the importance of “hiring” (electing or appointing) government officials who actually know something about government; and the critical difference between “what should we do?” and “how should we do it?”
The election of Donald Trump and his subsequent choice of cabinet officials has pretty emphatically made the case for my first premise. (There’s a Facebook meme to the effect of “If you think anyone can run the government, I hope your next colonoscopy is performed by a plumber.”)
My second preoccupation–the difference between “what” and “how”– remains less obvious. I thought of it, however, when I read this column by Catherine Rampell in the Washington Post. As she points out, it’s one thing to correctly diagnose a problem. It’s quite another to devise a remedy that will solve the problem rather than inadvertently making it worse.
By all means, let’s raise the living standards of workers at Amazon, Walmart, McDonald’s and other employers of low-wage Americans.
And, by all means, let’s raise Jeffrey P. Bezos’s taxes, too. The founder of Amazon (and owner of The Post) is the wealthiest man in the world. He didn’t need the tax cut that Republicans just gave people like him.
But the sloppily designed Stop Bad Employers by Zeroing Out Subsidies Act (a.k.a., ahem, the “Stop BEZOS Act”) is a terrible way to do either of these things. It’s virtually guaranteed to hurt the very low-income working families its sponsors want to help.
The bill Rampell is citing addresses an issue that I’ve written about several times: some of the nation’s largest companies (including Amazon) pay their workers so poorly that taxpayers make up the difference with food stamps and other social welfare benefits.. In effect, we are paying a portion of those workers’ wages. Meanwhile, the company’s “savings” go to shareholders as additional profit.
It’s pretty despicable, and it should stop.
The “Stop Bezos Act” would establish a “corporate welfare tax” on firms with at least 500 employees. Companies would pay a tax equal to 100 percent of the value of safety-net benefits their employees receive, including Medicaid, housing subsidies, food stamps and subsidized school lunches.
That certainly sounds good. As Bernie Sanders, the bill’s sponsor, has said,
The working families and middle class of this country should not have to subsidize the wealthiest people in the United States of America. That’s what a rigged economy is all about.
Agreed. The diagnosis is spot on. The prescription, however, would be a disaster; it would hurt the very people it aims to help, because it would discourage firms from hiring workers suspected of drawing benefits.
These workers come, disproportionately, from some of the most vulnerable populations: families with children, older people and workers with disabilities.
Families with children are much more likely to use food stamps. Older Americans who are poor are much more likely to be on Medicaid. And workers with disabilities would face even more barriers to employment under this bill than they already do.
Under this bill, Medicaid-eligible workers with disabilities or other health issues would become thousands of dollars more expensive. Working-age people over 45, who cost Medicaid about twice as much as their younger counterparts, might face even more discrimination in the job market than they already do.
The bill tries to address these issues by barring employers from asking job candidates about benefits. But firms could easily infer which applicants are more likely to get them, based on their races, genders, Zip codes, etc. Such “statistical discrimination” would be difficult to police.
Moreover, employers get information about dependents and marital status when newly hired workers fill out their HR forms. Guess which workers would be at the top of the list when it’s time to downsize?….
Perhaps worst of all, as the Center on Budget and Policy Priorities points out, the bill would ultimately create a new corporate constituency to push for cuts to social programs and stricter eligibility requirements. Suddenly, reductions to Medicaid or school lunches would be directly equivalent to a corporate tax cut.
This bill would also require new oversight, probably spawn multiple lawsuits alleging discrimination, raise equal protection issues (why treat companies with 500 employees differently than those with 480?) and generate numerous new regulations.
Simply raising the minimum wage would go a long way toward solving the problem without creating perverse incentives or requiring additional bureaucracy.
Stop Bezos is a great soundbite. We should do it. How we should do it, however, matters. A lot.