Friday, January 30, 2015

YCHIBW: Big Corporations and the Teat Edition «

YCHIBW: Big Corporations and the Teat Edition «: "(1) Corporations like Walmart disproportionately benefit from the existence of antipoverty programs like Medicaid and Food Stamps. Why? Because when these are available to people, Walmart does not have to provide people with a wage that, alone, would be enough for these workers to sustain themselves since the government is already providing it.



(2) Corporations like Walmart disproportionately benefit from the existence of antipoverty programs like the Earned Income Tax Credit. Why? Because when the government provides a tax credit to people that are working, they are more likely to work, and therefore Walmart does not have to pay the workers as much as it “normally” would in order to attract them.



Only one of these can be right."



'via Blog this'



It took me a moment to figure this one out.

2 comments:

Brett said...

Hmm, I dunno. What's the answer?

Ryan said...

In the first example, the potential workers are being provided a benefit regardless of whether they work.
This lowers the opportunity cost for forgoing work, and makes a job at Walmart less attractive. Walmart has to pay more to purchase labor because not working is made more attractive.

In the second example, the potential workers is being provided a benefit only when they work. This could keep wages lower than they otherwise would be, since the employees pay is subsidized by taxes.

Anyway, they are subsidies working in different directions, so they can't both help Walmart.