Amazon’s workers getting food stamps

Re a previous post talking about 10% of Amazon’s workers in Ohio getting SNAP – the same as the incidence of SNAP among the general workforce in Ohio.

This isn’t a subsidy to Amazon. Benefits which are paid whether you are working or not are not subsidies to employers. Quite the opposite in fact, they raise the reservation wage.

Think it through. I work not at all, I get some money/food/shelter. Therefore going to work must pay me more than the value of the things I already get. In the entire absence of any welfare state some would work for $1 an hour (hmm, mebbe). Employers must pay me more than what I get without working therefore.

Welfare that I get *only* because I am working might be such a subsidy to the employer. So, working tax credits (EITC to Americans) could be an employer subsidy. As it happens we think they’re about 30% a subsidy to employers, 70% to the workers. Which is fine actually, as working tax credits are meant to be a subsidy to the employment of low skill workers.

But food stamps, Section 8 and so on are not. Because you can indeed get them without working at all. In fact, you get more of them without work (the rules for single able bodied no dependents adults are stricter). Thus they raise wages that must be paid, not lower them.

Or, as the thoroughly left wing Arindrajit Dube (himself a researcher into the minimum wage) puts it:

A final line of argument is that these public assistance programs have become de-facto subsidies for low-wage employers. For a program to be a subsidy for an employer, it needs to lower wages. Is this plausible for the public assistance programs considered? I think it is for the EITC, but not for other programs. Depending on where one is on the EITC schedule, that policy can increase work incentives. And there is a lot of empirical evidence showing EITC encourages labor force participation. An unintended consequence of that labor supply response, however, is that employers capture some of the tax subsidies. This can happen in a simple supply and demand framework, where an increased labor supply to the market drive wages down. This can also happen in a bargaining context where the size of the bilateral surplus expands from lower taxes, and employers capture some of this increased surplus. Work by UC Berkeley’s Jesse Rothstein suggests that for every $1 of transfer to workers using the EITC, post-tax income rises only by $0.73 because of employer capture.

But what about other programs like food stamps or housing assistance? These means tested public assistance programs are not tied to work, and we should not expect them to lower wages. Let’s take food stamps, which are available to eligible families whether or not a family member works or not. Indeed, when people are not working, they are more likely to be eligible for food stamps since their family incomes will be lower. Therefore, SNAP is likely to raise, and not lower a worker’s reservation wages—the fallback position if she loses her job. This will tend to contract labor supply (or improve a worker’s bargaining position), putting an upward pressure on the wage.

21 comments on “Amazon’s workers getting food stamps

  1. Not sure I follow: aren’t you in effect saying that yes it is a subsidy to employers, but at a lesser rate than it is other locals (whose benefit is presumably not having to stand around watching people starve)?

  2. There are economic benefits and then there are economic benefits. An employer who is subsidised gets a worker who is likely to be more trouble than they are worth. But the worker, aside from the cash, is getting experience, training, something to put on their CV, good habits and so on. All that is invaluable.

    There should be no money for idleness. Ever.

  3. No. It depends. Something you get only if you work can be (probably will be) a subsidy. Something you get whether you work of not is an anti-subsidy. It raises the wage the employer must pay.

  4. I think the broader concern about Amazon is that it’s a company which is infamous for poor wages and poor working conditions (and their US staff aren’t on SNAP because Amazon creates great jobs) – and this has been extensively reported in the US, the UK, Italy and Germany – yet Amazon remains a favourite recipient for all sorts of special political favours and subsidies which less glamorous companies offering similar pay and perks would never get.

    For example, they trousered a few million from the Scottish government just a couple of years ago to set up a new warehouse. Similarly, Wales bunged them cash to open a centre in Cymru. Amazon pocketed the cash, laughed, and then brought in Hungarian migrant labour:

    https://order-order.com/2017/11/23/welsh-labour-backed-amazon-plant-brings-foreign-workers/

    Why are we paying an American company to come here, create sub-Poundland type jobs, then import more foreigners at our expense to fill them? Jeff Bezos doesn’t need our money.

  5. Ss2: I agree that we should not give subsidies to companies but that is in no way related to Tim’s post about a specific subsidy not being a subsidy to companies

  6. Solid Steve 2: Squirrels of The Patriots – “Why are we paying an American company to come here, create sub-Poundland type jobs, then import more foreigners at our expense to fill them? Jeff Bezos doesn’t need our money.”

    The more interesting question is what has gone wrong with Silicon Valley and Bezos in particular. These are very wealthy people. They should be Republicans. But they are not. They are often very far to the Left. Part of that may be because so many of them are Jewish and that would put many of them off voting for the Right. But Bezos isn’t.

    However what is wrong with Silicon Valley is obvious in Amazon’s work practices – they are far to the Left but they run “evil” sweat shops. So does Walmart but at least the Waltons are on the Right. They live in full alignment with their values. Silicon Valley dodges taxes which the Waltons don’t. Bezos throws money at Gay marriage but this is what he does to his workers? Pure virtue signalling. Again I assume part of it is that so many are Jewish. Jewish Law allows you to use any loophole you can. You do not need to align your values with the letter of the law. In the same way Chomsky has no shame about using off shore tax havens to plan his estate.

    Still there is hope for Bezos. He has started to bulk up. More muscle tends to go with voting to the Right and he was the proverbial 120 pound weakling. He married someone who used to work under him and they have had four children. She has stayed at home. So maybe as he gets older he will wise up.

  7. @SMFS – a lot of it comes from Lefties believing their own sh1t, so they find it acceptable to then act like their worst 19th century caricature of a top-hatted capitalist when in that position themselves.

    Meanwhile Walmart now has a starting salary of $11 p.h., which is well above the US minimum wage.

  8. abacab,

    Minimum wage is also a State competence and varies widely (and wildly).

    The Federal MW is $7.25 ($10.20 for sub contractors) and by State it ranges from none to $13.25 in DC (from 7/1/18) and some States are aiming for $15.

  9. Emil – sure. Tim is right.

    SMFS – You touch on a couple of interesting points.

    1) Why are Silicon Valley tech oligarchs almost uniformly politically far Left?

    2) What does Left and Right even mean in the context of the Besoses and Waltons and the vast multinational corporations they run? What does it even mean to us proles?

    (1) would make for a fascinating sociology dissertation, if sociology was a proper academic discipline.

    There’s arguably an element of cynicism involved:

    However what is wrong with Silicon Valley is obvious in Amazon’s work practices – they are far to the Left but they run “evil” sweat shops.

    So they often treat workers poorly, outsource their jobs to shithole countries, and bring in swarms of scab foreign labour to keep wages down. This is the kind of thing a 1970’s leftist would be organising strikes over.

    At the same time, they relentlessly virtue signal their support for leftist identity politics. It doesn’t cost Amazon any real money to support gay marriage or raising awareness of transgendered hedgehogs, but it buys them credit with people who might otherwise notice that Amazon treats its employees like meat robots.

    I don’t believe the Valley’s embrace of polymorphous perversity is completely cynical though. That’s a tempting but simplistic argument.

    And it’s related to (2). So how right-wing are the Waltons, given that they paid Hillary Clinton to sit on their board?

    And given that Walmart openly supports amnesty for illegal immigrants?

    And given that Walmart vociferously supports gay marriage and a host of other progressive shibboleths?

    Seems to me that by “right wing”, billionaires mean they want tax cuts and unlimited cheap immigrant labour. And by “left wing”, they mean they want subsidies and unlimited cheap immigrant labour.

    Western elites think they can reduce their host populations to a mestizo permanent underclass while they live like kings in gated communities. But hey – at least we’ll have Pride marches! And Amazon and Walmart offer a fantastic range of cheap rainbow merchandise, made in China.

  10. Solid steve – how much exactly are amazon paying its staff in the UK?
    Poor wages? Its higher than millions of people get paid in jobs. Its pretty standard in logistics operations. Neither a lot more nor a lot less than similar work for other companies.

    Poor working conditions? In comparison to what?

    I’ve worked in a logistics job, sorting parcels – we would have been happy to work as little as the amazon staff! 20 miles in a shift walking? We did that (and many thousands still do) pushing heavy cages or pallets. Not dinky trolley.
    Lots of companies want value for money from staff, setting targets to achieve and making staff meet targets or leave. 20 years ago I was quite capable of working at amazon. And would have thought 20 miles of walking in a shift as being gentle exercise.

    Compare amazon work to retail shop work then yes its hard work. Compare it with the work at other logistics operations such as parcel centres, distribution centres and warehouse work then its pretty normal. Except the pushing the dinky trolley thing, that’s less than cage or pallet moving.

  11. How I would love it to see the minimum wage devolved to local authorities in England. Not just because it would be beneficial, but the fun of seeing leftie councils in Sunderland, Hartlepool and Newcastle having some sort of standoff seeing who would drop it to a more sensible level first and accusing the others of not being pro-worker.
    Yeah right you twats, pretty well everyone who has the skills in the North East to earn £7.80/hr has got a job already. You genuinely want to bring some of the lower skilled and disabled into employment, there’s only one direction you can go with the MW number.

  12. “Jewish Law allows you to use any loophole you can.”

    And also insists you you the blood of christian children in matza. #cunt

  13. Snag – “And also insists you you the blood of christian children in matza. #cunt”

    Really? The things you learn on the internet.

    You know, there is a rather large body of evidence on this. A very large number of works discussing it. You think you might want to acquaint yourself with some of them?

    My favorite? Lending money at interest is forbidden to orthodox (with a small “o”) Jews. The Christian position would be simple – the intent matters.

    In the view of Maimonides, there were certain conditions similar to interest which were permitted; for example, Maimonides states that a person can offer money to a second person attaching a requirement for the second person to give a certain larger amount of money to a third person, or a requirement for the second person to persuade a third person to lend a certain larger amount of money to the first person.[18] When a non-Jew was involved, Maimonides argues that interest could be charged

    So you can lend money. You just need a cutout. Perfect.

  14. You know nothing of what you speak, nothing at all . You are just another cut-and paste anti-Semitic lying cunt, as yo have shown on here again and again and again.

  15. @snag

    I like Jews. Not that I know much about them.

    Except that they don’t go door to door asking people to join their religion and the Mossad girls in films always seem hot.

    Which is good enough for me.

  16. I agree with Martin by the way. I don’t know that Amazon are that bad an employer. What’s the evidence? Some BBC documentary?

    In fact can I say I like Martin, not that I know much about him. Except he doesn’t go door to door asking people to join his gang.

    Good enough for me.

  17. AndrewC – I would go door to door but I’ve never found it particularly good way of doing things.

    Now if BBC did a documentary on royal mail fulfilment centre or some parcel company sorting hub they’d find that hard work does exist.
    My wife did several years at Amtrak express parcels and currently works at another national parcel company. 120,000 parcels to sort in a night there are understandably methods of working and processes to follow to get them sorted and shifted in 6 or 7 hours.

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