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October 22, 2013 8:55 AM Age: 7 yrs

Privatizing Profits, Socializing Losses—A Continuing Saga

Category: Larry Checco
Source:  Larry Checco

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Washington DC -- As if we needed another example of how profits are privatized and losses socialized by corporations and top earners in this country.

A recent study found that taxpayers are spending nearly US$7 billion a year to supplement the wages of fast-food workers at a time when the very same fast-food companies they work for are reaping in billions' of dollars in annual profits.

More than half of the nearly 2 million “core” fast-food workers in this country rely on the federal safety net to make ends meet, according to economists at the University of California at Berkeley’s Labor Center and the University of Illinois, and as reported in The Washington Post.

In contrast to workers in other fields, these fast-food workers, say the economists, are twice as likely to rely on taxpayer-funded public assistance, including:

  • $1.9 billion in earned income tax credits
  • $1 billion in food stamps
  • $3.9 billion through Medicaid and the Children’s Health Insurance Program

And what of the seven largest publicly traded fast-food companies that hire these workers?

  • Last year, they netted a combined $7.4 billion in profits while distributing $7.7 billion to shareholders and paying out $53 million in salaries to their top execs, according to the National Employment Law Project, a worker advocacy group.

One gets the feeling that some in Corporate America and here in official Washington -- including some very smart people who inhabit think tanks around this moribund town -- are scratching their heads wondering why growth is so slow and why it’s taking so long to recover from this latest devastating recession.

Well let me help them out a bit:  A lot of hard-working Americans and not making a liveable wage!

If it’s true that 70 percent of our economy is consumer-driven, and that lots of consumers are struggling to make ends meet, it doesn’t take a rocket scientist to figure out what’s going on here.

As I noted in a previous column, auto pioneer Henry Ford had this problem figured out 100 years ago.  He paid his workers amply so that they could buy his factory's output, the Tin Lizzies, the Model T automobiles they produced.  And I’ll bet you dollars to donuts that despite the financial generosity he showed his workers, Mr. Ford didn’t miss a meal his entire life.

So the next time you hear that the fast-food industry lobbyists make a good point when they say their corporate clients offer valuable entry-level jobs, look around the next time you patronize one of their establishments.  How many people 40 years old and older do you see flipping hamburgers, or sweeping the floors or cleaning out bathrooms for eight bucks or less an hour in an effort to feed their families?

Then think about how your tax dollars -- the American taxpayers -- are making up the difference between their predominantly low wages and the literally billions in profits the fast food companies they work for are raking in every year.

Contents Copyright 2013 by Larry Checco - All Rights Reserved


Published by: Corporate Governance & Accountability Advisors, Inc. Content & Concepts ©2008 by CG&AA, Inc. All rights reserved