The Road from Minimum Wage to Maximum Subsidies

April 14th, 2014 No comments

By: Jason Staloski
Blog Category: Minimum Wage & the Economy

Domestically, Wal-Mart employs 1.3 million people and grosses 17 billion in annual profits.  This makes them the largest private employer in the United States, and therefore, they set the standard for employee wages at other large retail chains across the country.[1] Over 800,000 of current full time employees at Wal-Mart are paid less than $25,000 a year, which equates to approximately $9.06 an hour.[2] Notwithstanding the billions in profit Wal-Mart continues to make annually, they have been unwilling to provide a sustainable salary to a majority of their employees.

Wal-Mart has devoted a large portion of profits to a share-buyback program. A share-buyback benefits a small group of investors and occurs when a company purchases their own public shares available on the exchange. This action consolidates the amount of owners in the company. Ergo, the same amounts of dividends are distributed over less people. The profit gained from this investment is not predicated on how the company performs. In 2012, Wal-Mart devoted 7.6 billion in buy backs.[3] While buybacks are advantageous for the primary investors of Wal-Mart, predominantly the Walton family, there is no evidence that these buy backs are beneficial to Wal-Mart as a retailer. The buy back program has been expanded over the past four years, and over that four-year period there has been no indication of increases in productivity or a net gain in earnings at Wal-Mart retail locations.

If Wal-Mart would repurpose this 7.6 billion from the buy back program into their workforce, they would be able to provide each employee making under $25,000 a $5.83 raise. This would take the average Wal-Mart employee from a rate of $9.06 an hour to $14.89 an hour. This raise would not only help the individual employee, it would benefit the American taxpayer. The low wage paid to Wal-Mart employee’s costs taxpayers between $900,00 and 1.74 million dollars per store.[4] These subsidies stem from employees not earning a livable wage. Wal-Mart employees rely on government programs for food, health coverage, housing, and transportation, in addition to their salary from the retail conglomerate.

If Wal-Mart would refocus their financial commitments to their front line employees, they would not only benefit their corporation and staff, but the American taxpayer as a whole.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

[1] Ken Jacobs, David Graham-Squire and Stephanie Luce, “Living Wage Policies and Big Box Retail,” University at California Berkeley, Center for Labor Research and Education (April 2011), available at http://laborcenter.berkeley.edu/retail /bigbox_livingwage_policies11.pdf.

[2] Bill Simon, “Goldman Sachs 2013 Annual Global Retailing Conference,” Walmart presentation (September 11, 2013), available at http://az204679.vo.msecnd.net/media.documents/bill-simon-goldman-sachs-2013-presentation_130233858314846907.pdf.

[3] Renee Dudley, “Wal-Mart Approves New $15 Billion Share-Buyback Program,” Bloomberg  (June 7, 2013).

[4] Nick Hananuer, Testimony before the Subcommittee on Economic Policy, Senate Committee on Banking, Housing, and Urban Affairs (June 5, 2013).

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Impact on Minority Populations of State Refusals to Expand Medicaid under the Affordable Care Act

April 7th, 2014 No comments

By: Aaron Kostyk

Blog Category: Race & Healthcare

The recent Supreme Court decision in National Federation of Independent Businesses v. Sebelius struck down federal penalties on states that refuse to expand their Medicaid programs under the Affordable Care Act (“ACA”). The Court held that these penalties exceeded the scope of the government’s spending powers. This made the expansion of Medicaid programs essentially voluntary on a state by state basis. Not surprisingly, some states don’t want to accept federal funds to expand their programs. As of October 22, 2013, twenty six states were moving forward with Medicaid expansion and twenty four were not.

Refusal to accept federal funding for Medicaid expansion creates a “gap” in coverage between existing Medicaid programs and subsidies under the ACA and minorities account for a significant portion of the persons in this gap. Minority populations are more likely to be uninsured than the White population (13%), as compared with nonelderly Hispanics (32%), followed by American Indians/Alaska Natives (27%), Blacks (21%), and Asians/Pacific Islanders (18%). These populations are also more likely to have issues accessing affordable healthcare. Furthermore, given that roughly six out of ten Medicaid recipients are persons of color, minorities are more likely to be disproportionately affected by state refusals to expand their Medicaid programs. People in the gap who fall between one hundred percent of the federal poverty level (the current level of Medicaid coverage) and one hundred and thirty eight percent of the federal poverty level (the level at which ACA subsidies apply) will again be without options if states refuse to accept the money to cover them. The ACA has the potential to improve access to healthcare for historically under served populations. Furthermore, it is important to note that the majority of Medicaid recipients are children. In conclusion, states should set aside ideology and act in the best interest of their most vulnerable populations by expanding Medicaid.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.

Sources:

Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2607 (2012).

Health Coverage by Race and Ethnicity: The Potential Impact of the Affordable Care Act, The Henry J. Kaiser Family Foundation, available at http://kff.org/disparities-policy/issue-brief/health-coverage-by-race-and-ethnicity-the-potential-impact-of-the-affordable-care-act/, (publication #8423).

Samantha Artiga & Jessica Stephens, The Impact of Current State Medicaid Expansion Decisions on Coverage by Race and Ethnicity, The Henry J. Kaiser Family Foundation, July 02, 2013, available at http://kff.org/disparities-policy/issue-brief/the-impact-of-current-state-medicaid-expansion-decisions-on-coverage-by-race-and-ethnicity/, (publication #8450).

Status of State Action on the Medicaid Expansion Decision, as of October 22, 2013, The Henry J. Kaiser Family Foundation, available at http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/ (last visited Oct. 26, 2013).

2014-2015 Executive Board Announcement

April 2nd, 2014 No comments

The Widener Journal of Law, Economics & Race is pleased to announce and welcome the 2014-2015 Executive Board!

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Immigration Reform Now Promising

March 31st, 2014 No comments

By: Alicia Emili
Blog Category: Immigration Reform

With more than 11 million individuals living illegally within US borders, it is clear our immigration system is in need of reform.  The US is currently faced with this enormous task and the only way to ensure a proper execution of such expansive reform is for Congress to carefully address each part of the plan before unleashing it.

The highly complex comprehensive set of reforms supported by President Obama focus on strengthening border security, strengthening enforcement, streamlining legal immigration, and creating an earned path to citizenship. Core pieces of the comprehensive bill include things such as: improving infrastructure at ports of entry, improving partnerships with border communities and law enforcement, stepping up surveillance, cracking down on employers who hire undocumented workers, phasing in electronic employment verification, deporting convicted criminals, creating a “startup visa” for entrepreneurs, and launching a Citizenship Resource Center to centralize the information and tools needed for the entire process.  The reform also requires illegal immigrants to pass national security and criminal background checks, learn the English language, and pay taxes with penalties before they can earn their citizenship.

While President Obama originally pushed his set of reform acts through the Senate as a single, comprehensive bill, it does not appear that the bill will survive the House in the same comprehensive form.  President Obama has said that he will now accept a piecemeal version of the plan with the stipulation that the main values remain. The possibility of carving out the simple issues and leaving the complex issues on the back burner is one, he stated, that he will not support.

House Speaker John A. Boehner (R-Ohio) has said that immigration reform is “absolutely not” a dead issue, but has not offered a time table for a scheduled vote.  Advocates remain concerned as the passing of an immigration bill in 2014 with midterm elections on the horizon is complicated at best.  However, Boehner insists on addressing the intricacies of the reform one step at a time to ensure that the issues are being dealt with in a calculated manner.  Boehner is encouraged by President Obama’s recent decision to support a piecemeal approach to the reform, especially since the American people have become skeptical of large, comprehensive bills.

Overall, this gives confidence to the American people that the House is making a valiant effort to produce the most efficient reform possible, especially with the financial implications the reform could have on the blight economy.  Executives of the Wall Street Journal CEO Council believe immigration reform will provide “an instant jolt to the U.S. economy,” and the nonpartisan Congressional Budget Office estimated that a reform would increase the revenue of the Unites States by roughly $700 billion within 10 years. With the American people’s best interest in mind, and a strict step-by-step approach to reforming the system, the US appears to be on a bright path to an effective and efficient immigration reform system.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

Sources:

David Nakamura, Boehner:  Immigration reform ‘absolutely not’ dead in House, Washington Post (Nov. 21, 2013), available at http://www.washingtonpost.com/blogs/post-politics/wp/2013/11/21/boehner-immigration-reform-absolutely-not-dead-in-house/.

Obama would accept piecemeal immigration reform, UPI (Nov. 22, 2013), available at http://www.upi.com/Top_News/US/2013/11/20/Obama-would-accept-piecemeal-immigration-reform/UPI-43991384929000/.

Immigration, The White House (Nov. 23, 2013), available at http://www.whitehouse.gov/issues/immigration.

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A Landmark Decision or just an Affirmation?

March 24th, 2014 No comments

By: Morgan Davis
Blog Category: Racial Implications of Recent Supreme Court Decisions

The Supreme Court’s decision in Fisher v. University of Texas was greatly anticipated, but when the 13-page decision was issued, was it really a decision at all? The Court’s 7-1 decision reaffirmed the Court’s position that diversity in higher education is of great importance. However, the Court declined to settle the ongoing dispute of the legality or constitutionality of affirmative action. Ultimately, the case was remanded back to the Fifth Circuit, leaving various interest groups and universities not knowing exactly what to make of the decision. It is a win in some respects, because the decision did not invalidate the essence of affirmative action in an educational environment. Supporters of affirmative action take the Court’s decision as a sign that the Court supports the consideration of race in admission policies to ensure and promote diversity.  However, the remand will force the University of Texas to further defend the legality of its admission procedures.  On remand the “reviewing court must ultimately be satisfied that no workable race-neutral alternatives would produce the educational benefits of diversity.” The decision will ultimately encourage other colleges and universities to be proactive ensuring that their admission policies will withstand the Court’s strict scrutiny test.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

Sources:

After Fisher v. University of Texas: Implications for Education Research, Theory, and Practice, Fall 2023 Harvard Educational Review, http://hepg.org/her/abstract/1252.

Joy Resmovits, Fisher v. University of Texas at Austin Ruling Leaves Universities in Limbo, Huffington Post (June 24, 2013), http://www.huffingtonpost.com/2013/06/24/fisher-v-university-of-texas-at-austin-ruling_n_3434687.html.

The Tug-O-War with Minimum Wage

March 17th, 2014 No comments

By: Sarah Phillips

Blog Category: Minimum Wage & the Economy

There has always been ongoing debate about the appropriate minimum wage amount. This is especially true now as recent economic downturns result in a stark reality for those living on a minimum wage.

The main argument against raising the federal minimum wage is business community concerns. While a minimum wage employee is anticipating the wage increase to achieve the obvious objective of making more money, there is concern from the business community regarding the costs, especially for small businesses.   There is also concern that the public (including minimum wage employees) will bear the cost of the raise in minimum wage in the end.  These tensions only add to complexity of the issue.

For many, the most important principle is that people are able to earn enough to support themselves. This is called the “livable wage” argument.   Some businesses believe that the principle behind this argument is more important than costs to the business.  Another solution, one that is more long-term, is to increase job skill training to allow individuals to excel beyond the minimum wage.

As a result of changes in the economy, states began to individually pass legislation to increase their minimum wage to a higher amount than required at the federal level.  Some states, such as New Jersey, are including automatic future increases on account of inflation. On a federal level, the Fair Minimum Wage Act of 2013 would raise the minimum wage and account for cost of living increases. However, even if this legislation is passed, debate is sure to continue about the best way to address the minimum wage.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

Source:

The Wharton School, University of Pennsylvania. The Complex Economics of America’s Minimum Wage, Knowledge@Wharton (Nov. 11, 2013), http://knowledge.wharton.upenn.edu/article/complex-economics-americas-minimum-wage/.

 

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