The perfect cover-up.
Large corporations starved working Americans for years, now they’re trying to look progressive.
Last December Republicans passed the historically unpopular tax bill and gave corporations an absurdly generous tax cut, which lowered the corporate tax rate from 35% to 21%. Because of that, large companies are announcing they will raise workers’ wages and give them one-time bonuses. Take a listen to this clip from the Fox Business Network that Trump recently tweeted out.
That sounds good, right? Workers are getting a bonus, an increased hourly wage from ten to eleven dollars an hour, and extra benefits like parental leave. But therein lies the problem, companies like Walmart are relying on you to perceive this announcement as good and not question what more they actually could be doing to help working people. Don’t take my word for it, let’s look at the numbers.
Here’s the first thing you have to understand. In the year of 2017, Walmart pulled in over $13 billion dollars in net income, or more simply for now, how much profit they made. The year before that, they pulled in over $14 billion dollars in net income.
In fact, for every year in the past decade, they have made over $10 billion dollars in net income. Financially, Walmart has been doing well, and it shows in the growth of their stock price. Walmart's 52-week average stock price in 2007 was $36, and in 2017 it was $78. And this isn’t unique to Walmart, by-and-large US corporate profits have been going up over the past decade. Republicans simply slashed the corporate tax rate from 35% to 21% to make rich people richer.
Now here comes the trick we’re not supposed to talk about. Walmart, and plenty of other companies, are pretending the extra millions and billions they will now save is what made the increased wages and one time bonuses possible. The problem here is that this logic presumes Walmart couldn’t have previously afforded to give workers a living wage. Let’s do the math to prove they could have.
First, let’s establish the figures we’re going to be working with. Walmart employs roughly a million workers on an hourly wage. We’re going to define a living wage as $15/hour because that’s becoming a common consensus in America of what the minimum wage should be, both in terms of public opinion and economic research. Finally, for simplicity let’s assume all workers were paid for two-thousand and eighty hours a year, which implies each employee works eight hours a day, five days a week, for fifty-two weeks. Given Walmart employees a significant amount of part-time workers, this is already a serious overestimate.
If you multiply all of these numbers together, one million employees, working two-thousand and eighty hours a year, and receiving $15/hour, and, you get three billion, one hundred twenty million dollars. That means if Walmart wanted to give all hourly employees a fifteen dollar hourly wage in 2017, it would have cost them less than a quarter of their total profits from that year. And remember, we made an overly liberal estimate, the actual cost would be even less than that.
The reason Walmart can’t afford this plan is far more cynical. In the weeks leading up to the Republican tax bill being signed, Walmart authorized twenty billion dollars to be spent on stock buybacks over the next two years. In simpler terms, they want to make their stock more attractive to investors, and bring home a better return for shareholders. And to be clear, this isn’t unique to Walmart. For example, Trump has recently been touting the fact Fiat Chrysler is moving a manufacturing plant from Mexico to Michigan because of the savings from the Republican tax bill. Meanwhile, in 2015 Fiat Chrysler’s shareholders approved a plan for the company to buyback 10% of their stock.
This is why these recent corporate announcements are so painful because corporations already do in fact have the money to create well-paying jobs, they’re just more interested in spending it to drive shareholder-value because the executives who are making these decisions have multi-million dollar salaries tied to their companies stock-market performance.
And while ordinary Americans struggle to get by so these multi-millionaires and billionaires can enrich themselves and party on their yachts off the coast of Monaco; we’re faced with an entire political party that has decided to codify this as the new American dream.
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