Sen. Bernie Sanders’ (I-Vt.) latest policy idea seems laudable at first glance: Penalize big corporations when their workers tap public benefits, such as food stamps and Medicaid, to get by.
Unveiled this week and unabashedly aimed at Amazon and its wildly wealthy CEO, Jeff Bezos, Sanders’ Stop BEZOS Act would slap a 100 percent tax on companies with 500 or more workers until the government recovers the monetary value of all the social welfare used by their workers: Medicaid, food stamps, even school lunch subsidies. For instance, for every dollar an employee receives in food stamp benefits, the company would pay an extra dollar in taxes.
The idea is to shame some of the country’s largest and most successful companies for paying workers so poorly that they have to rely on government aid.
But the bill doesn’t just shame companies, it spreads that shame to the very idea of social welfare by demonizing benefits, economists say. That’s a play usually reserved for Republicans and conservatives, who love to bang the drum against the nation’s “takers.”
The bill, which doesn’t stand much chance of going anywhere, could give big companies a reason not to hire those who get benefits, a majority of whom are parents.
The Center on Budget and Policy Priorities, one of the most influential left-leaning think tanks in Washington, criticized the Sanders plan in a blog post on Wednesday. Several progressive policy types ― such as Dean Baker of the Center for Economic and Policy Research and Mike Konzcal of the Roosevelt Institute ― sounded sour notes on Twitter.
“It’s ham-fisted,” Betsey Stevenson, a labor economist at the University of Michigan who served on the Obama administration’s Council of Economic Advisers, told HuffPost.
If the goal is to get companies to pay higher wages, this won’t do it, added Stevenson, who specializes in examining how public policy affects the labor market.
In an interview with HuffPost, Sanders dismissed the criticism.
“We have thousands of workers working for an extremely profitable corporation owned by the wealthiest person in this country who are making wages so low they are forced to go on public assistance,” he said. “All we are asking of Mr. Bezos is pay your workers a living wage.”
There’s already stigma in the United States surrounding food stamps and other social safety benefits. Some Americans won’t apply for food stamps through the Supplemental Nutrition Assistance Program to avoid the shame involved, Stevenson said.
Yet the public safety net offers a real benefit to American workers. Single parents, in particular, rely on Medicaid and monthly food benefits in order to raise children in a country that offers little other supports to families (such as subsidized day care or parental leave). Nearly 70 percent of food stamp benefits go to households with children.
Though Sanders’ proposal includes a provision that blocks employers from asking applicants if they are on public benefits, that wouldn’t necessarily stop a company from profiling workers or not hiring those who seem likely to use benefits, the Center on Budget and Policy Priorities said in its blog post.
“In addition, some employers might pressure employees not to sign up for Medicaid or other benefits,” CBPP’s Robert Greenstein, Sharon Parrott and Chye-Ching Huang wrote. “And elements of the business community would likely lobby policymakers to reduce their tax bills by restricting eligibility and benefits for core low-income programs, which would be equivalent to a corporate tax cut.”
Warren Gunnels, Sanders’ policy director, suggested on Twitter that the CBPP did its analysis to please Walmart, which has donated to the nonprofit. In a statement Friday, CBPP spokeswoman Shannon Buckingham said Gunnels’ charge is false and pointed out that many other analysts outside of the organization share its view.
“The Center did not use any Walmart Foundation funding for this analysis,” Buckingham said. “Moreover, our analysis calls for policies that require Walmart and other corporations to raise wages, provide paid leave, and pay more in corporate taxes ― policies many corporations would find unattractive.”
Welfare recipients in the U.S. are often subject to work requirements, so if you get food stamps or Medicaid, in some states you also must work a certain amount per week. This bill, by disincentivizing hiring such workers, would make it even harder for them to land a job, thus causing more of them to lose benefits.
“It’s really unfair. Recipients would end up in a situation where there is a work requirement and employers are told that they’ll be penalized for hiring them,” Stevenson said.
Sanders rejected the idea that employers would discriminate against poor applicants, suggesting reasonable pay itself would solve the problem.
“If you pay people a living wage, they will have an adequate income,” he said.
Even though the bill stands little chance of becoming law, that doesn’t mean it’s OK that the policy idea is flawed, Baker told HuffPost last week. When you create an economic policy, you want to make sure it’s a good, effective idea, he said.
“Amazon has a history of treating workers badly, yes,” he said. “But this isn’t likely going to change that.”
This article has been updated with comment from Sanders’ policy director and Buckingham.