The biggest tax season story you won’t hear in mainstream media
by: Lori Dorfman and Lucy Martinez Sullivan and Saru Jayaraman
posted on Monday, May 17, 2021
As this year’s tax-filing deadline approaches, news outlets will publish some inevitable articles about delays in tax refunds, recovery rebate credits, and other logistical matters related to paying Uncle Sam. If past years are any indication, the stories that dominate headlines will almost certainly focus on individual taxpayers while overlooking a much larger conversation about corporations — and the extent to which those taxpayers fund them.
The National Restaurant Association (the “Other NRA”) is a prime example. It makes taxpayers eat the cost of not paying its workers a living wage. While it’s not unusual for corporations to underpay employees, deny them hard-earned benefits, and then expect taxpayers to foot the bill through social safety net programs, some of the NRA’s largest members are beginning to disavow the association’s stance on suppressing the minimum wage.
Despite being on the wrong side of many food industry battles — whether it’s marketing junk food to children, racial discrimination, sexual harassment, or yes, workers’ pay — McDonald’s has broken ranks with the NRA, the trade group that’s become the restaurant industry’s lobbying bulldog. The fast-food giant says it no longer supports the NRA’s aggressive campaign against both a national minimum wage increase, to $15 per hour, and ending the subminimum wage for tipped workers, currently $2.13 an hour. Additionally, McDonald’s announced Thursday that it will raise workers’ pay in its corporate-owned stores to an average of $15 per hour by the end of June — a move its workers are demanding the corporation mandate for the 95% of its restaurants that are owned by franchisees.
Still, the connection between this course change and the broader conversation about taxpayers subsidizing corporations remains underreported in the news. This is especially troubling since there are many other restaurant chains that haven’t woken up to the fact that raising the wage is extremely popular and is actually very good for both business and the larger economy. Most notably, the corporation Inspire Brands, which owns Jimmy Johns, Arby’s, Sonic, Dunkin’ Donuts, and several other chains, is not only fighting the minimum wage increase but is boasting about its efforts to scuttle the “Raise the Wage” Act in Congress in a letter the corporation sent to its (mostly underpaid) employees.
In the midst of a pandemic that has brought untold human and economic suffering to millions in the U.S., the NRA fought vigorously to remove the proposed wage increase from the COVID relief bill and recently concluded its annual Lobby Days (4/19-21), where its focus was on quashing growing momentum to increase the minimum wage.
Why is the NRA so opposed to the minimum wage increase? They say it’s because it will put restaurants out of business. Not only is this reasoning at odds with recent statements by the NRA’s largest backers, it stands to reason that if you can’t pay a living wage, you probably shouldn’t be in business. What’s really behind the NRA’s argument is an interest in profit maximization at the expense of workers and taxpayers.
Taxpayers pick-up the tab for Big Food’s poverty wages.
A recent report by the U.C. Berkeley Labor Center found that families of 71% of fast-food workers who would benefit from minimum wage increases are enrolled in programs like Medicaid and SNAP (also referred to as food stamps). One Fair Wage research shows that tipped workers, who earn a federal subminimum wage of $2.13 an hour, use food stamps at nearly double the rate of other workers. That so many low wage workers have come to depend on safety-net programs for help with putting food on the table or getting health insurance tells you that the wages these corporations are paying keep people trapped in poverty. Taxpayers are bearing the burden by subsidizing these corporations to the tune of $107 billion a year.
Perhaps not surprisingly, the corporations fighting most aggressively against the minimum wage are the most heavily subsidized. A GAO report from October — which revealed that the majority of Medicaid recipients worked full time, many in the food service sector — found that Dunkin’ was repeatedly in the top ten employers of “the largest estimated non-disabled, non-elderly adult Medicaid enrollees.” To add salt to the wound, the doughnut giant has no difficulty paying its CEO $2,500 an hour.
In other words, it’s not so much that America is “running on Dunkin'” as the doughnut king is running on the backs of U.S. taxpayers.
By their own accounting, corporations do just fine paying a higher wage.
As several corporations have noted, a higher minimum wage is not having a negative impact — whether on the total number of people hired or on corporate bottom lines. Denny’s chief financial officer said that in California, where the state has no subminimum wage and has already started raising the minimum wage for all, including tipped workers, to $15 by 2023, “California has outperformed the system.” The CEO of Domino’s, Ritch Allison, has also expressed support for a minimum wage increase, explaining that the corporation mostly pays above the minimum wage already. “You can’t go out there and hire people at that [lower] rate anyway,” Allison noted.
In fact, some corporations are recognizing that wage increases can not only lead to greater productivity and a more capable workforce, they can also boost their sales as greater employee spending power translates into greater consumer demand for products and services like dining out — something Henry Ford figured out literally more than a century ago when he doubled his workers’ wages.
As 70 investors holding $538 billion in assets noted in a statement of support, paying workers fairly also “may inspire brand loyalty from a generation of socially savvy, values-motivated consumers.” (Or said differently, not doing so may mean enduring these customers’ wrath.) The statement also notes that the subminimum wages uphold “systemic racism by disproportionately paying people of color less than white people.”
A Center for American Progress report reinforced this, finding that states that have a fair wage had less poverty, with the greatest benefits being realized by women and parents. Working people must be treated fairly: given enough to live on and feed their families without having to rely on food stamps and our overburdened social safety net, and without taxpayers being forced to subsidize the bottom line of the corporations they work for.
Progress hinges on Corporate America distancing itself from the “Other NRA’s” myopic stance and defunding this institution, especially so long as it builds a bulwark against lifting millions of U.S. workers out of poverty.
It also depends on media outlets thoroughly reporting this issue, both during tax season and year-round. McDonald’s is a big domino to fall in the fight for fair wages; changes there often ripple throughout the food industry, as they did when the fast feeder agreed to meet public health advocates’ demands to remove soda as the default drink in kids’ meal menus. Many other restaurants have since followed their lead. With enough pressure, the same can happen with wages, but reporters have to help readers make the connection between their own pocketbooks and low corporate wages, which affect all taxpayers in the food industry and beyond.
Lori Dorfman, DrPH, directs the Berkeley Media Studies Group and is an adjunct professor at the U.C. Berkeley School of Public Health; Lucy Martinez Sullivan is the executive director of Feed the Truth; and Saru Jayaraman is the president and co-founder of One Fair Wage, as well as the director of the Food Labor Research Center at U.C. Berkeley.