Sacred Cows of Corporate Welfare

IMG_0006 (1)Is it right to subsidize businesses with taxpayer money so that they can pay their employees less?

I know the Aspen “affordable housing” program is a sacred cow. But let’s talk about this cow for a change, rather than just worship it.

Let’s stipulate at the outset that the people who are suckling at the teat of this cow are not poor. The income cutoff for subsidized rental housing is $143,000 (and $213,000 for a couple). For subsidized owner housing, it’s $184,000 (and $191,000 for a couple).

But leave aside for a moment the questionable morality of taxing not just the wealthy but also the middle and lower class in order to subsidize the upper-middle class — where some of the subsidized are actually making more than the subsidizers.

And ignore that there are a billion people on this planet making less than $500 a year who need subsidies a lot more than a person who chooses to make $184,000 a year in Aspen.

And let’s not dwell on the fact that this cow is notoriously corrupted with individuals who lie about their eligibility to ride it.

And we’ll put aside the fact that the elites of government and media who are tasked with keeping this cow in its pasture are suckling at the teat of the cow themselves.

Finally, let’s save for another day the cost, inefficiency, cronyism and empire-building of the government agency that feeds taxpayer money to this cow. (Not to mention the inside track enjoyed by its staff — guess who learns first when another teat of the cow becomes available?)

Leave all that aside. My biggest problem with the cow is that it unintentionally benefits businesses and harms their employees.

Here’s how:

Businesses pay employees no more than necessary. That would eat into profits. In the real world, and even in Aspen, unprofitable businesses go out of business.

Employee wages are dictated by, among other things, the cost of living including the cost of housing. Businesses have to pay employees enough money to pay the rent. If they don’t, then they don’t have them as employees. A person can’t work if he can’t live.

Some employees use that money to rent an apartment in Aspen. Others choose to share an apartment with a roommate or three, or rent an apartment downvalley so that they have more money for student-loan payments, beer, skis, childcare and whatever else is important to them.

It’s good for employees to have those choices. That’s the way markets and societies are supposed to work.

But if employees receive housing welfare, the business no longer has to pay them a wage that allows them to buy it themselves in order to secure their services.

So the businesses do what their shareholders legally expect them to do. If the employees receive middle-class welfare in the form of taxpayer-subsidized housing, the businesses pay them commensurately less. Why wouldn’t they?

The end result is that the employees wind up receiving about the same as they would have received without the welfare; what they get in welfare from the taxpayers is offset by the commensurate reduction in their wages. And if they can’t navigate their way onto the affordable-housing gravy train and work their way up the waiting list past the insiders, they don’t have housing either.

Similarly, the person who lives with roommates or downvalley, in order to have money for other things, doesn’t have that money because the business is paying an artificially low wage due to the affordable-housing program.

In both those cases, the employees wind up with an artificially low wage due to the affordable-housing program but no affordable housing.

Predictably, those who worship the sacred affordable-housing cow think the way to cure these destructive unintended consequences of the cow is to expand the herd.

So: The taxpayers, including the middle and lower classes, get taxed more and more; an elaborate and expensive government bureaucracy sends the proceeds to members of the middle and upper-middle class, some of whom are not truly eligible but get the welfare anyway and some of whom are eligible but don’t get the welfare because they haven’t navigated their way onto and up the waiting list, all of which has the effect of worsening matters by driving down wages, and the advocates of the program consequently call for more of the same.

The only ones to benefit from this circular stampede (apart from the ever-expanding government bureaucracy) are the businesses who get to pay lower wages than they otherwise would have and their mostly out-of-town shareholders. For them, this sacred cow brings a feast of profits. Naturally, they join the worship.

Kill the cow. It’s time for businesses to either raise the pay of their employees to what the market dictates without taxpayer subsidies or lose them. Stop the corporate welfare.

Published in The Aspen Times on April 13, 2014 at http://www.aspentimes.com/opinion/10967734-113/cow-employees-housing-businesses

Sketch by Caroline 2014 (c)

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