WASHINGTON—As it has for years, the federal government is providing a massive subsidy to the nation’s largest and lowest-paying firms, such as Walmart and Amazon. The subsidy is because the low-wage firms pay their workers so little they must turn to federal food stamps, free school meals for kids, Medicaid, and Section 8 housing vouchers to survive, a new study says.
And that’s not the sole subsidy source the companies milk from the taxpayers. The corporate CEOs earn so many millions of dollars via stock buybacks and low capital gains tax rates on those transactions that they’re subsidized, too, at the same time their workers scrape along from paycheck to paycheck.
This largesse costs billions of dollars in lost revenues, but firms get away with it as executives plow millions into lobbying lawmakers and co-opting regulators, all to protect their profits and wallets.
The new study, an annual report by the progressive Institute for Policy Studies think tank, uses Walmart and Amazon in Nevada as a test case to extrapolate how much the corporate giants cost taxpayers when the behemoths low-ball their workers.
Nevada has an unusual law forcing firms doing business there to disclose to the state how much their workers report in federal aid to make up for wage shortfalls, and IPS also highlighted stock buybacks which enrich executives.
Though its state law requires more disclosure than either federal law or other state laws on corporate pay, the state’s Republican officials recently changed their standards for counting workers to include only full-time workers. Many of the workers in Nevada’s dominant industry, gaming, are part-timers.
Which doesn’t change the basic conclusion: “The top 20 low-wage firms in the U.S. together employ approximately 6.7 million people,” says author and team leader Sarah Anderson, a senior analyst. “The Low-Wage 20 are using public assistance as corporate welfare. These companies’ low-wage business models have left many of their workers with no choice but to rely on public assistance.”
The problem and the pay gulf between the CEOs and their low-paid workers will only get worse, Anderson warns, as a result of the Trump-GOP $4.5 trillion 10-year tax cut for the 1%, partly paid for by huge cuts in food stamps, Medicare, Medicaid, and housing aid. Key findings include:
- Fifteen firms among the Low-Wage 20 reported median pay in 2024 in Nevada below the $35,631 income limit for a family of three to be eligible for Medicaid in most states.
- Thirteen of the 20 firms reported median pay below the $33,576 threshold for a family of three to be eligible for SNAP food aid (food stamps) in 2024.
- “In Nevada, Walmart had 4,574 employees, 29.3% of their employees in that state, enrolled in Medicaid in 2024. Extrapolating this data to the national level suggests Walmart likely has around 468,800 employees on Medicaid.”
- “Amazon, the second-largest U.S. private sector employer, had 8,951 employees on Medicaid in Nevada in 2024, 48.4% of all Amazon employees there. If Nevada is representative of the e-commerce giant’s national pay practices, roughly 577,000 Amazon employees are likely on Medicaid.”
- Colorado, Massachusetts, Illinois, and Michigan disclosed 10,920 Walmart workers in those four states alone used SNAP. Amazon had 9,633, and Dollar Tree was #3, with 5,021.
- Ten of the Low-Wage 20 firms reported a 4.6% decline in median pay between 2019 and 2024, adjusting for inflation. Median pay dropped from $30,474 (in 2024 dollars) to $29,087.
- All 20 of these firms reported 2024 median pay below $59,600, the income level needed to afford the U.S. average rent for a two-bedroom apartment. Median pay was so low at seven of the 20 that workers at that level could not afford to buy an average used car.
- Starbucks CEO Brian Niccol earned $95 million in total compensation, on an annual basis, when he took over in the middle of 2024. Most of it was in stock buybacks and options for buybacks.
Starbucks’ median pay for workers—the point where half, including Niccol, are above and the other half are below—was $14,611 in 2024. It recently became the first of the Low-Wage 20 to file its annual corporate report for 2025 with the federal government, a footnote says. Niccols’ pay last year was $31 million, and the median pay for a Starbucks worker went up, to $17,200.
The IPS report noted Starbucks touts its 5% company match for workers’ contributions to 401(k) accounts. It then laconically adds that for 42% of Starbucks workers, their 401(k) balance is zero. Their paychecks are so low that nothing is left over to contribute to a retirement account.
Niccol refuses to bargain in good faith with his unionized workers, who have voted for Starbucks Workers United at more than 600 stores nationally. But Starbucks wasn’t shy about stock buyback spending: $18.865 billion last year.
The other side of the pay gap is average CEO compensation at these 20 low-wage firms “hit $18.6 million in 2024, just shy of the $18.9 million average for S&P 500 CEOs as a whole,” Anderson’s team reported. And that’s where the stock buybacks enriching shareholders—including at least 16 billionaires, such as Amazon founder Jeff Bezos, plus the entire Walton (Walmart) clan—enters the picture.
“The Low-Wage 20 companies combined spent $260 billion on stock buybacks between 2019 and 2024. This financial maneuver artificially inflates the value of CEO stock-based pay while siphoning resources from worker wages and other productive investments,” IPS said.
“With the $32.5 billion these firms spent on buybacks in 2024 alone, they could’ve lifted more than one million workers making the Low-Wage 20’s average median wage of $29,087 up to the $59,600 needed to afford the U.S. average rent for a two-bedroom apartment.”
And ten of the 20 spent more that year on buybacks enriching corporate executives and Wall Street than they spent on capital investment in new machines and fixed capital, much less their workers.
The AFL-CIO has been blowing the whistle on the corporate stock buyback dodge for at least a decade, along with Sen. Elizabeth Warren, D-Mass., ever since she was a Harvard professor. But her demands for data from the federal Securities and Exchange Commission—which gave the green light to the stock buybacks almost 50 years ago—have fallen on deaf ears.
The federation includes the buybacks, now the top form of executive compensation, in its annual Paywatch report, but makes a bigger point about the ratio between a CEO’s compensation, including both straight pay and the value of the buybacks, and a median worker’s pay, firm by firm—without going into the history and capitalists’ politics of the buybacks.
Still, the comments from AFL-CIO Secretary-Treasurer Fred Redmond at the Paywatch press conference in August 2024—three months before the election which returned Trump to the White House—are instructive:
“Instead of investing in research and development, capital expenditures or their own employees, CEOs have been using this corporate tax windfall to boost short-term stock prices through stock buybacks,” Redmond said then.
“More and more executives are using the bump in stock prices to sell their own shares after a buyback announcement, so CEO pay becomes even more inflated. In 2023, CEO pay was also boosted by $795 billion in stock buybacks by S&P 500 companies.
“This level of inequality is not sustainable, yet Trump told his wealthy donors he wants to cut the corporate tax rate even further if he is re-elected. It’s no wonder Elon Musk, the world’s richest CEO, endorsed Trump. And it’s no wonder that working people are upset that corporate profits and stock prices surge while our wages have not kept up with inflation.”
IPS has several ideas for how to start closing the chasm in compensation between CEOs and the rest of us. Outlawing and/or taxing the stock buybacks is one. Sen. Warren and National Nurses United have pushed that for years. The union is outraged by high pay for hospital chain CEOs.
Using federal, state, and local spending as leverage to force higher pay if you want to bid on federal work—an idea Democratic President Joe Biden adopted and Trump dumped via an executive order—is another. That’s not enough, IPS’s Anderson contends.
“Solving the current ‘affordability crisis’ will require safety net repairs and better ways to control basic costs. But to fix this problem for the long-term, we need to put an end to the poverty wage business model that is all too prevalent in Corporate America,” she concludes.
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