Who Fact-Checks the Fact-Checkers?

Kessler points out that both Amazon and Walmart recently raised their minimum wages everywhere across the United States—Walmart to $11 and Amazon to $15. (A little off-topic, but please take a second to note that both minimum wages are well below the living wage that Kessler described.)

But Kessler is forgetting that both corporations routinely hire independent contractors, and those contractors earn less than the minimum wage. In 2014, one of Walmart’s contractors was ordered to pay more than 21 million dollarsin unpaid wages to warehouse workers.

Amazon hires delivery drivers through the gig economy, and here’s one case of someone who earned less than the local minimum wage on his shift. And Priceonomics found that for workers in Amazon’s Mechanical Turk service, which outsources small tasks to crowdsourcing, “the average hourly ‘wage’…is $1-$5. Roughly half of the Mechanical Turk workforce is American, which means that they are working for less than the Federal minimum wage of $7.25per hour.”

It’s understandable that Kessler forgot about the independent contractors—part of the reason why corporations love to hire independent contractors in the first place is because they’re outside the bounds of labor laws and popular scrutiny. But what’s unforgivable is what Kessler did next.

In order to prove AOC’s claim that Amazon and Walmart “are benefiting from a wealth transfer is dubious,”Kessler relies on a particularly spurious source—a paper from 2005 by Jason Furman titled “Wal-Mart: A Progressive Success Story.”

As you might be able to tell from the title, “Wal-Mart: A Progressive Success Story” reads like an unabashed advertisement for the retailer—though at times it also feels like it’s coming from a weird parallel universe where corporate balance sheets take precedence over human lives. From the opening of the piece:

There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector. Plausible estimates of the magnitude of the savings from Wal-Mart are enormous — a total of $263 billion in 2004, or $2,329 per household. Even if you grant that Wal-Mart hurts workers in the retail sector — and the evidence for this is far from clear — the magnitude of any potential harm is small in comparison. One study, for example, found that the “Wal-Mart effect” lowered retail wages by $4.7 billion in 2000.

Who cares if American retail workers lose nearly five billion dollars in wages if American families save a few dimes on toilet paper? This is backward, trickle-down thinking.

The paper argues that government benefits for Walmart employees are good. “The bulk of the benefits of these expansions go to the workers that receive them, not to the corporations that employ them,” Furman writes.

Attempts to limit the spread of Wal-Mart and similar “big box” stores do not just limit the benefits of lower prices to moderate-income consumers, they also limit the job opportunities that Wal-Mart and other retailers provide. More puzzling is that some progressives have described Medicaid, food stamps, the EITC, and public housing assistance as “corporate welfare.” The right response to Wal-Mart is not to scale back these programs but to expand them in order to fulfill the goal of making work pay.

In other words, the paper is arguing that we should increase government benefits for Walmart workers, in the hopes that Walmart would eventually pay more.

But just because benefits like the EITC and SNAP go directly to workers doesn’t mean that Walmart doesn’t enjoy those benefits, too. By paying its workers less than they’d have to without government benefits, Walmart is putting those wages directly in its profit margin. (You can read a lot more about parasitic corporate employment practices in “Confronting the Parasite Economy,” a piece by Nick Hanauer—who is, full disclosure, my boss—in The American Prospect.)

By strictly interpreting AOC’s claim that “Walmart and Amazon can get paid by the government”—that is, by reading that statement as “the government sends Walmart and Amazon checks so that they can pay workers less than they’re worth”—Kessler is doing AOC a disservice. There is, in fact, a transfer of wealth exactly as AOC says: the government financially supports low-wage employers by largely not allowing their workers to starve to death or go without a home. Rather than paying their employees a living wage, those employers just pocket that money and call it profits. It’s the exact same money; it’s just funneled in directions that favor the employers and not the workers.

AOC is arguing the opposite of what that paper is claiming: while Furman claims it’s better to lower prices and wait for Walmart to decide to offer a living wage, AOC is saying it would be better to pay a living wage so Walmart workers can afford to eat in restaurants and shop for food and clothing and other goods in their local economy—and at their own Walmart.

In the end, Kessler gave AOC three Pinocchios for her claims. For his credulousness and his adherence to trickle-down economic theory that puts corporate greed over people, I’d argue that Kessler deserves a dishonor of his own. That’s why I’m proud to bestow upon his so-called “Fact Check” a first-ever distinction: Congratulations, Mr. Kessler—you earned yourself three Skunk Heads!

Don’t spend them all in one place!