During his 100 day celebration, after declaring his need to avoid “unforced errors,” Governor Kasich suggested that part of what SB 5 did was bring state government benefits more in line with the “shabby” benefits of private workers like a waitress at Bob Evans. By bringing Ohio’s public employee union benefits, to the “shabby” benefits of minimum wage, non-union jobs like the waitress at Bob Evans saves the State money, Kasich argued.
(Source: Marc Kovac @ Ohio Capital Blog)
So, would the State of Ohio save money if it provided benefits like Bob Evans does? No.
In fact, you can argue that even before you consider the $8 million corporate welfare giveaway the Kasich Administration is giving the corporation to move its global HQ from Columbus to nearby New Albany, taxpayers have been subsidizing Bob Evans’ employee benefits for some time.
Looking at just one month of data from the Ohio Department of Jobs and Family Services (July 2010), Ohio Policy Matters was able to see that roughly 13% of Bob Evans employees in Ohio received some form of government assistance to make ends meet. Roughly 4,800 Bob Evans employees and their family members relied on Medicaid to provide them with health care coverage. A little over 4,000 relied on the government to provide their families assistance buying food. And almost 250 made so little working at Bob Evans, they qualified for cash assistance under the Ohio Works First program. What’s worse is that over the last six years, the number of Bob Evans employees relying on government food assistance programs has grown nearly 49% while the number of employees employed by Bob Evans has shrunk by nearly 4%.
If what Policy Matters observed in July ‘10 was reflective of what is seen every month, how much does Bob Evans’ “shabby benefits” cost federal and Ohio taxpayers?
Based on statistical program averages for per-recipient program costs provided by ODJFS, it appears that these annual subsidies could amount to more than $20 million annually.
In other words, we just gave $8 million in corporate welfare to an Ohio company to rebuild a new corporate headquarters with $70 MILLION in profits last year that pays their workers so little it may cost us $20 million a year in welfare benefits to help their workers meet their families basic needs. It is an utter farce for Governor Kasich to suggest that companies like Bob Evans simply cannot afford to provide better benefits for their employees and stay in business.
Bob Evans can’t afford to improve its benefits, Governor? It looks like they could take the taxpayers off the hook and still make $50 million in profits. The problem with Kasich’s assumption is that he believes that the private sector pays the most in benefits they can afford. This is laughably untrue as Bob Evans, Walmart, and countless other businesses demonstrate. Thanks to day trading and the investor class, businesses are under enormous pressure to maximum revenues and minimize costs. They are, after all, for-profit entities. One way businesses are able to keep their cost down, like Bob Evans demonstrates, is by having the government pick up part of their tab in giving their employees a sustainable support system. In other words, welfare for the working poor is another form of corporate welfare.
Government can’t do that. If government pays “shabby” benefits that forces their employees to rely on the social safety net to make ends meet, all your done is transfer payroll expenses to welfare rolls. On a per employee basis, it would appear that companies like Bob Evans that pay their employees “shabby benefits” substantially cost the State more money than even the rosiest of projects by the Kasich Administration suggests SB 5 could save the State. If Ohio provided to its State employees the kind of benefits Bob Evans did, it would cost the State an additional $220 million in new welfare costs. That’s more than the Administration claims SB 5 will “save” Ohio taxpayers using what most consider highly questionable and incredibly rosy “math.”
As Policy Matters Ohio pointed out in their press release:
“People who work should be able to support themselves and their families,” said Wendy Patton, the author of the report. “The plight of these workers and their families illustrates a basic problem in our economy.”
“The answer is not that more Ohioans need lower earnings,” said Patton. “More people in Ohio need a living wage and benefits that are not shabby.”
Governor Kasich likes to quote Kennedy’s line about a rising tide raises all boats and applying to taxes. The same can be said about employee benefits. Of all the gaffes for Kasich to walk into, this one might be the worst of them all. The more you look at it, the more disturbing it gets:
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