Walmart and McDonald's are among top employers of Medicaid and food stamp beneficiaries, report says

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Cars drive past a Walmart store in Washington, DC, on August 18, 2020.
Nicholas Kamm | AFP | Getty Images

Walmart and McDonald’s are among the top employers of beneficiaries of federal aid programs like Medicaid and food stamps, according to a study by the nonpartisan Government Accountability Office.

The question of how much taxpayers contribute to maintaining basic living standards for employees at some of the nation’s largest low-wage companies has long been a flashpoint in the debate over minimum wage laws and the ongoing effort to unionize these sectors.

Sen. Bernie Sanders, I-Vt., commissioned the study, which was released Wednesday by the congressional watchdog agency. The Washington Post was the first to report on the data. Sanders, who has run for the Democratic nomination for president, is a leading progressive lawmaker and a consistent critic of corporations.

The GAO analyzed February data from Medicaid agencies in six states and Supplemental Nutrition Assistance Program — known as SNAP, or food stamps — agencies in nine states.

Walmart was the top employer of Medicaid enrollees in three states and one of the top four employers in the remaining three states. The retailer was the top employer of SNAP recipients in five states and one of the top four employers in the remaining four states.

McDonald’s was among the top five employers of Medicaid enrollees in five of six states and SNAP recipients in eight of nine states.

Other notable companies with a large number of employees on federal aid include Amazon, Kroger, Dollar General, and other food service and retail giants.

About 70% of the 21 million federal aid beneficiaries worked full time, the report found.

“U.S. taxpayers should not be forced to subsidize some of the largest and most profitable corporations in America,” Sanders said in a statement Wednesday evening. “It is time for the owners of Walmart, McDonald’s and other large corporations to get off of welfare and pay their workers a living wage.”

Walmart recently reported net income of $5.14 billion for its most recent quarter, while McDonald’s reported net income of $1.76 billion for the same period.

McDonald’s USA said in a statement that the company believes the data from the report was taken out of context and framed in a misleading way, citing that McDonald’s and Walmart are some of the largest employers in the country.

“The average starting wage at U.S. corporate-owned restaurants is over $10 per hour and exceeds the federal minimum wage. McDonald’s believes elected leaders have a responsibility to set, debate and change mandated minimum wages and does not lobby against or participate in any activities opposing raising the minimum,” the company said in a statement.

McDonald’s announced last March that it would no longer lobby against minimum wage hikes. CEO Chris Kempczinski told CNBC in November that the company would be open to discussing the minimum wage as he called on Congress to pass another Covid-19 stimulus package.

“If not for the employment access Walmart and other companies provide, many more people would be dependent on government assistance,” Walmart spokesperson Anne Hatfield said in a statement. “We support efforts to raise the minimum wage while we continue to make investments in our associates.”

The GAO report comes after Florida voted to increase its minimum wage over the next six years until it reaches $15 an hour. It is the eighth state to approve a $15-an-hour minimum wage and the second-most populous state to do so.

President-elect Joe Biden supports a $15 federal minimum wage. The federal minimum rate has remained at $7.25 per hour for more than a decade.

Earlier this year, Costco, Amazon and Target raised their minimum pay to $15 per hour. On Wednesday, Starbucks announced it would raise wages for its baristas.

The sun sets over a McDonald’s store on October 21, 2019 in Edgewater, New Jersey.
Kena Betancur | Corbis News | Getty Images

In the past, companies such as McDonalds and Walmart have responded to pressure on lawmakers to pass mandatory minimum wage laws with ad campaigns touting their jobs as entry level, and therefore never intended to provide the sole source of income for a family.

McDonald’s launched a memorable marketing campaign in 2016 pitching itself as “America’s best first job” and suggesting that teens and young adults make up the bulk of its workforce.

But many advocates for a mandatory minimum wage saw the McDonald’s ads as an attempt to gloss over reality, which is that millions of McDonald’s workers struggle to support families on the wages the company pays.

— CNBC’s Christina Wilkie contributed reporting.

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