- Sen. Bernie Sanders introduced a bill, the Stop BEZOS Act, which would force companies to pay a tax equal to the federal assistance their workers receive.
- The goal of the bill is to increase worker pay at large companies like Amazon and Walmart.
- Jared Bernstein, the former chief economist for Vice President Joe Biden, said the plan could backfire.
- Bernstein said employers could decide not to hire workers believed to be on federal assistance, making it harder for low-income Americans to find a job.
Sen. Bernie Sanders says he wants to help lower wage workers at Amazon make more money, but one left-leaning economist says his plan to do so could backfire.
Sanders on Wednesday introduced the the Stop Bad Employers by Zeroing Out Subsidies Act, or Stop BEZOS Act, a shot at Amazon CEO Jeff Bezos. The bill is designed to force large employers to pay back, in the form of a new tax, federal assistance their workers receive. Rep. Ro Khanna, a California Democrat, introduced a House version of the same bill named the Corporate Responsibility and Taxpayer Protection Act.
The goal is to force employers to increase wages to a level at which workers do not need to rely on programs like food stamps or housing assistance.
“In other words, the taxpayers of this country would no longer be subsidizing the wealthiest people in this country who are paying their workers inadequate wages,” Sanders told reporters at a press conference.
But Jared Bernstein, the former chief economist for Vice President Joe Biden and a senior fellow at the Center on Budget and Policy Priorities, says the bill could actually end up hurting the very workers it is trying to help.
The most troubling potential consequence, in Bernstein’s opinion, is that the Stop BEZOS Act could further the stigmatization of worker benefits.
“My concern is that there is already a political movement afoot to vilify public benefits and even though I know for a fact that the main sponsors of this bill – Sanders and Ro Khanna – don’t feel that way, I worry that this idea unintentionally provides the hard right with another argument,” Bernstein told Business Insider.
Many Republicans have already attempted to curtail public benefits to cut spending and address the federal debt, and Bernstein believes Sanders’ bill could in turn provide fodder for their argument.
Bob Greenstein, the founder of CBPP, wrote in an analysis that the move could also result in corporations joining the anti-benefits fight.
“In addition, the legislation would likely lead to substantial corporate lobbying efforts to restrict eligibility and cut benefit levels for core low-income assistance programs, because doing so would reduce companies’ tax bills – effectively making a cut in Medicaid, SNAP, school meals, or rental subsidies akin to a direct corporate tax cut,” Greenstein wrote.
Bernstein’s second concern is that the bill could encourage what he called “statistical discrimination,” or employers actively avoiding hiring people they suspect could be on federal assistance.
“If you’re an employer with a job applicant who you fear is going to draw public benefits, whether you’re right or wrong, you may try and avoid hiring that person,” Bernstein said.
This could result in companies simply hiring fewer workers or workers that will work for cheaper while not drawing benefits. As Greenstein noted, the measure would favour married workers over single parents since benefits are determined on household income and a married couple would have two incomes.
“Workers who receive these benefits would thus become thousands of dollars more expensive to employ than other workers who are paid the same wage but don’t qualify for these benefits,” Greenstein said. “This would create strong, problematic incentives for employers in deciding whom to hire – and whom to lay off when a firm’s sales hit hard times.”
Many states are already attempting to institute work requirements for some benefits, like Medicaid. The current iteration of the House GOP’s farm bill would do the same for SNAP, or food stamp, benefits. These work requirements would require able-bodied Americans to work at least 2o hours a week to qualify for benefits.
While Bernstein said the work requirements are a “a far worse idea” than Sanders’ bill, he said he feared that under the Stop BEZOS Act, many low-income Americans could be stuck between a rock and a hard place.
“They could face ‘statistical discrimination’ at work and if therefore it’s harder for them to find a job, they risk not meeting a work requirement and losing the benefit that they very much need,” he said.
Instead, Bernstein suggested using simpler method to boost worker pay at companies like Amazon: maintaining a strong economy and tight labour market, increasing the minimum wage, and securing strong support for work assistance benefits, like the earned income tax credit.
While Sanders has long advocated for strengthening worker protections, including an increase in the minimum wage, Bernstein said the Stop BEZOS Act could end up being counterproductive to that cause.
“They have identified an absolutely valid target, which is companies that pay well below a living wage to employees who need precisely that,” Bernstein said. “But the way you solve that problem matters a great deal and my concern here is that this solution will backfire.”
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