Should Retail Companies Get Subsidies?
Many retail employees make so little they qualify for government assistance
In 2012, Kohl’s Corp. was awarded up to $62.5 million in tax credits from the Wisconsin Economic Development Corp., in part to build a new headquarters and expand its Wisconsin workforce by 3,000 workers. But disappointing sales figures caused the company to pull back, instead opting to acquire and renovate space near the existing headquarters. The company also has created just 473 of the 3,000 jobs it plans to add. Photo by Tara Golshan of the Wisconsin Center for Investigative Journalism.
Good Jobs First, a Washington, D.C.-based nonprofit that advocates for accountability in economic development, generally recommends against taxpayer subsidies for retail companies such as Kohl’s Corp.
The group’s research director, Philip Mattera, said retail positions tend to be low-paid, part-time jobs.
“Retail jobs are substandard jobs,” Mattera said. “They really don’t deserve public subsidies. Ideally, they (subsidized jobs) are significantly above average.”
Glassdoor, which compares jobs and benefits of employees who report them to its website, lists the average wage of a Kohl’s cashier in the Milwaukee area at $9 an hour, or $17,102 a year. That wage could qualify a full-time employee for food stamps or subsidized child care.
Some Kohl’s employees also qualify for BadgerCare Plus, the state’s Medicaid-funded health insurance program for low-income residents. The state Department of Health Services said as of June 30, there were 1,232 Kohl’s employees and their children receiving BadgerCare Plus. It ranked No. 14 among Wisconsin employers with 558 employees whose families receive subsidized state-run health care.
Under terms of the Wisconsin Economic Development Corp.’s contract with Kohl’s, qualifying jobs must be located at the company’s corporate offices in Menomonee Falls — not its retail stores — and new employees must earn $30,000 or more plus earn benefits for the company to qualify for tax credits.
Nevertheless, Mattera’s group believes government should not subsidize companies paying their employees so little that they qualify for public benefits.
“Taxpayers are essentially subsidizing the companies two times,” Mattera said. “There is already a proliferation of poverty-level jobs at companies that could well afford to pay their employees better and provide better benefits.”
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As with any mega business, Kohl’s should receive nothing from taxpayers. Aside from their retail employees, who are paid poverty wages, many of their lower-level corporate employees are hired through staffing agencies, and thus see some of their paycheck go to the agencies, receive no benefits (they don’t even receive Kohl’s employee discounts), and have month-to-month contracts with no job security. It is obvious that this is a workaround for Kohl’s to lower employee’s wages, benefits, and job security – my friend worked there for two years, month-to-month, and then was abruptly fired. Kohl’s cares about its bottom line, not the Wisconsin workforce, but politicians are in thrall to the idea of “jobs” regardless of how good they are. A scummy company.
What the??? These are not retail jobs, they are corporate jobs. The average salary of a HQ job is a whole different ballgame than working at a Kohl’s store.
Was there some secret anti-Kohls meeting where the lefty media got together and decided to attack Kohl’s?
Tom DeWire, I agree in principle that companies shouldn’t need subsidies.. unfortunately with some municipalities/states providing them, others need to do the same in order to complete.
Regarding staffing, hiring people through staffing companies is a standard practice for many companies and happens for many reasons. There are advantages to both companies and employee’s by going this route. Generally the staffing company doesn’t “get a cut of the paycheck” as you think they do, they charge the company a fee on top of the salary.
The fact your friend was there for 2 years is the exception, not the rule. They must have been in a position that Kohl’s was unsure would be needed long term… or they just weren’t good enough to get hired on. Most employee’s are hired directly or if hired as a contract worker first, are hired on as a Kohl’s employee within several months of proving themselves. Sorry this didn’t work out for your friend.
Kohl’s keeping contracted workers for years and never hiring them on permanently is NOT the exception for the company — it is common practice there (speaking as a person also contracted there for 2 years with no end in sight, along with about half of the department I worked in!). It’s a way for Kohl’s to save money by not offering benefits to almost a third of their workforce. Tom DeWire, you’re right, they are a scummy company and do not care about workers.
Again, the exception (in this case for the department) being that they’re unsure of the long term personnel resources needed. What department was that?
A contract position that is filled for two years, then filled again with another contractor when the current contract person leaves makes me believe that “long term personnel resources” are needed. This happens in all departments across the company.
AG – it’s pretty naive to say that most contractors are hired after a few months of “proving themselves”. Many companies will keep contractors for regular and needed work and then hire a new contractor after for the same position. It’s not just Kohls, it’s common across corporate America.
I rarely agree with AG but he’s right. Those subsidies were about corporate jobs, not retail jobs. Still might not be a good idea but you guys should get the facts straight.
Tyrell, it is indeed fun when we can find ourselves with a common opinion sometimes.
Michael, I bring my position on contract workers not from a point of assumption of any naivete… I formerly worked in the staffing industry and worked for a company that worked as a vendor to Kohl’s. Generally speaking, the vast VAST majority of contract workers are contract-to-hire. The rare exception, and Kohl’s may have a department or certain departments the follow this, are areas where staffing levels see change on a regular basis and they need to stay fluid. This does not mean it never happens, and my experience doesn’t cover all of Kohl’s corp… but knowing exactly what sort of staffing Kohl’s uses for most areas, at what levels, and with what structure (at least as of a couple years ago) I can tell you this is not the normal practice for most areas.
Tyrell, it is indeed fun when we can find ourselves with a common opinion sometimes.
Michael, I bring my position on contract workers not from a point of assumption of any naivete… I formerly worked in the staffing industry and worked for a company that worked as a vendor to Kohl’s. Generally speaking, the vast VAST majority of contract workers are contract-to-hire. The rare exception, and Kohl’s may have a department or certain departments the follow this, are areas where staffing levels see change on a regular basis and they need to stay fluid. This does not mean it never happens, and my experience doesn’t cover all of Kohl’s corp… but knowing exactly what sort of staffing Kohl’s uses for most areas, at what levels, and with what structure (at least as of a couple years ago) I can tell you this is not the normal practice for most areas. Hence why I would love to know what department Tom and “person1” are referring to.
Marketing, eCommerce, PR, IT, Buying, Product Development……all of these departments relied on long-term contract workers when I contracted there (long-term, btw).
Just so no one can ever say I won’t admit when I’m wrong… I checked with old coworkers and while I never had direct experience with long time contractors, some of them had. They also said these days it is limited to up to 1 year.
Back to original point, the contact and contract to hire people don’t count towards any tax credits.