Food Stamps, Unjust Enrichment and Minimum Wage

Law and Inequality: A Journal of Theory and Practice, Vol. 35

American University, WCL Research Paper No. 2016-20

16 Pages Posted: 11 May 2016 Last revised: 20 Jun 2016

Candace Kovacic-Fleischer

American University, Washington College of Law

Date Written: May 10, 2016

Abstract

A number of large retail chains with monopsony power, such as Walmart, pay their low level employees so little that these employees are eligible for food stamps and other governmental benefits. In addition to paying low wages, these chains often have hourly restrictions so that their employees are not eligible for overtime pay. At times the chains violate the wage and hour provisions of the Fair Labor Standards Act (FLSA) by making hourly employees work “off the clock,” a practice known as wage theft.

One of the reasons these low wage retailers can pay so little is because their employees can supplement their income with food stamps. Another reason is the minimum wage of $7.25 per hour has not been raised since 2009. Paying anything more seems generous.

Whether to raise the minimum wage is fiercely disputed. This paper suggests the debate focus not only on the effect of the minimum wage on jobs, but also on the unjust enrichment of monopsonistic employers. By applying the law of unjust enrichment (also referred to as restitution), the government should be able to recover from these employers the amount of food stamps their low paid employees receive at taxpayers’ expense. A lawsuit in unjust enrichment should make the public aware that with food stamp payments and other benefits, the government is subsidizing monopsonistic employers.

Keywords: unjust enrichment, restitution, fair labor standards act, FLSA, minimum wage, wage and hour laws, wage theft, food stamps, poverty, walmart, monopsony

JEL Classification: D63, E24, J38, K19

Suggested Citation

Kovacic-Fleischer, Candace, Food Stamps, Unjust Enrichment and Minimum Wage (May 10, 2016). Law and Inequality: A Journal of Theory and Practice, Vol. 35; American University, WCL Research Paper No. 2016-20. Available at SSRN: https://ssrn.com/abstract=2778383

Candace Kovacic-Fleischer (Contact Author)

American University, Washington College of Law ( email )

4300 Nebraska Avenue, NW
Washington, DC 20016
United States

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