New Study Finds Wal-Mart’s Miserly Wages Cost Taxpayers

Date: 13 Aug 2004 | posted in: Retail | 5 Facebooktwitterredditmail

Update: For more recent analysis, see “New Data Show How Big Chains Free Ride on Taxpayers at the Expense of Responsible Small Businesses,” from June 2013.

California taxpayers are spending $86 million a year providing healthcare and other public assistance to the state’s 44,000 Wal-Mart employees, according to a new study by UC Berkeley’s Institute for Industrial Relations.

The study, “Hidden Cost of Wal-Mart Jobs,” found that the average Wal-Mart worker required $730 in taxpayer-funded healthcare and $1,222 in other forms of assistance, such as food stamps and subsidized housing, to get by.

Even compared to other retailers, Wal-Mart imposes an especially large burden on taxpayers. Wal-Mart workers earn 31 percent less than the average for workers at large retail companies (more than 1,000 employees), the study found, and require 39 percent more in public assistance.

Employees who’ve been with Wal-Mart for at least a year (about 65 percent of the company’s workforce) make an average of $9.70 per hour, compared to $14.01 per hour for workers at other large retail stores. In addition, 23 percent fewer Wal-Mart workers are covered by the company’s health insurance plan than employees at large retail stores as a whole.

The wage and benefit differential is even greater when Wal-Mart employees are compared to workers at unionized supermarkets, where health coverage is nearly universal and wages average $15.31 per hour.

As Wal-Mart expands in California, the cost to taxpayers will grow. While more than half of the company’s stores nationwide are supercenters, in California, Wal-Mart’s first supercenter opened just a few months ago in Palm Springs. The retailer plans to build at least forty supercenters across the state over the next few years.

Citing the competitive threat of Wal-Mart, supermarket chains in California are demanding wage and benefit concessions from their employees. The UC Berkeley study estimates that if other large retailers adopt Wal-Mart’s wage and benefit levels, it will cost California’s taxpayers an additional $410 million a year in public assistance.

Wal-Mart dismissed the study’s findings, arguing that many of its 44,000 California workers would otherwise be unemployed, placing an even greater burden on government welfare programs. There is strong evidence, however, Wal-Mart produces no net growth in employment. The jobs created by its stores replace other, often higher-paying, jobs at existing businesses that are forced to downsize or close.

The UC Berkeley study’s finding that the average Wal-Mart employee requires $1,952 per year in assistance is very similar to the results of another study released this year, in spite of the fact that the two studies used different methodologies. The other study, produced by US Representative George Miller, found that Wal-Mart workers cost taxpayers $2,100 per year on average.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.

5 Responses

  1. Alice Lewis
    | Reply

    you have GOT to be kidding me !!! Everyone picks on Walmart…. this article states that employees that have worked at Walmart make an average of $9.70 an hour. I worked at Joanns Fabrics and Crafts for 6 years and never earned more than $8.26 an hour,(I started at $7.00 an hour) . I am talking RECENT, two years ago I quit when they cut me back to 5 hours every other week. Joanns hires at minimum wage and gives you a 25 cents an hour raise per year, IF you deserve a raise. Same with Michaels Crafts, Sonic Drive in, and most other retail stores. Kentucky Fried Chicken gave my son a 50 cent an hour raise the first year he worked there. He worked in the same store for 5 years and never got another raise. NO health insurance was available at Sonic Drive in nor KFC. My husband worked for the same company for over 20 years. The last raise he got was 6 years ago. Target offered me a job at $7.00 an hour two years ago. I spent several months trying to get a job in retail about a year ago…. EVERY STORE in the mall and local strip malls that I talked to offered minimum wage, and NONE of them had insurance I would receive unless I paid for it myself. My brother in law has worked at Target for close to 9 years… he doesn’t make much more than 9 or 10 $$ an hour. THAT is just the places I personally know of. So stop picking on JUST Walmart. The majority of retail stores hire in at minimum wage and try their best to keep wages low and profits high.

  2. LIz
    | Reply

    I recently watched WALMART the high cost of low price, I absolutely hate walmart and will never shot there again.

  3. Jenny Bishop
    | Reply

    I don’t know what the answer is, but the problem is the constant lowering of wages and benefits for the American workers. But, the cost of living continues to increase! When the middle class thrives, everyone does better. The non-union workers have no power over wages, working conditions, or schedules, but unions don’t seem to be the answer either. So instead of disagreeing and firing insults at each other, the workers need to find common ground and unite to work together somehow. Isn’t that what America is supposed to be? Of, By and For All of Us? I think we are being set against each other by big money interests and corporations, and we fall for it everytime.

  4. […] line for a family of four—and a study found that Walmart’s wages are so low they actually cost taxpayers a significant chunk of change to pay for workers’ public […]

  5. […] union. From what I know, and the employees I have spoken with, the conditions are horrible. Plus American taxpayers subsidize nearly $2,000 per employee per year because Walmart will not pay fair wages. Many have no choice […]

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