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Study: Wal-Mart Policies Cost Taxpayers

2 August 2004 | Associated Press

keyword: Wal-Mart

by MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO — Wal-Mart Stores Inc.’s compensation policies cost California taxpayers $86 million annually to provide health care and other public assistance to the retailer’s underpaid workers, according to an analysis released Monday.

Wal-Mart disputed the study by the University of California Berkeley’s Institute for Industrial Relations, contending many of its key findings are badly flawed.

The study estimated Wal-Mart employs roughly 44,000 California workers who make an average of $9.70 per hour – 31 percent below the $14.01-per-hour average of other large retailers with at least 1,000 employees. The study calculated Wal-Mart’s wages using 2001 payroll figures disclosed in a sex discrimination lawsuit against the retailer.

But Bentonville, Ark.-based Wal-Mart said the study’s job and wage estimates for California are outdated. The world’s largest retailer employs 60,500 California workers who are paid an average of $10.37 per hour, said Wal-Mart spokeswoman Cynthia Lin. “The (study’s) conclusions are questionable because they are based on faulty assumptions.”

UC Berkeley’s study is based on the premise that Wal-Mart’s paltry pay scale forces the retailer’s workers to supplement their incomes with Medicaid, food stamps and other taxpayer-backed assistance programs at an unusually high rate.

California taxpayers contribute an average of $1,952 per Wal-Mart worker – 39 percent more than the average public assistance cost of $1,401 per worker at other large retailers with at least 1,000 employees, the study concluded.

“People understand the benefits of Wal-Mart – they have lower prices,” said Arindrajit Dube, a research economist who co-authored the study. “What might not be obvious is those low prices are fed by taxpayer-funded compensation.”

Wal-Mart rejected that notion, maintaining its wages are similar to those of its rivals. And the company said 90 percent of its workers have health insurance – either through the company or coverage provided by the employer of a spouse or parent. Wal-Mart also employs many elderly workers eligible for Medicare, the federal health insurance for senior citizens.

UC Berkeley study: http://laborcenter.berkeley.edu/lowwage

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