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

| Written by Stacy Mitchell | 13 Comments | Updated on Aug 13, 2004 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/new-study-finds-walmarts-miserly-wages-cost-taxpayers/

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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About Stacy Mitchell

Stacy Mitchell is a senior researcher with the Institute for Local Self-Reliance, where she directs initiatives on independent business and community banking. She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin.  Connect with her on twitter and catch her recent TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More

Contact Stacy   |   View all articles by Stacy Mitchell

13 Comments

I can think of a least 2.66 Billion reasons to hate Wal-Mart | The Stay-at-Home Feminist Mom said...

[...] In fact, that same documentary, the aptly named Wal-mart: The High Cost of Low Prices, reveled a plethora of shenanigans, including the fact that Wal-mart is given an additional $1.8 Billion in taxpayer monies via tax abatements. It also costs the taxpayer big bucks by forcing the government to provide Medicaid to its substantially underpaid workers, which means Wal-mart gouges US citizens for another BILLION – which includes screwing taxpayers for $86 million in the state California alone. [...]

Nov 12, 2012

Walmart may be America’s biggest Welfare Queen | Under the Mountain Bunker said...

[...] provide a livable wage and decent healthcare benefits, costing U.S. taxpayers an annual average of $1.02 billion in healthcare costs. This direct public subsidy is being given to offset the failures of an [...]

Nov 22, 2012

Research: WalMart’s Low Wages Burden Taxpayers « Warm Southern Breeze said...

[...] provide a livable wage and decent healthcare benefits, costing U.S. taxpayers an annual average of $1.02 billion in healthcare costs. This direct public subsidy is being given to offset the failures of an [...]

Nov 23, 2012

Alice Lewis said...

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.

Nov 24, 2012

Layoffs coming… – Page 69 said...

[...] provide a livable wage and decent healthcare benefits, costing U.S. taxpayers an annual average of $1.02 billion in healthcare costs. This direct public subsidy is being given to offset the failures of an [...]

Nov 24, 2012

Thoughts on WalMart, America’s Ectoparasite « Freewheel Burning said...

[...] Besides the more than $1 billion in real tax subsidies that support the opening of new WalMart stores, the federal government picks up the tab in the form of EBT payments and Medicaid. [...]

Nov 25, 2012

Failure Of Walmart Walkout Underscores Union Decline – Page 12 said...

[...] subsidizing walmart, it is walmart helping to subsidize the entitlement programs, bravo walmart. New Study Finds Wal-Mart’s Miserly Wages Cost Taxpayers | Institute for Local Self-Reliance Reply With [...]

Nov 28, 2012

Wal-Mart's Low Wages Costing Taxpayers Millions Each Year said...

[...] Wal-Mart’s response to the study was that the 44,000 employees working for the retailer would otherwise be out of a job, touting itself as a job creator, according to Independent Business. [...]

Dec 4, 2012

Reagan’s ‘Welfare Queen’ FOUND! | Our End of the 'Net said...

[...] Wal-Mart worker makes on average 31% less than a worker for any other large retailer, and requires 39% more in public [...]

Dec 4, 2012

LIz said...

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

Dec 13, 2012

Jenny Bishop said...

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.

Jan 4, 2013

Costco Pays Well and Soars, while Wal-Mart and Others Pay Peanuts and Sink. said...

[...] as 80 percent of workers in Wal-Mart stores use food stamps. This costs the American taxpayer about $1 billion per [...]

Apr 22, 2013

The Numbers Are In: President Bush and His Administration Successfully Decimated the Middle-Class said...

[...] 80 percent of workers in Wal-Mart stores use food stamps. This costs the American taxpayer about $1 billion per [...]

May 13, 2013