Another “thumbs down” report has been published this week regarding the deep taxpayer subsidies that keeps Wal-Mart profits up, and employee benefits down. In addition to the release several months ago by U.S. Congressman George Miller (D-CA) on public subsidies to Wal-Mart workers, and the Good Jobs First report on corporate welfare used to build Wal-Mart stores and distribution centers, now comes a third report called “The Hidden Cost of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California.” The study, conducted by the University of California at Berkeley Institute for Industrial Relations, concludes that Wal-Mart workers rely on various forms of public assistance due to substandard wages and benefits. This amounts to a “form of indirect public subsidy to the company.” “In effect,” the new study says, “Wal-mart is shifting part of its labor costs onto the public.” Based on 2001 wage data contained in testimony provided in the Wal-Mart class action lawsuit on sexual discrimination, the Institute estimates that the cost of this public welfare for Wal-Mart workers costs California taxpayers a whopping $86 million a year, or $1,952 a year per Wal-Martian. The study notes that $730 of this subsidy goes for health-related programs, and $1,222 for other forms of government assistance. The “safety net” programs factored into the study include welfare assistance, food stamps, section 8 housing, low income energy assistance program, women and infants (WIC) program, school lunch program, the earned income tax credit, Medicaid, and the state’s Children’s health insurance program. The $1,952 per year subsidy measures the public assistance expenditures for roughly 44,000 California Wal-Mart”associates.” The study found that the families of Wal-Mart workers use an estimated 38% more in non-health public assistance programs than the average for families of all large retail employees in the state. The Wal-Mart families also use roughly 40% more in tax-funded health insurance than the average families at other retailers. Even more significant, the UC Berkeley study suggests that if other large California retailers adopted Wal-Mart’s wage and benefit standards for their workers, it would cost California taxpayers an additional $410 million a year in public welfare costs. The earlier report by the staff of Congressman George Miller came up with an average per employee subsidy of $2,103 per year. Wal-Mart workers in California in 2001 earned an average wage of $9.70 — significantly lower than the $14.01 average wage for other large California retailers. In the health coverage area, 48% of Wal-Mart’s workers had health coverage, compared to 61% of all large retailers in the state, and 95% of unionized grocery workers. The report concludes, “The public cost of low wage jobs should be taken into account by policy makers at all levels as they make decisions about the kinds of economic development we should encourage in California and in our communities.” Predictably, a Wal-Mart spokesperson said the study was “based on faulty assumptions” because it used 2001 data. However, using Wal-Mart’s updated figures would only make the subsidies even larger. Wal-Mart said it has 60,500 workers now, not 44,000, and the average wage it pays now is $10.37 an hour. The larger number of workers will kick up the cost to California taxpayers, but Wal-Mart brushed off the study by asserting that the “conclusions are questionable.”
To get a copy of the Institute for Industrial Relations study, go to http://laborcenter.berkeley.edu/lowwage or email [email protected]. For the earlier studies referenced above, search this database for “Good Jobs First” and by “George Miller.”
