Wal-Mart’s Low Wages Costing Taxpayers Millions Each Year
(MintPress) – Anti-labor groups denounced Black Friday Wal-Mart protests around the nation, claiming individuals lack work ethic and gratitude. Yet a California university study indicates that those working at Wal-Mart receive wages low enough to qualify them for welfare benefits, creating a system that asks the government to fill in the gap where businesses fall short.
The report, “Hidden Cost of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California,” presents alarming statistics relating to the welfare costs provided to those who are employed at the big box retailer, which is the largest employer in the U.S.
The report’s main findings provide insight into the cost taxpayers carry for the retailer, with an estimated $86 million spent each year in California alone for employees’ public assistance programs. According to the report, the spending is broken down to $32 million each year for health-related expenses and $54 million for other public assistance programs.
And California certainly isn’t the only state. A 2005 study out of Maine showed that Wal-Mart employees topped the list for the number of employees receiving welfare benefits, with more than 10 percent of workers relying on government assistance, according to the Institute for Local Self-Reliance.
With welfare a non-stop hot topic in politics, it seems those on the side of conservative welfare reform would recognize that an employment system that does not provide full-time workers with the monetary value necessary to rise above the poverty line is problematic. For those working full-time at Wal-Mart, the work ethic is there, yet the salary provided still qualifies individuals for help from the government, recognizing the situation as akin to poverty.
“Wal-Mart workers’ reliance on public assistance due to substandard wages and benefits has become a form of indirect public subsidy to the company,” the report states in its conclusion. “In effect, Wal-Mart is shifting part of its labor costs onto the public.”
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.
That claim, of course, was countered by those who argued the emergence of Wal-Mart onto the retail scene caused the closure of many local businesses, which otherwise paid employees higher wages and couldn’t compete with the corporate buying power of Wal-Mart.
What is a liveable wage?
The average Wal-Mart employee earns 31 percent less than those working for other large retail companies, according to the Berkeley Study. In California, Wal-Mart employees make roughly $9.70 an hour; employees at other retailers earn $14.01 an hour, on average.
Californians, as a whole, make an average hourly rate of $24.96, which amounts to around $51,910. The average Wal-Mart hourly salary, assuming someone works 40 hours a week, would equate to a yearly salary of $20,000, or $17,907 in take home pay.
Data was compiled based on data from 2001-2002, based on Wal-Mart wage and benefit information release during a sex discrimination trial against the retailer. In 2001, Wal-Mart employed 930,771 employees in California. Data from that year showed that 54 percent of workers earned less than $9 an hour.
Outside of California, known for its high cost of living, the average annual salary for sales associates at Wal-Mart is roughly $15,500, with an average hourly wage of $8.81, according to IBIS.
A story published in the Huffington Post quoted a Wal-Mart worker struggling to support her family on her yearly salary — a problem that prompted her to join the strike for higher wages.
“I struggle to support my family on $14,000 a year,” Sara Gilbert, Wal-Mart customer service manager of three years said. “My children are in state housing and we get subsidized housing and food stamps.”
Meanwhile, Wal-Mart’s CEO in 2010 was making, roughly, more in one hour than most employees earned in one year. While not questioning CEO Michael Duke’s work ethic or entitlement for higher wages than his employees, the $28 million he earned in 2008 came into question when a Chicago city council member called the business man out, citing concerns over low wages being paid to those in the city.
Ed Smith, the city council member, said in an interview with ABC in 2010 that he questioned how Duke could go to bed at night understanding the disparity in incomes and struggles of his employees.
Wal-Mart fired back, claiming that Duke, as a Fortune 1 CEO, did not have to defend his salary or compensation package.
Impact outside of Wal-Mart
This has created a cycle of competition among retailers that can’t compete with Wal-Mart’s low prices. The consumer climate draws customers based on quality — or low prices. In many respects, Wal-Mart is an industry leader, setting the standards for other big box retailers.
Citing the Orange County Business Council, the Berkeley report notes that the retailer’s emergence into Southern California was expected to drive down wages and benefits by roughly $2.8 billion.
“Other retail firms that carry their own retail weight by providing self-sufficiency wages and employer-sponsored health insurance are placed at a competitive disadvantage, which can result in a downward cycle for wages and benefits across the industry,” the report states.
The report argues that if other retail outlets of similar nature were to model their entire wage and benefits model on Wal-Mart, the cost to taxpayers in California would rise by $410 million a year, in terms of the need for public assistance.
Yet, despite the growing concern that Wal-Mart’s low wage system is changing the climate, not just for their employers, but seemingly for all retail workers, Black Friday protests against the retailer didn’t seem to do much damage to its bottom line.
The corporation did seem to have its concerns about the protests, though, at least leading up to the biggest shopping day of the year.
“The UFCW has orchestrated numerous pickets, mass demonstrations, flash mobs and other confrontational activities both inside and outside Wal-Mart facilities in support of its bargaining and recognition demands,” Steve Wheeless, lawyer for Wal-Mart said in a statement provided to CNN Money. “Now, with the busiest shopping season of the year just days away, the UFCW is openly orchestrating and promoting attempted mass disruptions of Wal-Mart’s customer shopping experience.”
There, the blame was entirely on the workers — and it’s not just a stance the lawyer for the company takes. Obviously, approval of the strike wasn’t too high, considering Wal-Mart earned big, selling 5,000 items each second to 22 million customers in the four hours before the clock struck Black Friday.
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