Wal-Mart’s Low Wages Costing Taxpayers Millions

The price of low-cost goods may be higher than you think
By Heide B. Malhotra, Epoch Times
June 12, 2013 Updated: June 12, 2013

Wal-Mart Stores, Inc., America’s low-cost retailer, is facing criticism for having filed for a temporary restraining order against protesters outside its June 7 shareholder meeting in Fayetteville, Ark. 

The court order, covering the entire state of Arkansas, and signed by John Scott, the Benton County Circuit Court Judge on June 3, forbid members of the United Food and Commercial Workers International Union, the Organization United for Respect at Walmart (OURWalmart), and DOES 1-10 to step on Wal-Mart’s property in Arkansas and commit to any picketing activities. 

Wal-Mart is not immune to bad press. The much-maligned superstore is a frequent target of protests and lawsuits from workers and consumer groups over its labor practices, including the very low wages it pays its employees. 


Taxpayers Subsidizing Wal-Mart


Taxpayers are indirectly subsidizing Wal-Mart’s poorly paid employees. Wal-Mart is on top of the list of companies that pay substandard wages, according to a report released May 30 by the Democratic staff of the U.S. House Committee on Education and the Workforce. 

Wal-Mart associates earn an average of $8.81 per hour, and the majority are part-time workers and thus not eligible for health benefit. 

The committee’s report focuses on Wisconsin, given that the state provided the most up-to-date information. 

In Wisconsin, Medicaid provides health coverage for 3,216 of Wal-Mart’s employees, and 9,702 are enrolled in the state’s BadgerCare Plus program. The latter provides healthcare for Wisconsin’s working poor. 

There are approximately 300 employees per Wal-Mart Superstore—there are 75 such stores in Wisconsin. Considering the number of people on Medicaid and BadgerCare, the cost to the taxpayer is $904,542 annually per store, or $3,015 per employee. 

Given that Wal-Mart employees are often eligible for other public benefit programs, the report suggests that the actual annual cost to taxpayers is above $1.7 million, or around $5,815 per Wal-Mart employee. 

“It is estimated that Walmart employees cost taxpayers more than $1 billion nationwide,” suggests the Making Change at Walmart website. 


Productivity Paying the Price


Cutting employees, keeping the employee count low or reducing full-time employees to part-time status affects worker productivity and morale. 

“Over the last five years, the company [Wal-Mart] has increased its number of stores by 13%, but over the same period of time its total workforce has dropped by 1.4%,” reported a May 24 article from the Market Intelligence Center. 

Also, being paid substandard wages does not do much to increase productivity; thus shelves are not stocked as efficiently, and merchandise sits in the warehouse longer than it should.

In an attempt to improve on-shelf availability of items, Wal-Mart has hired third-party consulting firm Acosta, Inc. to conduct secret audits of the stocking levels of specific items on its store shelves. By placing stickers next to items that will be audited, Wal-Mart hopes to help managers pay greater attention to this issue and understand which items are the most important at different times of year. 

“Keeping its shelves full may be the top priority, but if it is unable to deal with the other problems then it is going to find it very difficult to get its sales headed in the right direction,” concluded Market Intelligence Center. 


California Fighting Back


California’s legislature is working on a bill that would penalize companies that pay their workers at or below the poverty income level, therefore, leaving the state to pick up the difference people need to survive through its Medicare or other benefits programs.

Supported by unions, consumer groups, and doctors, California’s legislators are discussing fines ranging up to $6,000 for every full-time employee that goes on a state-subsidized program due to low income level, reported the Los Angeles Times.

The bill has already passed the major legislative committees and is predicted to pass all hurdles, despite objections by retail store owners. 

“There are a lot of responsible employers who provide healthcare coverage and pay middle-class wages … They have to compete against Wal-Mart slashing wages and slashing hours. This is a way to level the playing field,” said Sara Flocks of the California Labor Federation in the Los Angeles Times article.