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Wal-Mart's wages drive employees onto public benefits, report says

June 07, 2013|By Alejandro Lazo, Los Angeles Times
  • Wal-Mart has long been criticized because a chunk of its workforce is on public assistance.
Wal-Mart has long been criticized because a chunk of its workforce is on…

Wal-Mart Stores Inc. wages are so low they force many of its employees onto the public doles, creating a drag on taxpayers and the economy, according to a new report from the staff of congressional Democrats.

The report analyzes data from Wisconsin's Medicaid program, estimating that a single 300-person Wal-Mart Supercenter in that state likely costs taxpayers at least $904,542 per year and could cost up to $1,744,590 per year, or roughly $5,815 per employee.

"While employers like Wal-Mart seek to reap significant profits through the depression of labor costs, the social costs of this low-wage strategy are externalized," concludes the report's authors, the Democratic staff of the U.S. House Committee on Education and the Workforce. "Low wages not only harm workers and their families — they cost taxpayers."

Titled "The Low-Wage Drag on Our Economy: Wal-Mart's Low Wages and Their Effect on Taxpayers and Economic Growth," the report is an update to a 2004 report. The revised version advocates for several measures, including reforming labor laws to make collective bargaining easier and raising the minimum wage.

The report analyzes data from Wisconsin because "it appears to be the most recent and comprehensive." The state released Medicaid enrollment by employer as of the fourth quarter of 2012.

Wal-Mart was first on the list with 3,216 employees enrolled in BadgerCare, the state's Medicaid program. Including the children and dependents of these employees, Wal-Mart accounts for 9,207 enrollees.

The report assumes that about a quarter of the store's employees enroll in other taxpayer-funded programs, including Section 8 housing, national school lunch programs, the earned-income tax credit and others.

Wal-Mart, in an analysis posted on its website, described the report as "flawed," criticizing the reliance on the data from Wisconsin to make "vast generalizations." In its rebuttal, the company said the report failed to take into account Wal-Mart's size and that the number of its workers on Medicaid is similar to other big retailers and comparable to the national average.

The company also notes that President Clinton's welfare reform law changed public welfare programs to focus on working families, increasing Medicaid eligibility by as much as 300% above the poverty line.

Concern over wages at Wal-Mart is not new. The company has a long history of discouraging unions from representing workers and has long been criticized because a chunk of its workforce is on public assistance.

In California, lawmakers are concerned that the public will get saddled with even bigger expenses from Wal-Mart employees as the federal health care law expands. Legislators in the Golden State are calling for fines that could reach about $6,000 for every full-time employee who ends up on Medi-Cal, the state's Medicaid program for the poor.

alejandro.lazo@latimes.com

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