Study concludes Calif. taxpayers subsidize Wal-Mart workers

Tuesday, August 3rd 2004, 6:00 am
By: News On 6

SAN FRANCISCO (AP) _ Wal-Mart Stores Inc.'s employee wages and benefits policies cost California taxpayers $86 million annually to provide health care and other public assistance to the retailer's underpaid workers, according to a new study.

Wal-Mart disputed the study by the University of California Berkeley's Institute for Industrial Relations, contending many of its key findings are badly flawed.

UC Berkeley's analysis, released Monday, is based on the premise that Wal-Mart's paltry pay scale forces the retailer's workers to supplement their incomes with Medicaid, food stamps and other taxpayer-backed assistance programs at an unusually high rate.

The study estimated Wal-Mart employs roughly 44,000 California workers who make an average of $9.70 per hour _ 31 percent below the $14.01-per-hour average of other large retailers with at least 1,000 employees. The study calculated Wal-Mart's wages using 2001 payroll figures disclosed in a sex discrimination lawsuit against the retailer.

But Bentonville, Ark.-based Wal-Mart said the study's job and wage estimates for California are outdated. The world's largest retailer employs 60,500 California workers who are paid an average of $10.37 per hour, said Wal-Mart spokeswoman Cynthia Lin.

``The (study's) conclusions are questionable because they are based on faulty assumptions,'' she said.

California taxpayers contribute an average of $1,952 per Wal-Mart worker _ 39 percent more than the average public assistance cost of $1,401 per worker at other large retailers with at least 1,000 employees, the study concluded.

``People understand the benefits of Wal-Mart _ they have lower prices,'' said Arindrajit Dube, a research economist who co-authored the study. ``What might not be obvious is those low prices are fed by taxpayer-funded compensation.''

Wal-Mart rejected that notion, maintaining its wages are similar to those of its rivals. And the company said 90 percent of its workers have health insurance _ either through the company or coverage provided by the employer of a spouse or parent. Wal-Mart also employs many elderly workers eligible for Medicare, the federal health insurance for senior citizens.