The Burden on the American Taxpayer to Cover Wal-Mart Employees

Most taxpayers don’t know the impact many private organizations, especially retailers have on the American taxpayer. In California alone, UC Berkeley’s Institute for Industrial Relations conducted a study and found the state government provides nearly any $86 million a year for healthcare and other services to Wal-Mart employees.

The study found government assistance of $730 for health care and $1,222 for other assistance such as low-income housing, on average was provided to Wal-Mart employees. Sixty-five percent of Wal-Mart employees make an average of $9.70 an hour compared to $14.01 an hour paid by other large retailers. And at unionize large retail chain stores, the average employee was paid $15.31 an hour.

As usual, Walmart disputed the study’s findings indicating they create 44,000 jobs that would not otherwise exist. However, evidence exists that Walmart does not produce a net increase in jobs as others are forced to close or downsize from their existence.

Study Link

In an updated 2004 study by the Democratic Congressional Caucus provides further evidence that Walmarts compensation practices continues to cost the American taxpayer considerable monies. “The U.S. House Committee on Education and Workforce estimates that a single 300 person Wal-Mart supercenter store in Wisconsin likely cost taxpayers at least $904,542 and could cost taxpayers up to $1,744,590 per year- about $5,518 per employee.”
In a non-partisan study, by The Center for Community Planning and Development at
Hunter College, Wal-Mart negatively impacted other businesses within the community. Most notably, the figure college study reached the following conclusions:

 Wal-Mart’s Economic Impacts: Net Loss of Jobs, Fewer Small Businesses
Wal-Mart store openings kill three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.

Wal-Mart’s entry into a new market does not increase overall retail activity or employment opportunities.Research from Chicago shows retail employment did not increase in Wal-Mart’s zip code, and fell significantly in those adjacent.

Wal-Mart’s entry into a new market has a strongly negative effect on existing retailers. Supermarkets and discount variety stores are the most adversely affected sectors, suffering sales declines of 10 to 40% after Wal-Mart moves in.

Stores near a new Wal-Mart are at increased risk of going out of business. After a single Wal-Mart opened in Chicago in September 2006, 82 of the 306 small businesses in the surrounding neighborhood had gone out of business by March 2008

The value of Wal-Mart to the economy will likely be less than the value of the jobs and businesses it replaces. A study estimating the future impact of Wal-Mart on the grocery industry in California found that, “the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year.”

Chain stores, like Wal-Mart send most of their revenues out of the community, while local businesses keep more consumer dollars in the local economy: for every $100 spent in locally owned businesses, $68 stayed in the local economy while chain stores only left $43 to re-circulate locally.

Wal Mart’s Costs to the Taxpayer

Wal-Mart has thousands of associates who qualify for Medicaid and other publicly subsidized care, leaving taxpayers to foot the bill. For instance in Ohio Wal-Mart has more associates and associate dependents on Medicaid than any other employer, costing taxpayers $44.8 million in 2009.

According to estimates, Wal-Mart likely avoided paying $245 million in taxes 2008 by paying rent to itself and then deducting that rent from its taxable income.

Wal-Mart has admitted a failure to pay $2.95 billion in taxes for fiscal year 2009.


Wal-Mart’s low paying jobs contribute to the decline of the middle class

Median household income declined by 1.8% nationally and 4.1% in New York City in 2009. This decline will be exacerbated by low paying Wal-Mart jobs.

Wal-Mart’s average annual pay of $20,774 is below the Federal Poverty Level for a family of four.

A Wal-Mart spokesperson publicly acknowledged in 2004 that, “More than two thirds of our people… are not trying to support a family. That’s who our jobs are designed for.”

Wal-Mart’s 2010 health care offerings have a high annual deductible of $4,400 which means a family would have to spend $5,102 oftheir own money on health care before Wal-Mart’s insurance pays anything. Based on the average salary of a Wal-Mart employee this payment represents almost 25% of their annual income
The study also concluded that  reduced the number of jobs and dust had a negative impact on the number of people employed within the area. Further, at least 25% of the retail businesses within 1 mile of Wal-Mart closed within one year of their opening.