Wal-Marts cost state, study says
Retailer refutes UC research that claims taxes subsidize wages
- George Raine, Chronicle Staff Writer
Tuesday, August 3, 2004
Employment practices at Wal-Mart, the nation's largest employer with
relatively lower labor costs in the retail sector, cost California taxpayers
about $86 million annually in public assistance to company workers,
according to a study released Monday by a UC Berkeley research institute.
The study estimates that low wages force employees to accept $32 million
annually in health-related services and $54 million per year in other
assistance, such as subsidized school lunches, food stamps and subsidized
housing.
Wal-Mart questioned the validity of the report, saying the authors
undervalued the wages and benefits the chain's employees receive.
The UC report comes from the Berkeley Labor Center, an institute that is
openly supportive of union causes. Although its researchers have in the past
accepted funding from the grocery workers' union to conduct studies, this
report was not funded by labor, its authors said.
Wal-Mart, and its possible expansion in California, is a major topic in
labor circles as negotiators for 45,000 union grocery clerks in the Bay Area
begin contract talks with Safeway, Albertson's and other major employers.
The current contract expires Sept. 11. The union, the United Food and
Commercial Workers, and management are also working on a separate pact
covering 15,000 Sacramento Valley union workers.
These negotiations follow the disruptive 139-day strike and lockout of
nearly 70,000 union grocery clerks in Southern California that ended Feb.
29.
In all these talks, management is using Wal-Mart's presence and proposed
California expansion as a negotiating tactic, arguing they must lower labor
costs to be competitive with the company and other low-cost grocers. Union
leadership is backing political efforts to limit Wal-Mart's growth. Authors
Arindrajit Dube of the UC Berkeley Institute of Industrial Relations and Ken
Jacobs of the UC Berkeley Center for Labor Research and Education make a
number of assumptions in their study, beginning with a workforce estimate of
44,000 Wal-Mart employees at 143 Wal-Mart and Sam's Club stores in
California who earn an estimated 31 percent less than workers in the large
retail sector as a whole.
The wage difference is even greater when comparing Bay Area Wal-Mart workers
with other union retail workers: The estimate is that Wal-Mart workers earn
on average $9.40 an hour compared with $15.31 for union grocery workers, 39
percent less, and the study estimates that they are half as likely to have
health benefits.
A spokeswoman for Wal-Mart, Cynthia Lin, said, It's disappointing that UC
researchers would release a study which has such questionable findings, but
then again, they are going to arrive at faulty conclusions when they work
off faulty assumptions.''
She said the study reports wages incorrectly. Bay Area workers earn an
average of $11.08 an hour while statewide it is $10.37.
Also, 90 percent of Wal-Mart's workers have health insurance, Lin said.
Of them, 50 percent have coverage through Wal-Mart and 40 percent through
other sources. She added that two-thirds of workers are senior citizens,
college students or second-income providers.
The UC authors do not have data on actual public assistance for Wal-Mart
workers. They take information from several sources, including testimony
about company wages in a sex-discrimination lawsuit brought against
Wal-Mart. They say that, at such low wages, many Wal-Mart workers rely on a
public safety net.
The authors extrapolate that if other large California retailers apply the
Wal-Mart model of wages and benefits to their 750,000 employees, it would
cost taxpayers an additional $410 million a year in public assistance to
employees.
David Theroux, founder and president of the libertarian Independent
Institute in Oakland, said it is important to consider who the Wal-Mart
employees are: They may be former unemployed workers, they may be retirees
or have taken a second job out of necessity, or they may be developmentally
disabled or have any number of disadvantages. If we eliminate Wal-Mart ...
it means those people are unemployed. Is it better for them to be employed
or unemployed?'' Theroux asked.
Theroux also faulted the study for what he said is a presumption that Wal-
Mart employees are more prone to go on welfare rolls. How do they know
that? They need to show that,'' he said.
He added that, historically, competition drives up wages. It sharpens
workers' skills and boosts productivity so workers can command higher wages.
It works in high tech. Why would retail be any different?'' Theroux said.
The study authors say in their conclusion, In effect, Wal-Mart is shifting
part of its labor costs onto the public.'' Co-author Jacobs, in an
interview, said he hopes that policy-makers keep that argument in mind when
Wal-Mart seeks to expand.
Indeed, the Los Angeles City
