Walmart’s Low Wages Cost Taxpayers Millions Each Year

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"Walmart’s Low Wages Cost Taxpayers Millions Each Year"

Due to low wages and few benefits, Walmart workers at a single 300-person Supercenter store rely on anywhere from $904,542 to $1,744,590 in public benefits per year, costing taxpayers, according to a new report from the Democratic staff of the House Committee on Education and the Workforce.

The report focused its analysis on Wisconsin, because the state’s data is the most comprehensive and up to date. It looked at how many workers enroll in the state’s Medicaid program and extrapolated how many services they rely on from programs such as the Supplemental Nutrition Assistance Program, Earned Income Tax Credit, school lunch program, Low Income Home Energy Assistance Program, and Section 8 housing vouchers, among others.

Looking at just those currently enrolled in Medicaid, the report estimates that each employee takes in $3,015 in public benefits a year. But that may be a low estimate, as other workers may enroll in other programs. Assuming a higher number, each employee could use more like $5,815 in benefits a year.

Walmart’s wages are some of the lowest in the industry, despite the fact that it is the country’s largest private employer and one out of every ten retail workers is employed there. Workers make $8.81 per hour on average, according to IBIS World, 28 percent less than those who work for other large retailers.

Its employees also get few benefits through their employment. Only about half of Walmart workers are covered by its health care plans, in part because the costs may be to high. While the company decided to expand health care coverage to part-time workers in 2006, it has since reversed course.

Walmart’s model isn’t the only way in the discount retail space, however. Rival Costco, which competes with Walmart’s Sam’s Club stores, pays employees about 40 percent more. The average Costco worker makes $21.96 an hour. Nearly all of the workers who are eligible for the company’s benefits are enrolled.

Costco has come under analyst pressure to lower wages and boost profit, but the company’s CFO has thus far refused to do so. Its bottom line, however, seems strong: Profits rose by 19 percent to $459 million last quarter.

Meanwhile, Walmart’s sales have been struggling. Its sales suffered during the first quarter of the year and the company has come under criticism for failing to keep shelves stocked thanks to too few employees working at a time. That has led to long lines and customer dissatisfaction, which helped it rank at the bottom of the American Customer Satisfaction Index in February.

While Costco has a lower profit margin than Walmart, it gets much more revenue and profit per employee and generates a higher return for investors.

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