DubeandJacobs-HiddenCostofWal-MartJobs

DubeandJacobs-HiddenCostofWal-MartJobs - HIDDEN COST OF...

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H IDDEN C OST OF W AL -M ART J OBS Use of Safety Net Programs by Wal-Mart Workers in California Arindrajit Dube, Ph.D. UC Berkeley Institute for Industrial Relations Ken Jacobs UC Berkeley Center for Labor Research and Education August 2, 2004
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H IDDEN C OST OF W AL -M ART J OBS :U SE OF S AFETY N ET P ROGRAMS BY W AL -M ART W ORKERS IN C ALIFORNIA A RINDRAJIT D UBE AND K EN J ACOBS 1 Wal-Mart is the largest employer in the United States, with over one million workers. It is the largest food retailer and the third largest pharmacy in the nation. The company employs approximately 44,000 workers in California, and has plans to expand signifi- cantly in the state over the next four years. Wal-Mart workers receive lower wages than other retail workers and are less likely to have health benefits. Other major retailers have begun to scale back wages and benefits in the state, citing their concerns about competition from Wal-Mart. We estimate that Wal-Mart workers in California earn on average 31 percent less than workers employed in large retail as a whole, receiving an average wage of $9.70 per hour compared to the $14.01 average hourly earn- ings for employees in large retail (firms with 1,000 or more employees). In addition, 23 per- cent fewer Wal-Mart workers are covered by employer-sponsored health insurance than large retail workers as a whole. The differences are even greater when Wal-Mart workers are compared to unionized grocery workers. In the San Francisco Bay Area, non-managerial Wal-Mart employees earn on average $9.40 an hour, compared to $15.31 for unionized gro- cery workers—39 percent less—and are half as likely to have health benefits. At these low-wages, many Wal-Mart workers rely on public safety net pro- grams—such as food stamps, Medicare, and subsidized housing—to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state’s taxpayers. This study is the first to quantify the fiscal costs of Wal-Mart’s substandard wages and benefits on public safety net programs in California. It also explores the potential impact on public programs of Wal-Mart’s competitive effect on industry standards. Main Findings: Reliance by Wal-Mart workers on public assistance programs in California comes at a cost to the taxpayers of an estimat- ed $86 million annually; this is com- prised of $32 million in health related expenses and $54 million in other assis- tance. The families of Wal-Mart employees in California utilize an estimated 40 per- cent more in taxpayer-funded health care than the average for families of all large retail employees. The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance pro- grams (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.
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DubeandJacobs-HiddenCostofWal-MartJobs - HIDDEN COST OF...

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