Low Wages at a Single Wal-Mart Store Cost Taxpayers about $1 Million Every Year, Says New Committee Staff Report

May 30, 2013 Issues: Labor, Wages and Benefits

WASHINGTON, DC – The price of Wal-Mart’s low wages and benefits at just one Wal-Mart store not only costs families in lost income and economic security, but it also may cost taxpayers about one million dollars in higher usage of public-assistance programs by Wal-Mart employees and their dependents, according to a report released today by the Democratic staff of the U.S. House Committee on Education and the Workforce. 

While up-to-date data on Wal-Mart’s wage and employment practices are not always readily available, new demographic data released by Wisconsin’s Medicaid program provided the needed information to uncover the scope of the taxpayer subsidization of Wal-Mart. The report finds that a single 300-employee Wal-Mart Supercenter in Wisconsin may cost taxpayers anywhere from $904,542 to nearly $1.75 million per year, or about $5,815 per employee. Wisconsin has 100 Wal-Mart stores, 75 that are Wal-Mart Supercenters.

“Wal-Mart is the nation’s largest private-sector employer, yet they pay such low wages that many of its workers are unable to provide their families with the necessities of life. The labor policies of Wal-Mart, and those of companies that emulate its low-road approach, end up leaving  taxpayers holding the bag,” said Rep. George Miller (D-Calif.), senior Democrat on the committee.

This taxpayer subsidy calculation also includes programs like subsidized housing assistance, the food-stamp program, child-care subsidies, energy assistance, and reduced school meals. The report released today is a follow-up to a similar 2004 report prepared by committee Democratic staff that found that a single 200-employee Wal-Mart store costs taxpayers more than $420,000 a year. Today, the most common Wal-Mart store is a “Supercenter,” which employs roughly 300 individuals.

The report explains the negative impact these compensation policies have on the broader economy and recommends policies to address the issue, including efforts to strengthen workers’ rights, increase the minimum wage, narrow the gender pay gap, and decrease unemployment through direct job creation. “Workers with more money in their pockets also need less public assistance.  In this way, increased wages in the retail sector can lead to a virtuous cycle that promotes economic growth while reducing the deficit through a larger tax base and less need for public assistance,” the report concludes.

Rep. Miller is the author H.R. 1010, a bill that would raise the minimum wage from $7.25 to $10.00 per hour in three steps and index future increases to inflation, giving Wal-Mart and other retail sector workers a significant boost in earnings. More than 30 million Americans would see a raise from this legislation and an estimated 18 million children have parents who will get a raise. A $10.10 minimum wage would increase the nation’s gross domestic product by nearly $33 billion and generate 140,000 new jobs over the course of three years.

Read the text of the report here.