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UC Berkeley study estimates Wal-Mart employment policies cost California taxpayers $86 million a year

– Employment policies at Wal-Mart, the nation's largest employer, cost California taxpayers approximately $86 million a year in public assistance to company workers, according to a University of California, Berkeley, study released today (Monday, Aug. 2).

The study indicates that Wal-Mart workers in California rely on the state for about $32 million annually in health-related services, and $54 million a year in other assistance such as subsidized school lunches, food stamps and subsidized housing.

"When workers do not earn enough to support themselves and their families through their own jobs, they rely on public safety net programs to make ends meet," said the report by Arindrajit Dube of UC Berkeley's Institute for Industrial Relations, and Ken Jacobs of the campus's Center for Labor Research and Education.

The researchers said they conservatively estimate that the approximately 44,000 workers at 143 Wal-Mart and its sister Sam's Club stores in California earn about 31 percent less than workers in large retail as a whole, and that 23 percent fewer Wal-Mart/Sam's Club workers generally are covered by employer-sponsored health insurance than workers in large retail.

There is an array of reasons for the low rates of coverage, said the researchers. They include higher employee turnover, eligibility issues, employee costs for health plans and plan quality.

In the end, Wal-Mart essentially "is shifting part of its labor costs onto the public," the report said.

To determine Wal-Mart's costs for taxpayers between March 2001 and March 2002, Dube and Jacobs relied on a variety of sources. They examined Wal-Mart's compensation policies, and wage data for part-time and full-time Wal-Mart workers contained in public testimony in a sex-discrimination case against the company. Then they worked with a statistical model of public assistance use based on wages, employer-based health coverage and demographic details such as age, race, gender and family size.

Dube and Jacobs warn that the drain on the Golden State's public assistance coffers could intensify as Wal-Mart follows through on plans to open 40 new "super centers" with combined retail and grocery operations around California over the next five years. So far, the company's only California super center is in Palm Springs.

"California and the West are among Wal-Mart's new frontiers," said Dube in an interview.

Meanwhile, the researchers cited efforts by other big California retailers, especially grocery chains, to reduce their workers' wages and benefits closer to those provided by Wal-Mart. "As the country's largest employer, (Wal-Mart) has become the standard setter," their report said.

If other big California retailers apply the Wal-Mart model to their 750,000 employees, Dube and Jacobs estimate taxpayer support to retail workers will increase by $410 million a year, for a grand total of $1.46 billion.

In just a few weeks, a contract expires for 30,000 San Francisco Bay Area grocery clerks. The contract for another 15,000 Sacramento area grocery clerks was due to expire last month, but has been extended while negotiations continue. Wages and benefits for new hires are expected to be central issues in those talks.

And on Wednesday (Aug. 4), the Los Angeles City Council will hold a hearing on legislation that would make approval of a big box store depend on the city government's evaluation of its economic impact. This legislation follows the rejection of a Wal-Mart ballot initiative in Inglewood, Calif., that would have skirted the planning process for a proposed superstore.

The complete Wal-Mart report is online.