“Mr. Walton, Tear Down this Wal-Mart!”

UC Berkeley's message to America's largest employer

By Andrew R Quinio
Posted on 10/12/04

Look around your dorm or apartment and remember where each item came from; that full length mirror, the cork board, the microwave, and even the toothpaste and shampoo. Most likely it all came from the giant known as Wal-Mart. Why, of all places, did you obtain those items from this retail Mecca? Wal-Mart assures you, “Always low prices. Always,” and they usually live up to that mantra. With great items selling at low prices, how could any penny-pinching college student complain? The UC Berkeley Labor Center takes issue with the conglomerate, and it is shooting blanks with Wal-Mart in its cross-hairs.

In early August, University’s Labor Center released a report criticizing Wal-Mart’s employee benefits and wages. While the data appears accurate and the report is very thorough, researchers left gaps in their data and flaws in their conclusions.

The Labor Center claims that due to low wages and lack of benefits, workers are relying heavily on the state of California’s social safety net, which is costing taxpayers approximately $86 million every year. Cynthia Lin, a spokeswoman for Wal-Mart, points to the amount of sales tax paid by the company to the State of California, which totals to $650 million. $46.5 million in corporate income tax was submitted, as well as $10.5 million in state unemployment tax. Essentially, what employees take in as benefits, the state pays for with taxes collected from Wal-Mart. The benefits that employees do receive include 401(k) plans, store discount cards, health care coverage, profit sharing, and life insurance. The workers also have the chance for advancement.

The Berkeley-based think tank argues that the provided perks are not enough. They have found that California Wal-Mart employees benefit from 40 percent more in taxpayer funded healthcare than the average for families of all large retail departments. Lin explains that one could find 90 percent of the employees covered by health insurance plan, with 50 percent being covered by the company’s plan. Meanwhile, 40 percent are insured through a parent, spouse, retirement plans, or Medicare. It is not uncommon to encounter a teenager or young person ringing up the purchases at a Wal-Mart checkout stand. Two thirds of the company’s employees are high school and college students, as well as individuals working to provide a supplementary paycheck.

Researchers for the labor center also indicate that Wal-Mart employees use 38 percent more in public assistance—which covers food stamps and subsidized housing—when compared to the average for families of all large retail employees. It should be noted that the Labor Center relied on data from Wal-Mart’s 2001 payroll, making their numbers inaccurate. Using updated statistics, they would find, according to Wal-Mart spokespersons, that Wal-Mart’s average hourly wage in the United States is more than 90 percent above the federal minimum wage. The average hourly wage for a California Wal-Mart worker is $10.37.

The Labor Center should also do a subsequent study to show what effect 44,000 unemployed workers would have on the state pocketbook. The support for Wal-Mart can be found in the Labor Center’s own numbers. According to the institute, Wal-Mart is providing paychecks to 44,000 Californians. Even if their numbers were accurate, and the employees were indeed draining state funds, it would be far worse if all of these individuals were without jobs, collecting unemployment and state welfare.

Anyone who has taken a basic economics class will tell you that the cheap prices Wal-Mart offers helps employment and business. With so many consumers wanting to buy cheap products from Wal-Mart, the company’s revenue will increase, and the profit can be used to hire additional workers and give existing workers greater benefits. Coercing Wal-Mart to pay its workers a higher set wage would increase costs, discouraging employers from hiring more workers.

One would think that a state deficit and lackluster job growth rating would bolster support for a company that employs so many people and contributes to so much tax revenue. If the Labor Center’s numbers are true, why aren’t more employees quitting their jobs and working elsewhere? In a free society such as ours, citizens are able to enter and quit jobs without force or coercion. Wal-Mart workers are no exception, unless managers in trademark blue vests are holding their employees hostage with $57.77 chain saws, which the Labor Center has yet to uncover. Otherwise, America’s free market gives individuals, including those under Wal-Mart, the freedom to quit.

There is an inherent flaw in the Labor Center’s criticisms. They blame Wal-Mart for forcing its workers to feed off of the state’s welfare, but the state should be blamed for providing so many hand-outs in the first place. The state does not owe anything to anyone. It is not the Governor’s nor the legislators’ responsibilities to take on the burden of a conglomerate’s labor costs. Additionally, taxpayers should not have to provide the dollars which line a state social safety net. If the Labor Center is genuinely concerned about saving taxpayers money, they should advise the state not to gift-wrap so many handouts.

The recall of an anti-business governor should make it clear to all Californians that the state needs a business like Wal-Mart to provide jobs. Sadly, the pro-union, anti-business forces have claimed victory over the largest employing company in the nation. In Inglewood, Wal-Mart needed the permission of voters to open a local branch. 60 percent of the voters said “No” to more jobs and cheaper products; no wonder outsourcing is so attractive these days. Imaginably, scores of job-seeking teens in the Los Angeles area simultaneously shed tears when the election results were announced, and went on with their unemployed lives. Meanwhile, the low-income family that looked to Wal-Mart for cheaper bathroom supplies had to find an alternative, more expensive supplier.

Currently there is an anti-Wal-Mart bill sitting on the Governor’s desk. SB 1056 would prohibit local governments from giving permits to “big-box” retail stores if it is deemed that a store will have a negative impact on the local business community. For the sake of low-income families, unemployed families, free enterprise, and small government, this bill must not pass. It is clear that the Labor Center’s own Wal-Mart takedown is union-backed, as the institute acknowledges acceptance of union funds.

After looking around at the odds and ends which adorn your living space, note the surplus amount in your bank account. Note bank account of the Wal-Mart employee, who knows that working for the largest employer in the nation is better than not working at all. And imagine how much the Berkeley Labor Center could save if they printed their stats on Wal-Mart bought graph paper.

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