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Wal-Mart: Delivering Value, Shirking
Social Responsibility

August 5, 2004

A new study finds that Wal-Marts prices are no bargain for states forced to provide its low-paid workers with health care and public assistance.

The price tag: $86 million in California alone, where Wal-Mart stores are not yet dominant as they are in other parts of the country. Researchers Arindrajit Dube and Ken Jacobs at the University of California Berkeley Labor Center analyzed data on the 44,000 California workers employed by Wal-Mart in 2001, finding that they cost state taxpayers $32 million in health-related expenses and $54 million in other assistance, far more than any other retail workers.

Food stamps, Medicare and subsidized housing are among the public assistance programs Wal-Mart workers utilized while earning average wages between $9-10 an hour. Although wages have risen slightly, costs are higher today.

"Wal-Mart workers reliance on public assistance due to substandard wages and benefits has become a form of indirect public subsidy to the company," the report said. "Wal-Marts long-term impact on compensation in the retail industry has the potential to place a significant strain on the states already heavily burdened social safety net."

The study further suggests that if other retailers cut wages and benefits to the level of Wal-Marts, the cost to Californias public assistance programs would rise by $410 million annually. Wal-Marts rivals are already trying to go that route; three large grocery store chains in California cited competition from the giant retailer as reasons for proposing lower wages and benefits in contract negotiations with the United Food and Commercial Workers (UFCW). That led to a months-long strike and lockout last year.

News of the study comes just as Wal-Mart seeks to improve its public image in California. The company has big expansion plans in the most populous state in the United States, and is spending millions on television advertising promoting it as worker-friendly.

The UFCW has been trying for years to organize Wal-Mart, mostly unsuccessfully. But in Quebec, Canada, the Quebec Federation of Labor certified a vote for the UFCW by a majority of the stores 180 workers. The store is in Saguenay, which is two hours north of Quebec City.

"The union represents a large majority of the stores employees," said Marie-Josee Lemieux, president of the UFCW local that organized the store. "We hope that Wal-Mart will accept this decision and negotiate a labour contract with the union."

Wal-Mart is expected to challenge the ruling.

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