[Lore]

Our nations biggest working welfare provider is beginning to fall victim to its own cost cutting.

Walmart’s Low Wages Cost Taxpayers Millions Each Year

Due to low wages and few benefits, Walmart workers at a single 300-person Supercenter store rely on anywhere from $904,542 to $1,744,590 in public benefits per year, costing taxpayers, according to a new report from the Democratic staff of the House Committee on Education and the Workforce.

The report focused its analysis on Wisconsin, because the state’s data is the most comprehensive and up to date. It looked at how many workers enroll in the state’s Medicaid program and extrapolated how many services they rely on from programs such as the Supplemental Nutrition Assistance Program, Earned Income Tax Credit, school lunch program, Low Income Home Energy Assistance Program, and Section 8 housing vouchers, among others.

Looking at just those currently enrolled in Medicaid, the report estimates that each employee takes in $3,015 in public benefits a year. But that may be a low estimate, as other workers may enroll in other programs. Assuming a higher number, each employee could use more like $5,815 in benefits a year.

Walmart’s wages are some of the lowest in the industry, despite the fact that it is the country’s largest private employer and one out of every ten retail workers is employed there. Workers make $8.81 per hour on average, according to IBIS World, 28 percent less than those who work for other large retailers.
Its employees also get few benefits through their employment. Only about half of Walmart workers are covered by its health care plans, in part because the costs may be to high. While the company decided to expand health care coverage to part-time workers in 2006, it has since reversed course.

Walmart’s model isn’t the only way in the discount retail space, however. Rival Costco, which competes with Walmart’s Sam’s Club stores, pays employees about 40 percent more. The average Costco worker makes $21.96 an hour. Nearly all of the workers who are eligible for the company’s benefits are enrolled.

Costco has come under analyst pressure to lower wages and boost profit, but the company’s CFO has thus far refused to do so. Its bottom line, however, seems strong: Profits rose by 19 percent to $459 million last quarter.

Meanwhile, Walmart’s sales have been struggling. Its sales suffered during the first quarter of the year and the company has come under criticism for failing to keep shelves stocked thanks to too few employees working at a time. That has led to long lines and customer dissatisfaction, which helped it rank at the bottom of the American Customer Satisfaction Index in February.

While Costco has a lower profit margin than Walmart, it gets much more revenue and profit per employee and generates a higher return for investors.

http://thinkprogress.org/economy/2013/0 ... each-year/

[Plantagenet]

Only about half of Walmart workers are covered by its health care plans, in part because the costs may be too high. While the company decided to expand health care coverage to part-time workers in 2006, it has since reversed course.

Thats an unintended consequence of Obamacare. Now that the federal government has mandated that part-time workers need not be covered by Obamacare health insurance, employers across the US are cutting hours and benefits for part-time workers so they correspond to the Obamacare definition of part-time workers.

[Lore]

Only about half of Walmart workers are covered by its health care plans, in part because the costs may be too high. While the company decided to expand health care coverage to part-time workers in 2006, it has since reversed course.

Thats an unintended consequence of Obamacare. Now that the federal government has mandated that part-time workers need not be covered by Obamacare health insurance, employers across the US are cutting hours and benefits for part-time workers so they correspond to the Obamacare definition of part-time workers.

The point of the article is that by providing sound wages and good benifits it improves the bottom line, unlike what Walmart has been doing.

[KingM]

The point of the article is that by providing sound wages and good benifits it improves the bottom line, unlike what Walmart has been doing.

Not only that, but think of the employees you meet at Costco vs. Wal-mart. At least at my local Costco, the employees work fast and seem intelligent and highly motivated. Wal-mart employees are sluggish and slow. I'm guessing Costco makes up a good percentage of their higher wages with higher productivity per employee, and most of the rest via much lower turnover. Plus, they're not jerks.

[ROCKMAN]

Seems to be a simple solution: the Walmart workers quit and go to work at Costco. Problem solved. You're welcome. LOL

[dsula]

ay, come on pstarr. Don't you read OF2's double dip thread? He posts growth news day after day after day. No way in hell we're going down the drain.

[dinopello]

Nice rant, pstarr. People may turn to unionization at least as long as there is excessive profit/wealth. People may have varied judgements as to what excessive is though.

The Waltons acquired a bit of it.

And in 2010, as the Walton’s wealth has risen and most other Americans’ wealth declined, it is now the case that the Walton family wealth is as large as the bottom 48.8 million families in the wealth distribution (constituting 41.5 percent of all American families) combined.

[agramante]

pstarr, you're gifted with a perverse imagination. I like it. My family and I don't shop at Wal-Mart (affectionately known as Big Evil) for exactly the reasons that article specifies. Taxpayer subsidies to a highly profitable privateer like them are a fine reason to boycott.

I have some conflicting thoughts on our current economic state. On the one hand, one of the best ways to reanimate the economy is to pay the workers more. With a fair living wage they will be able to survive, and will still put all or nearly all their earnings right back into the economy--the multiplier. It's perfect stimulus. On the other hand, due to the POD we're heading into a chronically contracting economy. I don't expect any American President to admit this (unless it's late beyond comedy, like when the Catholic Church admitted that Galileo might be right), so I don't expect much coherent policy toward it. In some ways I find the tea party's slash-all-spending approach the closest. But since they seem motivated mostly by nationalistic, racial and religious concerns, and since their recommended spending cuts tend to be as cruel (and counterproductive) as possible, and since they also recommend even larger revenue cuts, I consign them largely to the class of blind squirrels. Plainly we need to deleverage, individually and nationally, but I don't see their prescription being good, and I don't see how we're going to sensibly do it at all.

[dsula]

On the one hand, one of the best ways to reanimate the economy is to pay the workers more..

but how ?

[Lore]

Since corporate profits are way up, that shouldn't be a mystery.

[Tanada]

Since corporate profits are way up, that shouldn't be a mystery.

The problem is the exponential function just like it is with oil field size. If a company has a million employees and makes an extra billion dollar a year profit then equal distribution would be $1,000.00 per year, or less than $0.50 per hour as a raise.

Sure a Billion is a lot of money, to an individual! Its a good chunk of money even for a Million individuals. But the more employees there are the less it adds up to per capita, for two million it is $500.00 as a yearly bonus or $0.24 hourly, which is a pretty meager raise on a year to year basis. Many companies would rather give it as a bonus so it does not compound the next year in the wages category.

[agramante]

Especially, Tanada (and I'm no numerical analyst--partial diffs give me the shivers), since the point of the Costco article is, there's a positive feedback to profitability when you pay low-level employees more. (All feedbacks have their limits, of course. I'm not trying to espouse some irrational miracle here.) But higher employee satisfaction, higher efficiency (especially when they have decent break/vacation/sick leave policies), higher retention--these all result from making it more worth someone's while to come to work. The profit motive for higher-level employees and even the company as a whole--innovate, work harder and make more profit--applies to low-level employees too. By stiffing their least-compensated employees, in the long run Wal-Mart is hurting its own bottom line.

Now if the Waltons' goal is truly to impoverish as many Americans as they can...then they might actually be on the right track.

[Lore]

Since corporate profits are way up, that shouldn't be a mystery.

The problem is the exponential function just like it is with oil field size. If a company has a million employees and makes an extra billion dollar a year profit then equal distribution would be $1,000.00 per year, or less than $0.50 per hour as a raise.

Sure a Billion is a lot of money, to an individual! Its a good chunk of money even for a Million individuals. But the more employees there are the less it adds up to per capita, for two million it is $500.00 as a yearly bonus or $0.24 hourly, which is a pretty meager raise on a year to year basis. Many companies would rather give it as a bonus so it does not compound the next year in the wages category.

That maybe true, but it doesn't seem to be affecting Costco's balance sheet, just the opposite. You also have to measure the return impact of productivity gains, less time off, customer satisfaction, etc. Which puts me in agreement with agramante.

It's pretty obvious that Costco is taking some market share away from the other wholesale warehouse clubs.

[agramante]

Did a quick bit of math (I'm not bothered by all math). In 2012, Wal-Mart internationally made a gross profit of $443.85B, and a net $15.8B. Worldwide they employed 2.2M people. Let's assume that 80% of those work on the floor, as cashiers, clerk, shelf stockers, whoever. Assuming 34 hrs/week (Wal-Mart's definition of a full work week, and still not accurate, because Wal-Mart don't like full-timers) and 52 wk/yr, giving those 80% of employees an equivalent $1/hour raise would cost Wal-Mart $3.1B, decreasing their net profit to $12.7B. Said raise would give the full-time employee $1760 more per year, pre-tax. Now this is actually a gross overestimate of the cost of raises, since relatively few of those employees are full-time, but Wal-Mart doesn't release that data. Total hours worked would be a better number to base these estimates on. But I think it's safe to say that Wal-Mart can certainly afford to pay its employees more.

[Lore]

Walmart is more interested in increasing their shareholders net worth, namely the Walton family, rather then that of their underpaid employees.

[agramante]

Precisely, lore. And we need to keep making that point, often and loudly.