How Walmart's low wages impact the economy

Walmart doesn't pay its workers well and taxpayers are picking up the tab.
Written by Tyler Falk, Contributor on

Around the world, wealthy countries might be creating jobs but they're worse jobs that pay lower wages and offer fewer benefits. In the United States, one of the largest employers of low-wage workers is Walmart. About 1.4 million Americans work for Walmart -- the company has about two million employees worldwide. And the average hourly wage for a Walmart associate? An estimated $8.81 an hour. That's 28 percent less than employees earn at other large retailers. At the same time Walmart brought in $17 billion in profits in 2012 and in the fourth quarter of 2012 saw its profits rise 8.6 percent.

Those are some statistics cited in a new report by U.S. Congressional Democrats on the cost of Walmart paying employees low wages.

As the study shows, just one store can be a major drain on the economy. Because if Walmart saves money by not paying workers a living wage, those workers turn to government aid programs. As the report puts it: "When low wages leave Walmart workers unable to afford the necessities of life, taxpayers pick up the tab."

In fact, using Medicaid data in Wisconsin, the report found that one Walmart Supercenter store in Wisconsin with 300 workers costs taxpayers at least $904,542 per year and as much as $1,744,590 per year, $5,815 per employee.

In response to the report, Walmart spokeswoman Brooke Buchanan told Huffington Post:

"Every month more than 60 percent of Americans shop at Walmart and we are proud to help them save money on what they want and need to build better lives for themselves and their families. We provide a range of jobs -- from people starting out stocking shelves to Ph.D.’s in engineering and finance. We provide education assistance and skill training and, most of all, a chance to move up in the ranks."

But what would it look like if retailers like Walmart paid their workers more? A study last year by Demos provides some insight. It found that if wages rose to the equivalent of $25,000 per year for full-time work, more than 700,000 Americans would be lifted out of poverty, GDP would grow between $11.8 and $15.2 billion over the next year, and employers would create 100,000 to 132,000 additional jobs.

A solid economic growth strategy, perhaps?

Read the full report here.

One Walmart's Low Wages Could Cost Taxpayers $900,000 Per Year [Huffington Post]

Photo: Flickr/Walmart Corporate

This post was originally published on Smartplanet.com

Editorial standards