Sowell defends Wal-Mart, ignores workers' dependence on Medicaid, food stamps

Written by Nicole Casta

Published

In his May 12 syndicated column, Thomas Sowell criticized those urging higher wages for employees of the discount retailer Wal-Mart. Sowell referenced a May 4 New York Times article that contained a quote from a Wal-Mart employee who said he was not earning a living wage. Sowell asked: “How is he living, if he is not making a living wage?” Several studies show that he might in fact be getting help through government assistance programs.

Sowell argued that Wal-Mart stockholders should not have to subsidize higher wages for Wal-Mart workers “through lower earnings,” but he apparently failed to recognize that taxpayers are subsidizing Wal-Mart stockholders and executives through the high levels of public assistance that are used by its employees compared with other retail workers. A number of studies and analyses have shown that taxpayer-funded government programs are picking up the tab resulting from Wal-Mart's low wages and insufficient health insurance coverage.

An August 2004 University of California, Berkeley Labor Center study found that many Wal-Mart workers in California rely on government safety net programs such as food stamps, Medi-Cal (California's version of Medicaid) and subsidized housing at an estimated cost to taxpayers of $86 million annually-- $32 million for health-related expenses and $54 million for other assistance. Further, families of Wal-Mart employees utilize these services considerably more than the average for families with employees of all large retail companies. In fact, if other large retailers in California were to provide wages and benefits at Wal-Mart's level it would cost California taxpayers an additional $410 million in increased public assistance costs. According to the study:

  • The families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.
  • The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.

A 2002 internal memo from the Georgia Department of Community Health that focused on the state's Children's Health Insurance program PeachCare showed that the children of Wal-Mart employees accounted for 10,261 of the 166,000 children enrolled, about 14 times that of the second-highest employer, the supermarket chain Publix, which had 734. Wal-Mart, with 42,000 workers in the state in 2002, had about one child in the health care program for every four employees; the ratio for Publix was one child in PeachCare for every 22 employees [The Atlanta Journal Constitution, 2/27/04 (registration required)].

The state of Connecticut discovered in January 2005 that it pays an estimated $43 million annually to cover health costs for workers at the state's 25 largest employers; Wal-Mart was at the top of the list with 824 employees or employees' adult dependents on state public assistance programs. Beyond Connecticut, Wal-Mart had the most employees on Medicaid in a total of 11 states: Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Tennessee, Texas, Washington, West Virginia and Wisconsin, according to examinations in those states [Employee Benefit News, 5/01/05].

A 2004 study conducted by the Democratic staff of the House Committee on Education and the Workforce looked at Wal-Mart employees' eligibility for a wide range of public assistance programs and estimated that one 200-employee Wal-Mart store may cost federal taxpayers $420,750 annually, or about $2,103 per employee. This includes $36,000 for free and reduced-price school lunches, $42,000 for Section 8 housing assistance, $125,000 for federal tax credits and deductions for low-income families, and $108,000 for federal costs relating to health care assistance.