Impact of Fiscal Policy for Wal Mart Workers

Essay by nascar60University, Bachelor'sA, March 2006

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Wal Mart, the world's largest retailer, has been under fire for its employment practices. Also under fire is the pay and benefits package, which has a large population of Wal Mart workers receiving public assistance. New policies on pay, promotions, diversity, benefits, and how to notify cashiers of their breaks were unveiled at the company's annual shareholders meeting.

It is estimated that California Wal Mart workers earn an average 31% less than workers employed in large retail stores, they receive around $9.70 per hour compared to $ 14.01. Also 23% fewer Wal Mart workers are covered by employer-sponsored health insurance. At these low wages many Wal Mart workers rely on public safety net programs to make end meet. This creates hidden costs for California taxpayers. If other large California retailers adopted the wage and benefit standards of Wal Mart it could cost taxpayers an additional $410 million in public assistance programs.

Wal Mart reports that in California 48 percent of its workforce is enrolled in its health plan. This implies that of the 44,000 workers, 22,900 do not receive employer-sponsored health insurance. This gives an estimate total cost to the public for public assistance to Wal Mart workers at $86 million a year. There are roughly 750,000 workers in large retail firms in California, if these large firms adopted Wal Mart's wage and benefits standards then the annual cost of public assistance would then rise to $1.46 billion. This provides an estimate of the long-term potential impact on California taxpayers of Wal Mart's effect on the retail industry as a whole in the state. 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...