Walmart's wage hikes are good news for taxpayers

From my perspective, the surest sign that the economy is getting stronger is when the Help Wanted signs start sprouting up at numerous restaurants and retail shops.
This barometer of things to come was on full display in the Detroit area back in the mid-90s when the “We’re Hiring” placards in the windows of certain businesses were replaced by signs advertising pay that was considerably above the minimum wage.

These are the low-income jobs that are easiest to fill, so employers struggling to keep their turnaround low tends to be a good sign all the way up the economic ladder.

Which brings us to Walmart’s surprise announcement that it will be boosting wages for its employees to $10 an hour by next year.

Liberal economic analysts are suspicious: Does this mean that Walmart is trying to fend off union-organizing activities by disgruntled employees? Is Walmart seeking to get ahead of the curve in the competition for workers if a federal minimum wage hike comes to fruition? Or is the retail giant trying to deal with a low morale and falling productivity as the workforce engages in a quiet revolt over poverty wages?
All three of those postulations could be simultaneously accurate from a corporate standpoint, but one clear outcome here is that the taxpayers are the winners when Walmart loosens the reins on its tight-fisted pay policy.

Calculations by the House Democratic staff on Capitol Hill found that businesses paying minimum wages push hundreds of millions of dollars in expenses onto the taxpayers, whether it’s in the form of Medicaid, food stamps or child care subsidies.
The report found that, at one store, a typical Wal-Mart Supercenter in Wisconsin, these costs were estimated at more than $900,000 annually, according to The Washington Post.

Another big benefit for the public at large is the competition that Walmart will create in the market for low-income jobs.
The Wall Street Journal and the New York Times reported that Walmart’s precedent will likely force other corporations and businesses that pay poverty wages to offer raises. The competition that lags far behind the inflationary cuts in the mandatory minimum wage are starting to kick in.
Here’s how Neil Irwin in The New York Times describes the new reality:
“The world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements."

And here’s a chart from that House Democratic staff report that shows how much expense Walmart shifts to taxpayers by paying such low wages. It is based on the circumstances in Wisconsin in 2012. Because most public records do not list each government program recipient’s employer, the House staffers created two estimates, one based on enrollment in the Wisconsin Medicaid program, known as BadgerCare+, and the other based on the costs to taxpayers if every Walmart employee at a SuperCenter took advantage of every program designed to help those living below the poverty line.

Remember: These are the figures for one 300-employee Walmart SuperCenter. The Estimate A column totals $904,000 per year; The Estimate B column carries a price tag of $1.7 million.

 

 

 

 

The Low-Wage Drag on Our Economy:

Wallmart's low wages and their effect on

 taxpayers and economic growth

 

E S T I M A T E A   

 $25,461 – reduced-price lunches under the National School Lunch Program. 

 $12,938 – reduced-price breakfasts under the School Breakfast Program.

 $155,406 – subsidized housing assistance under the Section 8 Housing Program. 

 $72,160 – for the Earned Income Tax Credit. 

 $251,706 – for Medicaid enrollment under the BadgerCare+ Program.

 $11,414 – for assistance under the Low Income Home Energy Assistance Program (LIHEAP). 

 $96,007 – for Supplemental Nutrition Assistance Program (formerly Food Stamp Program) benefits under Wisconsin’s Food Share Program. 

 $279,450 – for Wisconsin Shares Child Care Subsidy Program benefits. 

 

E S T I M A T E  B

 

 $58,228 – reduced- price lunches under the National School Lunch Program. 

 $29,588 – reduced-price breakfasts under the School Breakfast Program.

 $355,350 – subsidized housing assistance under the Section 8 Housing Program. 

 $165,000 – for the Earned Income Tax Credit. 

 $251,706 – for Medicaid enrollment under the BadgerCare+ Program.

 $26,100 – for assistance under the Low Income Home Energy Assistance Program (LIHEAP). 

 $219,528 – for Supplemental Nutrition Assistance Program (formerly Food Stamp Program) benefits under Wisconsin’s FoodShare Program.

 $639,090 – for Wisconsin Shares Child Care Subsidy Program benefits.