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Reports blast 'double-dipping' by Wal-Mart

Posted in the database on Wednesday, April 20th, 2005 @ 22:29:25 MST (1539 views)
by Susan Lundine and Christine Selvaggi Baumann      

Untitled Document Wal-Mart Stores Inc., which has reaped millions of dollars in government subsidies to expand its operations in Florida, is potentially the state's biggest user of the Medicaid system.

The nation's largest employer and grocery retailer, which constantly battles allegations of substandard employee wages and benefits, has more Medicaid-eligible employees and/or dependents than any company in Florida, according to the state Department of Children & Families.

The company has 12,300 Medicaid-eligible employees in the state -- more than 13 percent of its 92,812 Florida workers.

About 2.2 million Floridians -- mainly low-income families, children, the disabled and the elderly -- are enrolled in Medicaid. The state's Medicaid budget is $14.7 billion for 2004-2005, having nearly doubled from $7.8 billion for 1999-2000.

A national report by a nonprofit watchdog group says the Bentonville, Ark.-based retailer has received millions of dollars in government subsidies in Florida.

And accepting subsidies while having so many Medicaid-eligible employees is something "we look at as double-dipping," says Philip Mattera, research director of Good Jobs First, the Washington, D.C.-based nonprofit that wrote the report. "They're hitting up taxpayers in two ways to finance their expansion.

"We're talking about a company that has about $288 billion in revenue and $10 billion in profits," Mattera says. "Why should state or local governments give handouts to this company?"

Wal-Mart officials strongly defend their company's wage and benefits practices.

Dan Fogleman, a company spokesman, flatly denies reports suggesting that Wal-Mart encourages employees to sign up for public assistance programs. In fact, he says such behavior "would be a violation of company policy and one would be terminated if they did it." With its medical benefits, merchandise discounts and vacation policies, "Wal-mart has a very competitive benefits package," says Fogleman.

Subsidized growth
While there is no central source of most companies' government incentives, Wal-Mart's substantial subsidies were reviewed in a report that found the retailer garnered more than $50 million in Florida taxpayer money between 1992 and 2002 to help finance its expansion.

The report, "Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth," was published May 2004 by Good Jobs First.

And Florida isn't alone in giving Wal-Mart taxpayer money to grow while many of its workers turn to public assistance to survive -- it's a nationwide concern, according to several independent reports.

"Wal-Mart commonly seeks subsidies in about one-third of its retail projects," says the Good Jobs First report. Thus, more than 1,000 of its 3,500 stores "may have received public assistance" -- to the tune of more than $1 billion in subsidies.

"The question of whether large sums of taxpayer funds should be used to subsidize the expansion of a company such as Wal-Mart is a serious public policy issue," says the Good Jobs report.

The average wage for regular, full-time hourly Wal-Mart associates in Florida is $9.36 an hour, or $19,468 a year, below the federal poverty level for a family of five.

But the Wal-Mart jobs created with Florida subsidies are higher paying, because they mainly are for Wal-Mart distribution centers, says Scott Openshaw, a spokesman with the state Office of Tourism, Trade and Economic Development. "Wal-Mart may have Medicaid-eligible employees, but our program is not a kind that creates (those) jobs."

Still, Mattera says that type of reasoning is disingenuous at best.

"The Wal-Mart distribution centers create more full-time jobs, and the wages are somewhat higher than in the stores, but they're still not great jobs," he says. "They are low-paying when compared to other distribution centers."

Openshaw's department currently has an agreement that will give Wal-Mart $5.76 million in tax incentives if the retail giant meets certain conditions. In that deal, Wal-Mart opened two distribution centers in Baker and DeSoto counties, promising to create 1,000 jobs. Openshaw says wages at those centers are 164 percent higher than the area's average wage.

"These jobs offer value for the local communities, and far be it from us to tell them what kind of jobs they should attract," says Erin Heston, a spokeswoman with Enterprise Florida, which facilitates state incentives.

Low enrollment, waiting periods
Yet another report says a typical Wal-Mart store may cost federal taxpayers $420,750 a year in public assistance.

The report, "Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart," was done last year by the Democratic staff of the U.S. House Committee on Education and the Workforce.

While full-time Wal-Mart employees must wait six months and part-time employees must wait two years to enroll in the health plan, the national average waiting period is 1.3 months, says the congressional study. That study also says Wal-Mart employees pay 42 percent of their health insurance premium, compared with the national average of 16 percent.

"Because Wal-Mart fails to pay sufficient wages, U.S. taxpayers are forced to pick up the tab," says the study.

Still another report, done last August by the University of California Berkeley's Labor Center, says that Wal-Mart's workers are paid significantly less than other retail workers and are less likely to have health benefits.

The Berkeley report says reliance by Wal-Mart workers on public assistance programs such as food stamps, Medicaid and subsidized housing in California cost taxpayers about $86 million a year.

Retailer: Reports bias
Fogleman, the Wal-Mart spokesman, disputes the Good Jobs First findings.

He says that report is biased because United Food and Commercial Workers Union, which opposes the store's employment practices, paid for half of the report.

"If you do math, you'll see every dollar invested by cities and counties is returned 40 times over," says Fogleman. Nationally, he says Wal-Mart has paid millions in sales tax and billions in local property taxes. "Customers decide with their feet. They can rely on Wal-Mart to provide the value they need."

Fogleman calls the California report unreliable because he says it was fueled by special interests such as labor groups that want to see Wal-Mart employees unionized. He also says Wal-Mart was not contacted to participate in the study or review the findings before it was published.

The University of California Berkeley Labor Center "is largely regarded as a union think tank," says Fogleman.

He does not refute the federal study done by the Democratic U.S. House committee, but maintains that Wal-Mart has "good, solid benefits."

© 2005 MSNBC.com

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