Why Wal-Mart Hirings Do Not Help U.S. Economy

 |  Includes: JOBS, WMT
by: Carneades

Reuters reported Thursday morning that Wal-Mart will hire an additional 22,000 individuals to staff its voluminous stores. Certainly, in this time of mounting job losses, a job at Wal-Mart is better than nothing as everyone has bills to pay. However, on a broader level, we are disturbed by what this announcement "means" for the country. Apparently, the deepest recession since the Great Depression has not been enough to derail Wal-Mart's growth. What then, could ever stop the discount retailer?

Obviously, those folks who view Wal-Mart as a net contributor to the US economy will cite the addition of 22,000 jobs as proof that the Company is a benevolent sort of Giant, offering regular Americans the chance to earn an honest living. The evidence however, suggests that Wal-Mart compensates its associates so meagerly that they are forced to seek the refuge of Government assistance just to make ends meet. A Government inquiry into Wal-Mart's labor practices, the results of which are contained in the report below, concluded the following:
  • In 2001, Wal-Mart Sales Clerks earned on average $13,861 per year.
  • In 2001, the federal poverty line for a family of three was $14,630.
  • A 200 employee Wal-Mart store costs taxpayers an average of $420,750 per year.
Assuming that Wal-Mart's announcement of 22,000 new jobs corresponds with an opening of roughly 100 new stores(this is generous, and assumes that 9% of the jobs created will be white collar, higher paying positions), we could confidently say that Wal-Mart Thursday was really announcing a cost to the federal taxpayers of $42,075,000. This figure doesn't even include the state and county level tax incentives that are so often used to lure Wal-Mart into a particular area.
Does the US need more Wal-Mart jobs? We would say no.
"A Report By the Democratic Staff of the Committee on Education and the Workforce" - US House of Representatives, Representative George Miller (D-CA), Senior Democrat, February 16, 2004

Disclosure: No position in WMT