Power

Walmart’s Wage Hike Still Puts Taxpayers on the Hook

Taxpayers spend $6.2 billion every year on public assistance for Walmart employees who make too little money to make ends meet, and according to a new report Walmart’s headline-grabbing minimum wage increase won’t do much to change that.

Taxpayers spend $6.2 billion every year on public assistance for Walmart employees who make too little money to make ends meet. vvoe / Shutterstock.com

Taxpayers spend $6.2 billion every year on public assistance for Walmart employees who make too little money to make ends meet, according to one estimate. Walmart’s headline-grabbing minimum wage increase won’t do much to change that, according to a new report.

Walmart will raise its minimum wage to $9 an hour starting this month, and $10 starting in 2016 for workers who have passed a six-month training period.

Even these wages will still force many workers to rely on government programs like Medicaid and food stamps to get by, according to an analysis from Americans for Tax Fairness.

That’s certainly true for Shantell Pearson of Sacramento, a single mother who already struggles to make ends meet working for $9.20 an hour as a Walmart associate.

Pearson told Rewire that she depends on welfare, food stamps, WIC (nutrition assistance for women, infants, and children), and Medi-Cal (California’s Medicaid program). She qualifies for a Section 8 housing voucher and wishes she could get one, but the waiting list is long and it’s hard to get in.

Pearson usually has to devote the majority of her monthly Walmart paychecks to covering her $825 rent.

“It’s a real struggle,” she said. “Nothing is getting paid on time.”

The authors of the new report, The Walmart Tax Subsidy, say that because Walmart refuses to disclose comprehensive wage information, it’s “impossible” to measure exactly how much less Walmart’s new policy will burden taxpayers than it does now.

But analyzing income eligibility limits for eight public programs shows how inadequate $9 or even $10 an hour is for many workers.

Walmart defines “full-time” work as at least 34 hours a week. At $9 an hour and 34 hours a week, the report’s authors note, an employee would take home $15,912 per year. A $10 wage earner would bring in $17,680.

A $9 an hour full-time, childless, single-earner employee would still qualify for Section 8 housing assistance, Medicaid, and home energy assistance—three of the five public programs in the report that person would be eligible for.

A $10 an hour full-time employee would only qualify for Section 8 if single, but adding one child makes that worker eligible for all eight government programs the report analyzed: child care subsidy, Section 8, Medicaid, food stamps, the Earned Income Tax Credit, school lunch, school breakfast, and home energy assistance.

That’s only if workers meet Walmart’s definition of a full-time employee. Pearson doesn’t, and it’s made a big difference in her quality of life.

“If you’re full time, they’ll make sure you’re OK,” she said. “If not, they don’t give a damn if you make it out or not, period.”

Pearson works 30-32 hours a week. An employee has to work 34 hours a week for four consecutive weeks to qualify for full-time benefits, but Pearson says Walmart is “smarter than that” and often stiffs workers by just enough hours in one of those four weeks to prevent full-time status.

Part-time workers don’t get access to health coverage, vacation days, or paid sick and family leave until they’ve been with the company for a year, Pearson said.

Pearson can’t afford to hire a babysitter for her 1-year-old daughter since all of her income and government assistance has to cover even more basic necessities.

“Every day I wonder, who is going to watch my baby while I’ve got to go to work?” Pearson said. Family helps out sometimes, but sometimes she just has to miss a shift, and much-needed pay, to stay home with her daughter.

Walmart plans to remove the waiting period for paid leave for part-time workers as part of its policy changes. Meanwhile, Pearson just passed her one-year mark—“It’s been a long year, trust me,” she said—and the paid leave she is finally eligible for will help her a little.

A raise to $10 an hour would also help a little—but not enough to make much of a difference, Pearson said, and certainly not enough to get her off of public assistance. A raise of $2-$3 an hour would probably leave her ineligible for assistance, but that doesn’t mean she still wouldn’t need it.

“Without welfare I wouldn’t even be able to do this right now,” Pearson said.

Americans for Tax Fairness noted that the Walton heirs’ personal fortune increased by more than $20 billion from March 2014 to March 2015, and that just half of that amount could give all of Walmart’s workers a raise of $5 per hour.

That would get most workers closer to the “living wage” of $15 an hour that worker advocacy groups like OUR Walmart and the Fight for 15 campaign have been demanding, and slowly winning, nationwide.

That’s about how much Pearson estimates she’d need to provide for herself and her daughter without also depending on public assistance.

“$15 an hour would be a reasonable pay rate,” she said. “No one should have to struggle to pay bills.”