Study: Wal-Mart Can Afford Low Prices, Higher Wages [View All]

Full story: http://blog.aflcio.org/2006/06/15/study-wal-mart-can-afford-low-prices-higher-wages/

Study: Wal-Mart Can Afford Low Prices, Higher Wages

Wal-Mart, which always boasts about its always low prices, claims it has saved the American consumer $263 billion by expanding its stores. But a new study released today by the nonprofit Economic Policy Institute (EPI) demonstrates Wal-Mart’s always low-wage policy actually does more harm than good to low-income consumers.

In The Wal-Mart Debate: A False Choice Between Prices and Wages, EPI economists Jared Bernstein and Josh Bivens find that Wal-Mart could raise wages and benefits for its non-supervisory staff by 13 percent and still maintain a profit margin nearly 50 percent greater than its top competitor.

The EPI study also disproves a widely cited study commissioned by Wal-Mart that claims U.S. consumers saved a whopping $263 billion because of the giant retailer’s expansion. That study by the consulting firm Global Insight is based on incorrect findings and faulty research methods, according to Bernstein and Bivens.

“Working families need higher wages to keep up with the rising prices of gas and housing,” Bivens says. “Rent or mortgage, utilities, medical services and transportation—these are what take up the largest portion of a family’s income—not goods bought at Wal-Mart.”

As Wal-Mart expands into more urban areas, studies have found it kills competing retailers that typically paid 18 percent more. A University of California, Berkeley study showed that in 2000, total earnings of retail workers nationwide were reduced by $4.7 billion due to Wal-Mart’s presence.