Testimony for the New York City Council
On the Subject of Walmart’s Labor Practices and its Negative Impact on Communities
Provided by
Matt Ryan
Executive Director, New York Jobs with Justice
Thursday, February 17, 2011
Good afternoon and thank you for inviting me to testify before the City Council. My name is Matt Ryan, and I am the Executive Director of NY Jobs with Justice, a coalition of worker and community organizations building power to secure good jobs and strong communities for all New Yorkers.
Right now, New York City is at a pivotal moment. We can choose either to build our economy on a strong foundation of quality jobs and shared prosperity, or on a shaky foundation of poverty wage jobs and inequality. Allowing Walmart to enter our city would put us on a collision course with poverty and inequality, which is truly a road to nowhere.
NY Jobs with Justice has long stressed that one of the keys to building a strong economy lies in transforming the retail sector. According to One City/One Future, a study we co-authored in 2009, the retail industry is among the five largest and fastest growing sectors in the New York City economy, but it pays its hourly workers less than half of what shrinking sectors such as manufacturing, wholesale trade, and utilities pay.[1]
If we are going to build an economy that works for everyone, we must transform retail jobs into good middle class jobs. Through initiatives like the Health Care Security Act and the Greengrocer Code of Conduct, we have worked to ensure that this crucial industry is governed by high-road business standards that lift New Yorkers out of poverty and allow them to lead a decent life.
Walmart is the industry leader in creating precisely the kind of dead-end jobs from which our city’s communities have been struggling to escape. A 2007 study found the company paid its workers at least 25 percent less than its closest competitors, [2] and it provides health benefits with deductibles so high that a 2011 study estimated it would cost a Walmart worker 25 percent of her annual income before she even started receiving benefits. [3]
But these figures only scratch the surface of the miserable experience of working at Walmart. As esteemed scholar Nelson Licthenstein has noted, Walmart has been documented to systematically train managers to deny Yorkers overtime pay, routinely force workers to work off the clock, and regularly force workers to quit rather than lay them off and face an increased unemployment tax obligation.[4] Perhaps this is why their turnover rate is over 40 percent.[5]
All of these offenses would not be so bad if they were self-contained. However, like a weed, Walmart’s employment practices invade surrounding communities, sapping them of the same resources they deny their employees. As local businesses struggle to compete with Walmart’s cut-throat practices, they either go under or adopt similar low-road practices. A 2007 study found that Walmart openings reduced aggregate earnings throughout the retail industry by an average of 10 percent and employer-sponsored healthcare by 5 percent.[6]
Sadly, taxpayers are left footing the bill that Walmart refuses to pay. According to a 2004 Congressional study, Walmart’s failure to cover the cost of its employees’ basic subsistence cost US taxpayers $1.6 billion a year – including expenditures for health care, housing, and school lunches.[7] Matters have not improved much since. In 2009, 41 percent of Walmart’s Massachussetts employees received publicly subsidized healthcare, at a cost of $16.6 million.[8] [9] That same year, Walmart had more employees and dependents on Ohio’s Medicaid plan than any other company at an estimated cost to taxpayers of $45 million.[10] In fact, Walmart tops the list of companies with the most employees receiving Medicaid in all 24 states that track the data.[11]
Walmart executives seem to think they’re getting a good deal. As former Walmart CEO H. Lee Scott glibly put it, public health care plans may actually “be a better value – with relatively high income limits to qualify.”[12] While Scott may see “value” in plundering the public treasury for the cost of providing its workers with basic necessities, New York City should not. Faced with record budget deficits, New York cannot afford to pay for Walmart’s negligence. More importantly, though, New York has values of its own.
We believe that if you work hard, you should be able to leave poverty behind and that the strongest economy is tne built on shared prosperity. Walmart believes in shifting the cost of the most basic human needs onto taxpayers so it can maximize its bottom line. If we chose Walmart’s values over ours, we will lose the chance of watching our children grow up in a city of opportunity, in which everyone has a chance to thrive. It is my sincere hope that the Council will do everything in its power to prevent that from happening.
Thank you.
[1] New York Jobs with Justice, et. Al, One City/One Future: A Blueprint for Growth that Works for All New Yorkers, 2009.
[2] Arindrajit Dube, T. William Lester, and Barry Eidlin, A Downward Push: The Impact of Wal-Mart Stores on Retail Wages and Benefits, UC Berkeley Center for Labor Research and Education, December 2007.
[3] Hunter College Center for Community Planning and & Development and New York City Advocate Bill de Blasio, Wal-Mart’s Economic Footprint: A literature review. January 2011. p.
[4] Nelson Licthenstein, The Retail Revolution, How Walmart Created a Brave New World of Business. Metropolitan Books: New York, 2009. p. 99-109 (Hardcover edition).
[5] Coleman Peterson, “Employee Retention: The Secrets Behind Walmart’s Successful Hiring Policies,” in Human Resource Management, Spring 2005, 85, 87-88.
[6] Arindrajit Dube, T. William Lester, and Barry Eidlin, A Downward Push: The Impact of Wal-Mart Stores on Retail Wages and Benefits, UC Berkeley Center for Labor Research and Education, December 2007.
[7] Rep. George Miller, Democratic Staff of the Committee on Education and the Workforce, Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart, February 2004
[8] Massachusetts Division of Health Care Finance and Policy, Employers Who Had Fifty or More Employees Using MassHealth, Commonwealth Care, or the Health Safety Net in State FY09, June 2010.
[9] Walmartstores.com: Massachussetts State Information. Retrieved from <http://walmartstores.com/pressroom/StateByState/State.aspx?st=MA>
[10] Ohio Department of Jobs and Family Services, June 2009 – Top Ten Employers and Summary of Top 50. Retrieved from Ohio Department of Jobs and Family Services website: <http://pnohio.3cdn.net/5ddd17f44b6d3a8a58_sjm6bx1ew.pdf>.
[11] Walmart Watch, “Wal-mart’s New Health Plan: Medicaid. Retrieved from < http://walmartwatch.org/get-the-facts/wal-marts-new-health-plan-medicaid/>
[12] Transcript Lee Scott Speech, 4 May 2005. Cited in: Nelson Lichtenstein and Erin Johnson, Creating Hourly Careers: A New Vision for Walmart and the Country, January 2011.