Is Wal-Mart a Drain on the Economy?

It turns out Wal-Mart might not be such a bargain after all:

A recent University of California, Berkeley study found that the fast growing retailer takes more from communities than it gives.

"Because of the low wages and because people do not have health insurance through their employer, people rely on public support to make ends meet," says the school's Ken Jacobs.

Estimates are the result is a tab to California taxpayers of $82-million a year for health care, food stamps, and other social services.

Wal-Mart counters that it pays far more in tax than that, and that it hires from areas of the workforce that are underemployed, including seniors and students.

It would take a more advanced understanding of economics for me to fully grasp what is going on here, but it seems to me that so long as Wal-Mart stays within the bounds of the law (which they have had some problems with), the government ought not have much to say about this. If we are really so concerned about these employees, we ought to increase the minimum wage and/or required certain benefits.

Of course, there is a bigger non-legal issue here, and that is what the story is going after: are Americans really saving money by shopping at discount stores, when the discount arises from low wages and no benefits to employees? If, as the study alleges, public support of those stores' employees is so costly, the required taxes may offset any in-store savings.

In the end, though, it is hard to imagine the average not-so-sophisticated American shopper recognizing that in the larger economic scheme of things, their Wal-Mart purchases are not saving them all that much money. These are the same people who have extra wages withheld in an attempt to save money, effectively taking out a zero-interest savings account with the US government when an interest-bearing account is available at any bank in America.

UPDATE:Sebastian Holsclaw points out some of the flaws in the study:

The first flaw is that the study assumes that if these people were not working at WalMart they would not be getting public assistance. That is an assumption which requires a serious defense if we are to get past it. Many WalMart jobs are the very first step into the working world. For many of these people this is either a first job or their first job in a long time. It doesn't seem a stretch to suspect that many of them would be unemployed if they weren't working at WalMart.

He's got a lot more, and it doesn't take an advanced understanding of economics to grasp the points he is making. Thanks, Sebastian.