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We continue to get email about the University of California, Berkeley, study suggesting that Wal-Mart’s employment policies are costing just California’s taxpayers $86 million annually paid in public assistance to company employees. The study says that Wal-Mart workers in California, because they make insufficient salaries and get inadequate benefits, rely on the state for about $32 million annually in health-related services, and $54 million a year in other assistance such as subsidized school lunches, food stamps and subsidized housing.

We had a lot of email yesterday on the subject, and one of today’s emails follows up on those missives.

One MNB user wrote to respond to a letter in which the correspondent wrote that Wal-Mart has brought 44,000 jobs to the most employer unfriendly state in the nation. Those 44,000 employees, at $10 an hour (and only 30 hours a week) result in $700 million in taxable wages, and income for people to spend to keep the economy going.

I live in the home state of Wal-Mart, and rarely set foot in one of their facilities because of my disgust of what they have done to the retail environment.

I did the calculations, and 30 hrs per week at $10 per hour times 52 week, that comes to an annual salary of $15,600 per year. I don’t know what the tax structure is in California, but the state I live in, this level of income would not pay any taxes for the year, especially if there were any children in the home. And, when you look at the Federal tax structure, they would fall into the Earned Income Credit bracket where the Federal Government pays them tax money base on the following guidelines taken straight off the IRS website:

Your earned income and modified AGI must each be less than:

-$11,230 ($12,230 for married filing jointly) if you have no qualifying children, or;
-$29,666 ($30,666 for married filing jointly) if you have one qualifying child, or;
-$33,692 ($34,692 for married filing jointly) if you have more than one qualifying child.

Therefore, these 44,000 jobs theoretically would not pay any taxes on the almost $700 million combined income, but would be drawing additional tax money based on the earned income credit.

Also on the subject of Wal-Mart, we had a story yesterday about the company considering a $10 million settlement of a US Department of Justice probe into its use of cleaning contractors that hired illegal immigrants to clean its stores. We commented that “on the one hand, $10 million is petty cash to Wal-Mart, so it probably makes sense to just write the check and get the government off its back.

“However, that’s still a pretty big chunk of change to be handing over if indeed the company believes in its complete and total innocence.”

One MNB user wrote:

I fully agree with your comment. I'm just a little bothered by the lets just get the Feds. off our back approach. We as a country are far to use to this type of solution. What ever happened to the stand up and fight for what is right. Please don't take this as I believe Wal-Mart is innocent.

However when you decide to emphatically decide to say you are innocence then stand up and fight for it. This is just a simple cheap way out and at the
same time saying "not me I would never do that.”

Another member of the MNB community offered:

Companies often settle cases like this (and in many civil court cases too). Why? Because the cost to defend and win is many times more than the cost of simply settling and paying today.

No argument there. We understand why settlement often is a better option that fighting, even if you’re innocent.

We just think that it is somehow disingenuous to, say, write a check for $10 million and then proclaim your innocence. Either the settlement or the proclamation of innocence is a lie – and one way or the other, credibility is damaged.
KC's View: