Recently, my wife returned home from volunteering as a nurse at a free clinic in our community and mentioned that it had been a busy day. Among the uninsured patients she saw were several Wal-Mart employees. They are apparently among the thousands of Wal-Mart workers -- 45 percent of its workforce by some estimates -- who are not covered by the company's health insurance plan. This is the same Wal-Mart that has spawned five billionaires who rank among the 10 wealthiest Americans.

Everyone knows the Wal-Mart story. Sam Walton was an innovative businessman who created the world's largest retailer. By building stores in rural communities and using his sales potential to muscle suppliers into giving him large discounts on their products, Walton undercut his competitors and became an American success story. But there is another side to the Wal-Mart tale that you won't read about in Walton's autobiography, "Made in America."

Last week, newspapers across the country reported that one of Wal-Mart's own auditors had warned top executives in 2001 that Wal-Mart was guilty of extensive violations of child-labor laws and state regulations mandating employee breaks. The audit uncovered 1,371 instances of minors working later than permitted, working more hours than are permissible, and working during school hours. The auditor also found 60,767 instances of workers not taking required breaks.

In October of last year, federal agents raided 60 Wal-Mart stores in 21 states, arresting 250 to 300 illegal immigrants working as janitors. Only a small number were Wal-Mart employees; the rest worked for contractors it had hired. Wal-Mart denied knowing about the illegals, but federal investigators told reporters that company executives knew of the immigration violations.

Later, a suit was filed in federal court contending that Wal-Mart and its contractors failed to pay these employees, some of whom worked 56 hours during a seven-day work week, legally required overtime pay. The suit also alleged that they failed to make workers' compensation and Social Security payments required by law.

In fact, Wal-Mart has a lengthy record of employment law violations. In 2001, a suit against the retailer for "off-the-clock" work resulted in a $50 million payout to its employees. Another suit regarding discrimination against Hispanic employees was settled after Wal-Mart paid nearly a half-million dollars to 10 former workers. Wal-Mart is also currently the target of one of the largest sex discrimination suits ever filed. And, true to form, when Wal-Mart employees in Texas tried to organize a union, Wal-Mart committed unfair labor practices in an effort to keep the union out.

When Wal-Mart moves into a community, it portrays itself as a generous, All-American neighbor. However, striking grocery store workers in California, Missouri, and West Virginia have learned what Wal-Mart's arrival really means.

For many years, unionized grocery store employees were paid a reasonable wage that put them in the lower reaches of the middle class. And they and their families received health care under an employer-paid health plan.

Wal-Mart's employees, on the other hand, are paid far less than unionized workers and receive far fewer benefits. As a result, Wal-Mart's labor costs are reportedly 20 to 30 percent lower than their unionized competitors. Arguing that they need to match these lower costs to remain competitive, grocery store chains are now demanding that their employees accept cuts in wages and health care benefits.

And, of course, if workers in these areas accept the reductions, the dominos will start to fall across the country and unionized retail workers will join many of Wal-Mart's employees in the ranks of the working poor and in the lines of their community's free clinic.

In the early 1900s, Henry Ford balked at paying good wages to his auto workers. Eventually he recognized that low-paid workers couldn't afford to buy cars but that well-paid ones could. Not only did the wages Ford paid allow his employees to buy the cars they built, it helped auto workers, and a lot of other people in the communities they lived in, climb to the middle class.

Wal-Mart's contribution to local economies is low-wage jobs that drag down the income and benefits of other workers in the community. And nationally, the pressure Wal-Mart puts on its suppliers to provide goods at lower and lower and lower prices, has forced many companies to close their American factories and move work overseas.

Wal-Mart ads used to feature the mantra "Buy American." Today, "Made in China" might be a more accurate description of the company's philosophy. In the last five years, Wal-Mart has doubled its imports from China and in 2002 it bought roughly $12 billion worth of Chinese merchandise.

So what does the future hold? It is likely that Wal-Mart's low-wage strategy will prevail.

Wal-Mart shoppers will continue to save 50 cents on toothpaste and a few dollars on a new blender. In exchange, their communities will be saddled with hidden costs that, in the long run, will render these savings less significant. Some share of the costs of health care for Wal-Mart employees and of the jobs lost to low-wage manufacturers abroad will be borne by the community and the number of working poor will rise. And the five billionaire members of the Walton family will climb higher on the list of wealthiest Americans.

Unless people decide Wal-Mart isn't such a bargain after all.

Paul F. Clark is professor and head of the Department of Labor Studies and Industrial Relation at Penn State University