A few days ago, our friends at the Economic Policy Institute put out an interesting paper looking at the claims about the trade-offs inherent in the Wal-Mart business model. That is, in order to have low prices, workers had to be paid low wages.

Well, the EPI paper probes some interesting points. Here’s the upshot, according to the report:

The more important question for the future isn’t whether Wal-Mart is a force for good or evil in the American economy, but whether the economic benefits provided by Wal-Mart (and other big-box retailers) can be preserved even if their labor compensation is dramatically improved. To this end, our research finds that:

* A study by the consulting firm Global Insight, which concludes that Wal-Mart’s expansion has saved U.S. consumers $263 billion, is deeply flawed. The statistical analysis generating this widely quoted figure fails the most rudimentary sensitivity checks used in good economic analysis, rendering its conclusions unreliable.

* A robust set of research findings shows that Wal-Mart’s entry into local labor markets reduces the pay of workers in competing stores. This effect is largest in the South, where Wal-Mart expansion has been greatest.

* Wal-Mart could raise wages and benefits significantly without raising prices, yet still earn a healthy profit. For example, while still maintaining a profit margin almost 50% greater than Costco, a key competitor, Wal-Mart could have raised the wages and benefits of each of its non-supervisory employees in 2005 by more than $2,000 without raising prices a penny.

This shouldn’t be too surprising, particularly the last point. But, it gives folks some economic points to make in the debate. See it all here.