Soccer Dad

Mugging wal-mart

Though the Washington Post is much too negative towards Wal-Mart, its editorial, "Beating up on Wal-Mart," about the new Maryland law requiring Wal-Mart to spend at least 8 percent of its payroll on health care for employees, is right on:

The Maryland bill is a legislative mugging masquerading as an act of benevolent social engineering. It is true that skyrocketing health care costs and the growing ranks of uninsured workers represent a burden on the state's health system that other corporations in effect help subsidize. But Wal-Mart employees, like the employees of other large retailers that employ many low-wage workers, are only slightly more likely to collect Medicaid benefits than the national average. And unlovable as it may be, Wal-Mart serves low- and middle-income people, both by creating entry-level and part-time jobs for people who might otherwise be unemployed and by saving its moderate-income customers a staggering amount of money.

The legislation has prompted imitators in 30 states. Where it passes, no one should be surprised by unintended consequences. Wal-Mart and other targeted firms may shift jobs or planned facilities elsewhere. Many low-wage younger workers may still opt out of health coverage even if offered a more generous plan. In trying to address the national problems of health care and uninsured workers, lawmakers in Maryland and other states could inflict on themselves a new set of problems while failing to solve the underlying one.

The bill was passed last year by Maryland's overwhelmingly Democratic legislature and vetoed by Governor Ehrlich. As one of the first acts of its new session the legislature overrode the veto.

The next step is uncertain. The New York Times reports:

Indeed, the bill is shaping up as an issue in the fall campaign, with Republicans and their business allies lining up against it, and Democrats and their labor union supporters backing it. Wal-Mart has 53 stores and employs about 17,000 people in Maryland.

Debate was particularly emotional among representatives from Maryland's Eastern Shore, where Wal-Mart recently announced plans to build a distribution center that would employ up to 1,000.

Wal-Mart executives have strongly suggested that they might build the center elsewhere if lawmakers passed the health care bill.

In a passionate speech in the State Senate, J. Lowell Stoltzfus, a Republican, warned that the bill "jeopardizes good employment for my people."

"It's going to hurt us very bad," he added,

So because Wal-Mart doesn't spend enough on health care (according to these economic illiterates) the legislature was willing to risk 1000 or so jobs and leave some people who wouldn't get the jobs dependent on the state. Good thinking!

Later the NY times reports:

Wal-Mart has come under severe criticism because it insures less than half its United States work force and because its employees routinely show up, in larger numbers than employees of other retailers, on state Medicaid rolls.

Sebastian Mallaby a columnist for the Washington Post (whom I quoted earlier) gives the proper perspective on these numbers:

Wal-Mart's critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid. Actually that's a typical level for large retail firms, and the national average for all firms is 4 percent.

Then the Times goes on:

Consumer advocates specializing in health care are hoping that the Maryland law will be the first of many.

"You're going to see similar legislation being introduced," said Ronald Pollack, executive director of Families USA, a nonprofit health advocacy organization, "and debated in at least three dozen more states, and at least some of those states will end up also requiring large employers to provide health care coverage."

What's wrong with this picture? Well on one side you have Wal-Mart, a business; on the other you have a "nonprofit health advocacy organization."

So the Times without actually reporting anything falsely can portray this as a win for the little guy, the non-profit against big bad Wal-mart and "business interests."

But another way to look at Families USA, is that it advocates not health care but redistribution of wealth according to formulas it deems proper.

And here's another news flash:

State lawmakers here in Annapolis took repeated swipes at Wal-Mart during debate over the bill on Thursday. It appeared that the company's intensive lobbying campaign in Maryland, including advertisements arguing that the requirement would hurt small businesses, might have soured some lawmakers.

Senator Lawlah called the lobbying "horrendous" and adding, "I have never seen anything like it."

Unions launched an unprecedented campaign to demonize Wal-Mart and have a bunch of politicians tell the company how to run its business. Wal-Mart runs a counter campaign and that turns some legislators off? That's the way the game should be played.

Instead, unions and "advocacy" groups get to lobby with little scrutiny as to whether their noble ideas are good or not, but a business that fights back is somehow in the wrong?

Indeed a lobbyist for Wal-Mart noted to the New York Times:

Frank D. Boston III, the chief lobbyist for Wal-Mart on the health care bill, stood in the main corridor of the Capitol building on Thursday wearing a look of resignation. Referring to unions in the state, he said, "They have a power we can't match, and we worked this bill extremely hard."

This is what happens when party has power for too long with no real competition. And it's something to remember this November. Both Democratic candidates for governor said that they'd have signed the bill. If for no other reason than to provide a brake for a runaway legislature, Gov. Ehrlich's re-election is essential.

For all the talk of the Abramoff scandal, this is also corruption. Corruption of another kind, to be sure. But it is corruption none-the-less. The unions and advocacy groups can promote an economically unsound law and never have to deal with the consequences.

But for all the credence the Times gives to Wal-Mart's critics it doesn't answer one question. Mallaby wrote:

When Wal-Mart opened a store in Glendale, Ariz., last year, it received 8,000 applications for 525 jobs, suggesting that not everyone believes the pay and benefits are unattractive.

If 15 times as many people apply for jobs as there are jobs available, obviously those people don't feel that the wages and benefits of Wal-Mart are bad. Why do potential Wal-mart employees in Maryland need their legislature to tell them that these jobs don't pay enough in wages and benefits? Why not let job seekers determine that themselves?

UPDATE: Commenter Monoblogue has an excellent post on the subject. As he lives where the effects of the override will be felt.

Technorati Tags: Wal-Mart, Maryland, Governor Ehrlich.