Giving Wal-Mart the Biz (Editorial)

The Maryland General Assembly passed legislation last month that, although aimed directly at Wal-Mart Stores Inc., should be a red flag for every business in the country.

The Fair Share Health Care Act requires any private company employing more than 10,000 workers in the state to spend 8 percent of its payroll on health care coverage — or put the money into the state’s health program for the poor.

Maryland Gov. Robert Ehrlich has promised to veto the bill, which would likely only stall things until early 2006. It appears there are probably enough votes to override.

Wal-Mart, which employs about 15,000 in Maryland, provides benefits for most of its full-time employees, as it does everywhere. As most are well aware, though, many of Wal-Mart’s employees are not full-time employees with full benefits. Most of the people working in the stores are part-time workers. Some are older employees who are covered by Medicare.

This is one of the many business strategies that allow Wal-Mart to have lower prices than its competitors. And those lower prices have made it a giant that is open to attacks from all sides.

One might expect some of the mom-and-pop operations to hate Wal-Mart. One might expect labor unions to hate Wal-Mart. But the driving force behind the Maryland legislation was neither. It was Giant Food Corp., which just happened to control the bulk of the grocery market in the state until Wal-Mart started moving in. Giant, which employs more than 10,000 in the state, is owned by Ahold, the Dutch food retail giant that competes with Wal-Mart. It already pays more than 8 percent of its payroll for health benefits for its unionized workers.

Wal-Mart rightly questioned the motivation behind the bill: Is it really intended to get better health care for Maryland workers or to get at one of Giant’s competitors?

The cost of health benefits is a struggle for every business these days. Labor representatives argue that Wal-Mart — by covering fewer than half of its employees — is forcing competitors to cut benefits in order to compete, dragging down the standard of living for their employees.

Business groups, however, think the bill could hurt Maryland’s chances of attracting new companies because of fears of state intrusion into their health care plans. (If Maryland has a plan for attracting new companies that employ 10,000, we’d like to hear it.)

Putting the motivations aside, it’s simply a bad bill.

Is cost the only measure of health care? Health care costs nearly always increase faster than wages. Does that mean someday a company could be forced to pay out 10 percent, 12 percent or more of its payroll? That doesn’t sound like the American way to us.

Maryland legislators should know better than to base health care on costs or payroll alone. What if many of those part-time workers are actually covered by a spouse who works elsewhere? What if many simply are willing to take the risk of going uninsured? Isn’t insurance an option?

What if Wal-Mart, because of its size and clout, is able to negotiate a medical plan at a lower percentage of payroll that is far better in coverage than a more expensive plan that would cost it 8 percent of payroll?

There’s no word yet on how Wal-Mart will deal with the issue should it get the final OK, although the company has said it could back off building a new distribution center in Maryland that would employ 1,000. It’s a threat backed up by Wal-Mart’s proven willingness to walk away if doing business is too expensive.

Agreed: Wal-Mart should do right by its workers and not expect taxpayers to subsidize its employee costs. But Maryland legislators, despite intense pressure from a big Wal-Mart competitor and from unions that see the law as a test for how to force Wal-Mart to unionize, should not pass anti-business laws that force a company — any company — to spend a certain percentage of its payroll on health insurance.