The WasteWatcher: The Staff Blog of Citizens Against Government Waste

The Wal-Mart Bill

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


In January, the Maryland legislature overrode Governor Bob Ehrlich’s veto of the Fair Share Act.  The legislation requires all businesses in the state of Maryland with 10,000 or more employees to spend at least 8 percent of their payroll on employee health benefits or pay the difference in a tax.  Although there are several large employers in the state, the bill only affects Wal-Mart.  In reality, this law has nothing to do with providing health insurance.  It represents the continuing effort of labor unions and their allies to demonize and punish successful, non-unionized companies.  A similar bill was passed in Suffolk County, New York that affects large, non-unionized grocery stores.

Arguments put forth by labor unions and their allies over health insurance show how duplicitous their support for “the Wal-Mart bill” really is.  In a recent interview on Washington, D.C.-based WMAL, U.S. Senate candidate Rep. Ben Cardin (D-Md.) was asked to comment on President’s Bush’s State of the Union Address.  Providing the usual derision expected from the opposition party, he chose to highlight many of the President’s proposals for healthcare.  He criticized Health Savings Accounts (HSA’s), labeling them an assault on employer-based health insurance.  He called for universal health insurance and for more government involvement in lowering the cost of healthcare and prescription drugs. 

Rep. Cardin also praised the Wal-Mart bill.  He said it forced the company to pick up the health insurance tab for its employees and prevented Maryland taxpayers from paying for employees who purportedly rely on Medicaid.

But Rep. Cardin’s support for the Wal-Mart bill contradicts the positions he took just seconds earlier in the interview.  The law raises the cost of healthcare for businesses and constitutes a direct assault on employer-provided health insurance.  Furthermore, his opposition to higher Medicaid costs for taxpayers is curious because Rep. Cardin ultimately wants universal health coverage, under which taxpayers pay for everyone’s healthcare.

All attempts to organize Wal-Mart have failed and the company’s stores continue to draw business away from unionized competitors.  Listening to Big Labor’s demagoguery, one would think that Wal-Mart employees are miserable.  Yet 86 percent of Wal-Mart employees have health insurance, more than half of them through the company.  In fiscal 2006, the company is projected to spend approximately $4.7 billion in benefits, almost half of their net income of $10.3 billion in fiscal 2005.  The legion of applicants that line up at any new store shows the company must be doing something right for its employees.

The continuous attacks on Wal-Mart do nothing to help the low-income people that labor unions and their allies profess to care about.  Wal-Mart is the largest private employer in the nation and provides numerous low-priced products that help families on a budget meet their needs.  Like other large retailers, Wal-Mart mainly hires low-wage and entry level workers.  Its employees are only slightly more likely to collect Medicaid benefits than workers at similar retailers nationwide.  In Maryland, the company was planning on opening two distribution centers that would have created hundreds of jobs in two of the state’s poorest counties.  The facilities’ construction is now in doubt.

Furthermore, the Wal-Mart bill is unconstitutional.  The Employee Retirement Income Security Act (ERISA) frees nationwide employers from conflicting state directives for employee benefit plans.  The Retail Industry Leaders Association has filed two federal lawsuits against the state of Maryland and Suffolk County, New York.  The association claims the statutes run contrary to ERISA and are discriminatory.  Courts have routinely struck down state mandates for benefits that fall under ERISA.

For now, Big Labor and its friends are pushing similar legislation in at least 30 other states.  Businesses and consumers need to be wary; laws that mandate benefits for private employers hurt the people they are purported to help.

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