ANOTHER WAL-MART PROBLEM
January 23, 2006
In an attempt to unionize Wal-Mart, Maryland legislators have decided that it must spend 8 percent of its payroll on health care, or give the difference to the state, says George Will of the Washington Post. The unions claim that Wal-Mart's health benefits are so low employees end up depending on Medicaid for health care.
One way that Wal-Mart holds down prices is by not being a welfare state, says Will. That is, by not offering higher wages and benefits than the labor market requires. However, Wal-Mart's pay and benefits are sufficient to attract hordes of job applicants whenever it opens a new American store, which it does once every three days, says Will.Furthermore:
- Nearly 86 percent of Wal-Mart employees have health insurance -- more than half through the company, which offers 18 plans, one with $11 monthly premiums and another with $3 co-payments.
- Its employees are only slightly more likely to collect Medicaid than the average among the nation's large retailers, who hire many entry-level and part-time workers.
- In 2005, Wal-Mart paid its 1.3 million employees $4.7 billion in benefits; that's almost half as large as the company's profits of $10.3 billion.
When Wal-Mart enters a market, retail prices decline 5 percent to 8 percent; nationally, it saves consumers $16 billion annually. It earns just $6,000 per employee, one-third below the national average for retailers.
As labor unions and allied rent-seekers -- companies that use the government to impose disadvantages on their competitors -- in 30 or so other states contemplate mimicking Maryland, Wal-Mart can contemplate an advantage of federalism, says Will. That is, it can invest elsewhere.
Source: George Will, "Getting mugged in Maryland," Fort Worth Star-Telegram, January 20, 2006.
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