Unions Beat Wal-Mart

The union movement scored a significant success in Maryland as the state legislature passed a law yesterday requiring Wal-Mart stores to increase spending on employee health insurance.

The legislature overrode a veto by Republican Governor Robert Ehrlich to pass the law, which was a response to the growing criticism that Wal-Mart has skimped on employee benefits, forcing employees to turn to the government for health insurance.

According to the New York Times, "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."

Dozens of states, whose legislatures are considering similar laws, are watching Maryland closely in the context of fast-rising Medicaid costs. Under the Maryland law, employers with 10,000 or more workers in the state must spend at least 8 percent of their payrolls on health insurance, or else pay the difference into a state Medicaid fund.

Because Wal-Mart will not disclose publicly how much it spends on health care, the effect of the law on Wal-Mart is unclear. Wal-Mart was concerned enough about the bill, however, to hire four firms to lobby the legislature and to contribute $4,000 to Gov. Ehrlich's reelection campaign.

State Senator Gloria G. Lawlah, a Democrat who sponsored the bill, said: "This is not a Wal-Mart bill, it's a Medicaid bill." This bill says to the conglomerates, 'Don't dump the employees that you refuse to insure into our Medicaid systems.' " There are four employers in Maryland with more than 10,000 workers - Johns Hopkins University, the grocery chain Giant Food and the military contractor Northrop Grumman, but only Wal-Mart falls below the 8% threshold on health care spending. Wal-Mart has 53 stores and employs about 17,000 people in Maryland.

Opponents claim that the bill will send the message that Maryland is antibusiness. Wal-Mart recently announced plans to build a distribution center on Maryland's Eastern Shore that would employ up to 1,000. The company "strongly suggested" that they might build the center elsewhere if lawmakers passed the health care bill.

This is in fact the second time that this bill passed. When Gov. Ehrlich vetoed it late last year, he invited a senior Wal-Mart executive to sit by his side as he did so. The bill will be a definite issue in this year's campaign.

For its part, Wal-Mart is considering its options, including a lawsuit to challenge the law because it is close to the required 8% threshold. A Wal-Mart spokesperson said that everyone should have access to affordable health insurance but this bill "does nothing to accomplish that goal."

It isn't clear whether Wal-Mart's claim will have any legal merit. Nor is it clear that this is an effective way to deal with health care reform in the absence of a more comprehensive health care system. What is clear is that something had to be done as the number of jobs with health insurance benefits declines and the number of people who end up on state Medicaid increases (unless you're stuck in limbo where you don't have insurance but you're not poor enough for Medicaid).

A wise man once said, "All I'm asking is that we not let the perfect become the enemy of the good." Maybe this is good enough--for now.

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