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Picking on Wal-Mart more about politics than policy

The Maryland Legislature recently passed a law requiring that any company with 10,000 or more employees spend 8% of its payroll on healthcare, or must give the difference to the state. Maryland has exactly one employer with 10,000 employees — Wal-Mart. While I doubt they would agree, Wal-Mart might feel honored to have a state legislature pass a law just for them.

The action of the Maryland Legislature is one more step down the road to socialism and sets a dangerous precedent for other states. Even the Washington Post described the new law as, “a legislative mugging masquerading as an act of benevolent social engineering.”

OK, what’s the beef with Wal-Mart? Critics say that Wal-Mart’s pay and medical benefits are so low that some employees are eligible for Medicaid. Since Medicaid costs taxpayer dollars, Wal-Mart should furnish health insurance benefits or pay the state. Echoes of the tobacco industry lawsuit are ringing in the halls of Maryland’s capital.

Mississippians should applaud the pioneering efforts of our former attorney general Mike Moore for paving the way for Marylanders to mount their attack on Wal-Mart.

Though I hardly ever shop at Wal-Mart (or anywhere else, for that matter) many, many people do. Consumers benefit mightily from Wal-Mart’s low prices. In fact, some studies indicate that retail prices come down 5% to 8% when Wal-Mart comes to town. Consumers save roughly $16-billion annually as a result of Wal-Mart’s lower prices.

Now, let’s take a quiz here. Where will Wal-Mart get the money to pay the additional costs resulting from the Maryland law? If you said from raising prices and charging their customers more, you are correct.

Thus, Maryland is fleecing their own constituents without risking blame for higher taxes. Heck of a deal!

Organizing the politicos

Why Maryland? Why Wal-Mart? Well, it seems that having failed to sign up a single one of the 3,250 U.S.-located Wal-Mart stores, organized labor decided to take another approach. In a recent Washington Post column, George Will says that Maryland was a natural place to begin because it has lopsided Democratic majorities in both houses of its Legislature. Since they couldn’t organize Wal-Mart, they organized the Maryland Legislature. Like a bad relative, you throw them out the front door and they sneak back in through the back door.

Contrary to popular opinion, Will says that 86% of Wal-Mart employees have health insurance, more than half through the company. And, Wal-Mart 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.

Tale of two companies

To help us see where this might be going, let’s take a look at a tale of two companies. Wal-Mart is the number one employer in America today. General Motors held that title back in the 1970s. Wal-Mart is growing by leaps and bounds while GM is steadily laying off huge chunks of its workforce. What happened to General Motors over the last three decades?

Emerging foreign competition has made life miserable for GM with its United Auto Workers mandated pay and fringe benefit package. In fact, union demands have just about destroyed GM and most of the other U.S. automakers. By contrast, Wal-Mart is opening a new American store every three days. One company adjusted to the changing economy and the other didn’t. Will state legislatures do for Wal-Mart what the UAW did for the automobile industry? They certainly will if they can. Nature abhors a vacuum and liberals abhor a free-enterprise success story.

Before leaving the Wal-Mart versus General Motors comparison I’d like to delve into their corporate cultures a little bit. In a recent U.S.News & World Report column, Michael Barone makes some interesting distinctions in personnel management practices between the two companies.

Wal-Mart hires a lot of part-time people whereas GM’s union insists that all employees be full-time and receive full benefits. Well, not all workers want to work full-time and Wal-Mart gives them a choice. Further, Wal-Mart promotes from within. You can work your way up from the store floor to management ranks at Wal-Mart; however, at GM, the United Auto Workers union rules discourage crossover between labor and management.

Troubling trend

Increasingly, I see a trend of cowardice in local government that is troubling to me.

ere’s the deal. Local governments are screaming to high heaven over the prospect of eliminating the sales tax on groceries. Without sales tax they’ll have to raise property taxes. So what? Here’s the political hook. Lots of folks who buy groceries don’t bother to vote whereas an unusually high percentage of property owners do vote. Get my drift? This action by the Maryland Legislature is nothing more than a tax increase without the necessity of facing the voters.

So, here’s the $64,000 question — if Wal-Mart is such a bad place to work why do new store openings draw hordes of job applicants?

Thought for the Moment

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. — Winston Churchill

Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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