Re: NBC: Why bills targeting WalMart hurt many low wage/low skilled workers
- From: "Calvin Jones & the 13th Apostle" <Another_Thin_Line@xxxxxxxxx>
- Date: 23 Feb 2006 18:35:51 -0800
like Wal-Mart needs the state & Fed. Gov't help in its efforts to
reduce wages. Who is Alan Reynolds anyway?
SMBalloon wrote:
Townhall.com
Should Wal-Mart reduce wages?
By Alan Reynolds
Feb 23, 2006
Maryland recently voted to force firms with more than 10,000 employees
to devote 8 percent of their payroll expenses to health insurance, or
pay the state the difference. Since the law applied to only one
company, it became known as the "Wal-Mart bill."
Similar bills popped up in 33 states, with the proposed health
insurance mandate escalating to 9 percent of payroll in Oregon and
Florida, 10 percent in Kentucky and 11 percent in Colorado. The first
of such bills have already been rejected in New Hampshire, Indiana,
Washington, West Virginia and Vermont.
The arguments are weak. A Denver Post editorial complains that,
"Wal-Mart pays less than 1 percent of its $265 billion annual sales
for health care." But Wal-Mart's profits in 2004 were just 3.6 percent
of its sales, so 1 percent of sales amounts to 28 percent of earnings.
Others complain that 5 percent of Wal-Mart employees are on Medicaid,
but that is comparable to other large retailers and the national
average of 4 percent. Seattle Times columnist Bruce Ramsey notes that
Washington's Medicaid plan "enrolls children from families of four
with incomes up to $48,000 a year." No private plan can compete with a
tax-financed scheme that costs nothing and pays all medical bills.
The lobbying effort behind these bills comes from competing grocery
store chains such as Giant, Safeway and Kroger, and from labor unions
that carry their baggage. When Kentucky legislators discovered their
Wal-Mart bill would also apply to Kroger, they quickly exempted Kroger
by making the bill apply only to firms employing more than 25,000.
Legislators who take orders (and favors) from Wal-Mart's rivals hope
their meddling will raise Wal-Mart's labor costs and thus render the
company less competitive. But this is a delusion. The whole burden
will be borne by workers and by those forced into less-desirable work
(or none).
Maryland's mandate does not compel Wal-Mart to spend a dollar more on
employee compensation. All it demands is that Wal-Mart pays no more
than 92 percent of compensation as wages (or non-health benefits).
Compelling Wal-Mart employees to accept a larger fraction of their pay
in the form of health insurance rather than cash is a particularly bad
deal for housewives and students, who are usually covered under Dad's
family plan. It is also a bad deal for seniors covered by Medicare.
The law injures actual and potential Wal-Mart employees in Maryland,
particularly housewives, students and seniors seeking relatively easy
part-time work. Mothers want to be home to cook dinner when the kids
get out of school. Students who have low-priced health insurance
through college are not even allowed to work full-time.
A recent paper by Jason Furman (John Kerry's economic policy advisor)
found 81 percent of Wal-Mart employees are eligible for health
insurance, compared with 61 percent for retailing in general. He also
noted that "Wal-Mart is relatively unusual in that it offers health
insurance both to full- and part-time employees. By comparison ...
only 17 percent of firms offer health benefits to part-time workers."
Although Wal-Mart pays 70 percent of the cost of health insurance,
the company cannot possibly induce working homemakers and students to
pay the other 30 percent, because most of them already have health
insurance -- usually through the husband/father. And most of them work
part-time.
Brigitte Madrian of the Wharton School surveyed "The U.S. Health Care
System and Labor Markets" in a new paper for the National Bureau of
Economic Research. She notes that "some individuals have cheaper
insurance from another source (for example, the government or a family
member), and they may place a very low value on having
employer-provided health insurance." These individuals are clearly
injured by any Wal-Mart bill that forces employers to switch the mix
of compensation from wages to health benefits that are worthless for
those already insured.
Madrian found that "married women with health insurance through their
husbands ... are much more likely to be employed in part-time jobs
that typically do not provide health insurance." Much more likely,
that is, if they can find part-time jobs. But because health insurance
is "a fixed cost of employment," she adds, studies show this "give
firms an incentive to economize on the cost of providing health
insurance in two ways. The first is by hiring fewer employers but at
longer weekly hours. ... The second is by hiring fewer but more
productive employees."
Requiring big employers to devote a larger share of paychecks to the
fixed cost of health insurance must give them an incentive to
substitute full-time workers for part-time workers. That is bad news
for those seeking part-time work. Mandating that a higher share of
payroll be devoted to health insurance also gives employers an
incentive to shun future job applicants with labor market
disadvantages -- such as teenagers, elderly seniors, those with little
schooling, those in poor health and those with an imperfect command of
the English language. That is bad news for those at the bottom of the
ladder of opportunity.
The "Wal-Mart bills" are calculated cruelty disguised as kindness.
They should be renamed as what they are -- wage- and job-reduction
bills.
(end of commentary)
.
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