Central Pension Fund

An Interesting Wal-Mart Showdown in Maryland

In April of this year, The Washington Post and The Baltimore Sun reported on a fascinating political showdown in Maryland, which required that State’s legislators and Governor to choose between the best interests of Maryland’s taxpayers, or the best interests of Wal-Mart. The results were revealing of the extent to which big business increasingly controls our nation’s political system.

At issue in Maryland was the question that is affecting almost every aspect of our economy, including retirement security: how to pay for the increasing cost of health care in the United States.

The Maryland legislature came up with a modest proposal to alleviate the increasing burden on that State’s taxpayers to pay for the health care costs of the increasing number of its uninsured citizens. The modest proposal was this: the very largest employers in the State, those with more than 10,000 employees, must pay at least 8% of their payroll costs for employee health coverage, or 6% if they are a non-profit company. If a company chooses not to provide the health coverage directly, it must pay the equivalent amount into the State’s Medicaid insurance program.

There are exactly four employers in Maryland that would be affected by this legislation. Only one of the four is not already in compliance with the proposal. Guess who: Wal-Mart.

As more and more employers have abandoned any responsibility for employee health insurance in this country, the burden has fallen on the taxpayers to provide health care for the uninsured. This has produced an increased tax burden in virtually every state.

The Maryland legislature, seeking to provide tax relief, simply said that if you are one of the State’s largest employers you have an obligation to the State’s taxpayers to provide a minimal investment in health care.

Of course Wal-Mart immediately cried foul. In its view, this legislation was an unwarranted governmental intrusion into the free market system, that unfairly singled out one company. And furthermore, Wal-Mart threatened that if the legislation was signed into law, it would cancel its plans to build a large distribution center in Maryland that would provide up to 1,000 jobs. This threat was the equivalent of blackmail: transfer our health care burden to Maryland taxpayers or you will lose 1,000 jobs.

The State’s response to Wal-Mart’s threat was very interesting. Almost uniformly, every Republican legislator, and the state’s Republican Governor, turned their backs on tax relief --- in favor of Wal-Mart relief. The Democrats almost uniformly voted for tax relief, rejecting Wal-Mart’s threat.

The story is not over yet because the legislation, which was passed by the Democrat-controlled legislature, will not be put on the Governor’s desk until the next session of the legislature begins. In the meantime, the Governor has proclaimed he will veto it and protect Wal-Mart.

What the story reveals, of course, is the extent to which big business --- Wal-Mart being the biggest in the United States --- feels free to bully politicians at the expense of taxpayers. Conservative politicians, who regularly criticize “tax and spend” liberals, desert the taxpayer when big business calls. (In the Maryland case, the Governor’s office was quick to declare that his position on this legislation had nothing whatsoever to do with the fundraiser Wal-Mart held for him last Fall.)

Of course, for the members of the International Union of Operating Engineers, who benefit from negotiated health care contributions from their employers, this story is far more ominous. To the extent the largest employer in America justifies taxpayer subsidies of its employees’ health care costs as necessary to be competitive, it invites every other employer in the country to take the same position.

It is expected that legislation similar to Maryland’s will soon be introduced in several other states. Hopefully, in those states, as in Maryland, taxpayers will understand and reject Wal-Mart’s argument, and require their elected representatives to hold all businesses to at least minimal responsibility for maintaining a viable system of health care in our country.

Security in retirement requires both a good pension and adequate health care. The International Union of Operating Engineers continues to demand and protect the membership’s right to both.

April 13, 2005