Business exists to provide a product and or service. In general, they exist to make money. When something happens that negatively affects their ability to make money, the businesses make adjustments.
In the case of WalMart, they have delayed creating a distribution center in Maryland because Maryland politicians, supported by Giant Foods, a WalMart competitor, decided to create a law that affects only Giant.
The politicians determined how much WalMart was spending on health insurance and then decided to pluck a percentage out of the air, a percentage that was more than WalMart spends, and made it a basis of a bill. The bill says that "big employers" must spend at least 8% of its payroll for the health care costs of their employees, or give the difference to Maryland or pay a fine. Gov. Ehrlich vetoed the bill as being anti-business. And he is right. It is anti-business. Maryland, which has an anti-business reputation anyway, made the national news because of this bill.
Additionally, other states are looking at the outcome of this to determine if they are going to do the same thing.
This is stupid.
The WalMart distribution center would be located in a county that has the second highest unemployment rate in the state. If the state legislation over rides the veto, potentially 800 jobs would be lost.
And, the real heart of the matter, for some anyway, is that WalMart is taking a big bite out of the competition. Giant didn't care about WalMart until WalMart started selling food. That's when Giant went whining to the politicians for help. The politicians found an "out" using health care and there it was, a serious dent to Giant's competitor.
Oh, and it should be noted that after the bill was passed and the legislative session ended, Giant announced it was moving its administration offices to another state and closing some of its warehouse facilities.
Now, compare that to this news about Hyundai.
Hyundai's non-unionized plant, for example, will pay most of its 2,000 employees a starting wage of $14.46 an hour, far below the $20-plus hourly wages for comparable United Auto Workers members in Michigan. The Hyundai workers also will have to contribute $14.54 every two weeks for health coverage, which is free to employees under UAW contracts.There is no pension available to the Hyundai workforce; instead, employees have a 401(k) plan.
By contrast, GM, Ford and the Chrysler Group of DaimlerChrysler AG carry more than 800,000 retirees and family members on their pension rolls at a total cost of $11 billion per year. The companies estimate that about $1,500 of the cost of building each vehicle goes toward health care -- several times what Hyundai pays.
That's part of the reason Hyundai can offer a laundry list of safety features on the new Sonata, quality that ranks near the top of the auto industry and a price that undercuts competitors at Honda and Toyota -- and still make more profit than GM.
Maryland politicians tried to get many of the foreign companies to build plants in the state, but all efforts failed. One reason for the failure is the anti-business reputation of the state. A second reason is that Maryland is a strong union state while states further south are "right to work" states.
If the legislation overrides the veto and makes it law, how long will it be before the politicians decide to raise the 8% level? How long will it be before the politicians decide to lower the number of employees a company has? How long before the number of employees level starts to impact small business? And how long will it take for businesses to pack up and leave the state of Maryland because of the law?
When that happens, jobs will be lost, unemployment levels will rise, and who will be the most impacted? The lower economic levels and the middle class.
The Democratic politicians in Maryland did this to show support for their union money spigots. They didn't do this for people lacking health care. WalMart is used by the poor and middle classes because of the lower prices. If WalMart has to raise its prices in Maryland, who are the people who get hurt?
Not to mention health care costs have to go up to compensate for people who had to wait til they were able to die to get health care rather than when their conditions were more curable. I'm sure businesses could make more money if they used slave labor, but would you support a repeal of laws against it?
Posted by: animeg3282 at May 21, 2005 11:05 PMOops, about to die.
Posted by: animeg3282 at May 21, 2005 11:06 PMEd, I've said this before. What I would like to see here is a substantive argument against the bill...rather than "this is stupid." As it stands your argument that 800 jobs would be lost doesn't seem to carry much weight given that the health care costs that the state is forced to bear because WalMart won't cover their employees are far greater than the benefits from paying 800 workers.
There is another problem here. This bill wasn't written for Giant. Giant happened to support a bill drafted against a competitor, but this was a side benefit. This bill was crafted in order to get WalMart to do what every other corporation of its size is expected to do--pay for the health benefits of their employees.
Let's take your argument a step further. Why should our employers offer reasonable health care benefits? Shouldn't we get health insurance through the open market rather than having our employer's assistance? Check the costs of a family getting a PPO/HMO plan and compare that with what your employer offers.
And your argument of GM's additional cost of $1500 per car because of health care falls flat when nearly every car manufacturer (including Hyundai) offers incentives to buyers for nearly this amount or more. Obviously car manufacturers could lower the overall cost of every car if they didn't offer these incentives to buyers.
To take your argument to the extreme, employers could save millions by cutting all employee benefits and giving only those prescribed by law (1/2 hour break after four hours). Then we could be as competitive as China.
Posted by: elg at May 22, 2005 08:33 AMBusiness exists to provide a product and or service. In general, they exist to make money. When something happens that negatively affects their ability to make money, the businesses make adjustments.
the problem with neoliberal capitalism is that the capitalists have convinced everyone involved (with power) that profit is the be-all be all. Especially in the US, they have managed to make a strong case that they should have no social responsibility at all.
imagine that. a business - that needs a space to operate, that needs to employ people in order to put the product out, that needs laws to be written by people in order to exist, that needs people to be customers to purchase its products (!) - feels that it should have no social responsibility to people BECAUSE THEY'RE TRYING TO MAKE A PROFIT.
EB, your pro-business arguments make me uneasy because you seem to have drunk the kool-aid. why shouldn't businesses be responsible for the welfare of their workers?
i often hear arguments saying that socialized medicine/welfare is un-american. it's really hard to believe in democratic principles, however, when you're struggling to make ends meet or pay medical bills. All the while you struggle, the people who talk democracy the loudest are the ones who pay the least for it/benefit the most from it - just like the founding fathers did so many years ago.
i know this argument is fragmented, but my point is that businesses must be held to honor social welfare commitments. if not, we'll be feudal sooner than we like.
Posted by: bemused at May 22, 2005 06:22 PMTime is going to be tight for me, especially after Tuesday. I'll do the best I can do.
doesn't seem to carry much weight given that the health care costs that the state is forced to bear because WalMart won't cover their employees are far greater than the benefits from paying 800 workers.
Here are my questions that address your point:
1. How many people who work for WalMart are part-time? Of those how many want to be full-time but WalMart is not doing it? How many part time workers want health care coverage? How may of them are eligible to get the coverage (are there minimum number of hours worked requirements)?
2. How much does health care cost for singles, married couples, and married couples with no kids? My health care is ~ $450/month. There are "admin" workers I know who can't afford that cost.
3. How many of the workers have coverage because they get it from their spouses or parents or else where?
4. Why 8%? Why not 10%? 15%? 20%? At what point is "enough"?
5. How much is the state of Maryland picking up because some WalMart workers can't get health insurance?
When these can be addressed, and to date the politicians sure aren't doing it, then I can take the bill more seriously. Right now, it's just more anti-WalMart garbage pushed by unions and WalMart competition.
Posted by: DarkStar at May 22, 2005 07:18 PMWhile all of the questions you ask are fair, only two are pertinent. The state of Maryland is spending approximately 350 million on health care for the uninsured. I don't know how many uninsured people there ARE in Maryland, but I imagine that information isn't that hard to find. Divide 350 mill by that number...then multiply that number by 15,000 (which I believe is the number of employees that WalMart has that are NOT covered) and you'll have it. From what I understand WalMart offers benefits BUT STRONGLY URGES THEIR EMPLOYEES TO GO ON PUBLIC ASSISTANCE BECAUSE THEIR BENEFITS ARE BETTER AND LESS EXPENSIVE.
Now when we're talking about these issues just off the cuff, then you're absolutely right--politicians should make sure their constituencies know what's what. But as far as I'm concerned, we should be working on a different standard at Vision Circle. You want to argue that legislation is "stupid"? Fine.
Do the research yourself to study the other side. Don't ask politicians to do what shouldn't take you more than a fifteen minute google search to find.
Posted by: Lester Spence at May 22, 2005 08:51 PMDon't ask politicians to do what shouldn't take you more than a fifteen minute google search to find.
The problem is, you have LAWMAKERS making LAWS that they have no clue about nor the potential impact nor the numbers behind what they support. And, when they are put on the spot, they spout, what I can term nothing else but nonsense and show no degree of understanding business and how it operates.
I asked my district representative's office about the bill and was not impressed with the lack of business knowledge and health care costs knowlege.
Above, I gave the cost of what I pay for health insurance.
From the link:
http://www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/facts_and_figures/walmartonbenefits.cfm
Employees must pay $218 per month for family health care coverage from Wal-Mart.
That's less than what I pay. I also have looked into paying my own health costs, directly, for a number of reasons, one being I tend to job hop and I want to have medical care consistancy. Paying for health care for my family, the cost would be slightly higher than what I pay now. Either way, both are more than what WalMart workers pay, if that link is correct. (When paying for my own coverage, it is still group insurance).
More than 60 percent of Wal-Mart employees--600,000 people--are forced to get health insurance coverage from the government or through spouses’ plans—or live without any health insurance.
1. They don't break down the percentage of how many are "forced" to get it from government, spouse or live without.
2. Of those who live without, they don't give a breakdown of how many do so by choice.
3. "Forced" to get health care from their spouse? Uhhh.... My wife and I made a decision who had the best health coverage and that was the one we went with. If they are still covered, so what?
Wal-Mart has increased the premium cost for workers by over 200% since 1993
That's a lot, but I think that's better than the averge.
That link was from a union backed web site.
Here is another link:
http://reclaimdemocracy.org/walmart/health_insurance_program.php
Detractors point out that Wal-Mart covers only 48 percent of its employees. But according to the Employee Benefit Research Institute, in the retail sector overall only 45 percent of workers receive health coverage from their own employer. Still, why do more than half of Wal-Mart's employees opt out of the company's health insurance?
For one thing, part-time workers who make up 25 percent of Wal-Mart's workforce are not eligible until after two years. Then there is the cost. Wal-Mart pays 67 percent of the cost of health insurance for employees, about equal to the retail industry average of 68 percent for family coverage—but, for individual health insurance, far below the 77 percent that retailers contribute on average.
Many employees opt out because they are otherwise covered. The company says that two-thirds of its employees are second-income providers, college students, and senior citizens. Many of these have health insurance through their spouse's employer, parent's plan, or retirement and Medicare programs. Thus about 40 percent of the company's workers are covered apart from Wal-Mart's plan.
Thank you!!!! If you could, this would be excellent as its own entry. I'm pressed for time as well. I'll respond when I can.
Posted by: Lester Spence at May 22, 2005 11:48 PM
Have you ever talked to any Wal-Mart workers about Health care? Wal-Mart offers care to it's workers but the price is so high that most workers cannot afford it.
Most of the working poor on public assistance work for Wal=Mart. It's become a joke in some states. That's why many states are trying to force Wal-mart to give more health benefits.
Nothing wrong with capitalism but what Wal-Mart is doing is called economic exploitation.
Posted by: princec at May 21, 2005 10:55 PM