On Health Care: The Wal-Mart Effect in Washington

As Change.org's own Tim Foley reported a week or so ago, Wal-Mart has recently come out (in a letter to President Obama co-signed by the Center for American Progress and Service Employees International Union) in support of an employer mandate that would require most businesses to provide health care coverage to all of their employees.

This change of heart by the mega-corporation--whose dismal labor practices have been well-documented over the past decade--has been called a major political turning point in the nation's current health care reform debate, and could push the country towards more "universal" coverage for all its residents.

However, since reading about this corporate "coming to God" moment, I can't stop asking myself two important questions: why and at what cost has Wal-Mart chosen to support health care reform?

A report released by the U.S. House of Representatives Education and the Workforce Committee in 2004, titled Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart (pdf), estimated that each Wal-Mart store with more than 200 employees costs U.S. tax-payers $420,750 annually in social services accessed by underpaid employees (i.e. Food Stamps, Medicaid, Heating/Cooling assistance, etc.)  Some have argued that Wal-Mart alone is helping to drive the phenomenon known as the development of the "working poor" by providing such paltry wages and benefits.

Part of Wal-Mart's competitive advantage has always been its ability to dump social service costs onto state and federal government support programs.  (While the company has improved health coverage in recent years, 48 percent of employees continue to either receive health care elsewhere or have none at all.)

So, why would they now turn around and support an initiative that would greatly increase the financial responsibility the company has to provide health care coverage to its employees?

The way that I see it, the decision is based on both a political and business calculation designed to increase Wal-Mart's market share and has relatively nothing to do with the company actually wanting to provide livable working conditions for its employees.

On the business side of the equation, many analysts believe Wal-Mart supports an employer mandate because--being the largest employer in the country and one of the only companies to continue to see a profit in this recession--they believe they will be able to shoulder the increased costs better than their competitors and thus increase their competitive advantage.  Another positive, not to be under-valued, is the great PR Wal-Mart will receive from being on the "good" or "right" side of the health care debate.

On the political side, I think my argument can be best made in the words of Costco CFO Richard Galanti who stated in a recent Wall Street Journal article that Walt-Mart probably realizes they are "going to be dragged into providing coverage one way or another, and might as well drag everyone else in retailing along with them."  If you can't beat 'em, force health care costs down their throats.

The National Retail Federation is now encouraging its 2,500 members (including some of the nation's largest retailers, but not Wal-Mart) to reach out to their Congressmen and Representatives to oppose an employer health care mandate, saying Wal-Mart's support for the provision could lead to "devastating consequences to retailers throughout the country."

I'm left asking myself, is this an "ends justifies the means" type of deal, or should we be horrified--even if it does result in near universal health care--that the nation's largest employer has more pull in Washington than any unified trade group, non-profit organization, Senator or lobbyist?

If only it was on Wal-Mart's agenda to eradicate poverty and hunger, or for there to be global peace.  Imagine what we could accomplish in Washington then...

(Photo credit: ILoveMyPiccolo on Flickr)