Wal-Mart Wins, Workers Lose

Alexandra Walker

May 20, 2005

Demonstrating the payoff of well-placed campaign contributions, Maryland's governor just vetoed a bill that would have forced Wal-Mart—a campaign contributor—to give its employees better health benefits. By passing the Fair Share Health Care Act, the Maryland legislature wanted companies with 100,000 employees or more to boost spending on health care in the name of responsible corporate behavior. Look, folks, if capitalism is what Americans want, then the power of elected politicians like those in Maryland combined with the power of organized workers must be employed to tame it. Unfortunately, Gov. Robert Erhlich stopped this principled legislation in its tracks in order to side with a campaign contributor.

Wal-Mart is one of only two employers in Maryland that would have been affected by the law. The other, John Hopkins University, already exceeds the health benefits the law required. The Fair Share Health Care Act would have required Wal-Mart to spend at least 8 percent of its payroll on health benefits. In the course of opposing the bill, Wal-Mart claimed the bill was being pushed solely to benefit one of its competitors in the state, Giant Food. The thing that's interesting about Wal-Mart fingering Giant—which, not surprisingly, endorsed the bill— is that the company now devotes 20 percent of its payroll expenses to health care. Does Wal-Mart really want to beg comparisons with that kind of good corporate behavior?

Of course, those opposing the Maryland bill invoked the usual free market fallacies to demonize the bill as counter to principles of "competitiveness." Writing recently for TomPaine.com, Beth Shulman made short shrift of Wal-Mart's excuses for not treating employees fairly:

Second, Scott argues that if Wal-Mart paid better wages and benefits, it would reduce its profits. The implication is that this would damage the company’s position with investors. But it is the negative publicity about Wal-Mart’s treatment of workers—paying its workers poverty-level wages and providing few benefits; harassing and firing workers for trying to organize a union; sex discrimination allegations resulting in the largest class-action sex discrimination lawsuit in history; and mistreating immigrant workers— that is contributing to Wall Street’s declining perception of Wal-Mart’s potential.  While Wal-Mart’s profits nearly doubled, from six to 10 billion dollars since 2001, its stock declined by nearly 10 percent. This is worse than the overall market averages and far worse than Wal-Mart’s competitors, whose stock prices climbed during the same period.  There is no reason to believe the public pressure to change Wal-Mart’s labor practices will lessen and the negative publicity will slow. Indeed, more groups are challenging Wal-Mart and its low-road policies.

But equally important, Wal-Mart does not just have an obligation to its shareholders. It has some responsibility to its workers and to the communities in which it operates. By treating workers so poorly, it is abandoning its basic corporate responsibilities.

The Maryland legislature deserves big props for passing such progressive legislation. Too bad it wasn't able to overcome the enormous influence of money in politics to make its good idea a reality. To keep tabs on this issue as it evolves and other battles involving Wal-Mart around the country, visit WalMartWatch .

UPDATE: Sirotablog has a nice take on the photo of the governor announcing the veto.