Forbes – 02.27.06:

The chief executive of Wal-Mart Stores beseeched U.S. governors yesterday to help him make healthcare more affordable for his 1.3 million U.S. employees.

“We know our benefits at Wal-Mart Stores are not perfect,” Scott told the National Governors Association.

A survey by Ohio’s Department of Jobs and Family Services recently found that Wal-Mart workers represented one of the state’s biggest groups of employed Medicaid recipients–around 8% of the retail giant’s employees are enrolled, costing the state a reported $11 million, according to The Associated Press.

Wal-Mart has been criticized by labor unions for setting high premiums that keep more than half of its workers from participating in the company health plan.



  1. joshua says:

    Micheal….where did you get that figure? Please show us.
    Do you have any knowledge as to WHY those towns are called *rust belt*? Because they used to have steel as their primary form of employment. Do you have any idea why they aren’t there anymore?
    Because between the industry not modernizing, and the unions insatiable demands they collapsed against much cheaper, more effcient European and Japenese companys.
    I find it interesting that one of the few of the old line steel,copper producers still alive and making money is the one company that wasn’t unionized, Koppers Corp.
    I come from a long line of union activists, but even my uncles and granfather agree, that the unions got to greedy and wiped out many of the biggest employers of the 40’s and 50’s….the steel industry, the railroads and the automakers. Not alone of course, but they made it extreamly difficult for the companies to fight off cheaper foriegn competitors.
    So, please spare me and others the plight of the poor american workers. If you really want to put your money where your mouth is, stop buying products produced abroad, that is also produced here at home. Also, quit using businesses, from the Internet to Joes Tavern that use call centers in India and elsewhere. Don’t buy your kids those 200.00 dollar Nikes and all of their favorite *cool* clothes that are made in other countries and not here in American anymore. Christ, even Levi’s aren’t from America anymore. And whatever you do, throw away all the electronic goods not made in America(cell phones, blackberries etc.)
    Oh, and those little American flags we like to wave, 85% of those are produced in China, and India. Maybe Wal-Mart buys it’s clothes from China because they can’t get them here, since the textile industry was wiped out in the 60’s by cheaper foreign goods.
    Most, if not all of these disasters happened when the pro-union and *common people* Democrats where in power by the way.

  2. joshua says:

    it’s not an ideolgy Eideard. Maybe thats what confuses you. You bet Wal-Mart has been sued, and some have been successful, and rightly so. But that dosen’t mean that the company is evil incarnate. I was going to say that even the U.S.Congress has been accused of, and sued for discrimination and sexual harrassment, but THEY are evil incarnate so blows my point.
    I read the original Ruetuers article about the Wal_Mart insurance thing and went after more info, and found the goverment and other stuff about their pay and benifits comparisions.
    I just get a bit tired, as I’ve said several times before of the bashing of the store chain. They may have hurt some towns by coming in, but as someone said above, no one is forced to buy there. People buy there because they are cheap. And they have a good record of hiring the elderly and the disabled, one of the best. I know 15 or 16 people who have worked for them for many years and they love their jobs.
    They have been trying to open 2 of their super stores(with food stuff) in the bay area, where my family lives for several years. Besides the usual anti people the big money keeping them out are from Safeway and Albertsons grocery chains. Because they know if Wal-Mart is allowed to open the grocery outlets they will have to compete or lose huge amounts of business. The bay area is one of the most overpriced areas in the country for all items, but food is just outragous. Not everyone in the bay area makes 120,000.00 dollars a year in high tech. If Wal_Mart is allowed to open they will clean clocks, especially among the working poor(lower to middle, middle class here) and the Hispanics who already have to work 2 or more jobs just to pay rent.

  3. moss says:

    Smith — actually the adverts should be breaking right around now for Wal-Mart in-store clinics. Part of their legal strategy to get the clinics licensed is that this will bring minimal medical care “closer” to their employees.

    The surveys for their marketing plan were completed about a month ago. The emphasis will be on “minimal” and “basic” and cheap. Mostly run by nurse-practitioners.

    But, then, you shouldn’t give the surveys that WalMart paid for any credence. They were performed by some of the same people who determined that Americans finally see that Bush is a dunce.

  4. BOB G says:

    Some folks just can not handle prosperity!

  5. Mike says:

    Businesses have no obligation to provide healthcare to their workers, beyond that it helps provide them with a more healthy and productive workforce to produce more revenues for their shareholders.

  6. T.C. Moore says:

    Businesses have no obligation to provide healthcare to their workers

    Mike is right on this one. Healthcare packages are part of an overall compensation package for employees. Unions did not win healthcare like Fusion says in #21. It was widely introduced as a benefit during WWII, because the government was regulating wages, and employers had to differenciate themselves to attract workers.

    60 years later we still live with this market distortion, instead of everyone’s pocketbook really feeling how expensive healthcare is. That might lead to some different consumer behavior and different pressures on the system to lower costs. It’s not that simple, and yet maybe it is a start. (There are other ways to provide comprehensive healthcare, besides a nationalized one-payer system. See Singapore and their equivalent of Health Savings Accounts plus catastrophic insurance.)

    Also, Walmart does not screw it’s employees out of healthcare, or receive a healthcare subsidy from the state. It provides part-time, low skill jobs that pay the market rate. Government then provides healthcare to low income people as a social benefit. If these people could get a better job than included healthcare, surely they would. What are the chances they’d get that healthcare for a similar job at another employer? Would they rather have healthcare and lower pay, or take the cash and go to Medicaid for healthcare?

    Costco jobs are actually a cut above Walmart, and employees are compensated for their higher productivity. Walmart has chosen a strategy of staffing their stores with part-time, low paid, lower skilled employees, but creates more jobs overall. You could regulate them away, and force them to offer “Costco jobs”, but that would take away some opportunities for some people. It’s a struggle to get along with a Wal-mart job, but wouldn’t it be a struggle otherwise? Walmart employees must feel it’s a better deal than the alternative.

  7. Mr. Fusion says:

    T.C.

    You are quite correct. I’m not sure that one could say “Costgo jobs are a cut above Wal-Mart”, but I don’t enough about Costgo. Though I understand that they compete head to head with Sam’s Club, which is owned by Wal-Mart and has the same pay scale, and earn a higher profit. Even with the higher wages and benefits.

    You are correct about healthcare and WWII. After WW II, however, companies started dropping healthcare benefits. It wasn’t until the mid to late 1950s that unions started demanding the benefits be reinstated into contracts. Or did you forget the Steelworkers strike in 1957. Healthcare was a major demand. The other major unions followed the Steelworkers shortly after that.

    Again, I believe you are correct about Wal-Mart not being LEGALLY required to give healthcare benefits. There is a MORAL obligation to though. Wal-Mart has set itself up as a good corporate citizen. They advertise their good deeds. They crave recognition of their charity. It is the hypocrisy of Wal-Mart’s stance that has offended so many people. They have even touted they are making their healthcare package better.

    Wal-Mart likes to state how well they treat their employees. Yet as I noted above, in over 30 states Wal-Mart has been sued for overtime violations. Then there is the female discrimination suit(Wal-Mart lost). Locking the employees in at night(fire violations).

    While strictly true, Wal-Mart doesn’t owe them and the employees should be grateful they even have a job. It is ironic that almost all (if not all) textile mills have closed in America, partly because Wal-Mart has been selling only foreign made textiles. So these people should be grateful that Wal-Mart gives them a substandard job when they contributed to the elimination of their old better paying job.

    As for using a lot of part time employees, again that is true. It is even true by design, but not for the reason Wal-Mart will tell you. This is the only company I am aware of that considers a 34 hr week as full time. Yet they still like to keep the part-time people. Why? Because it keeps their employees in line when they know their hours can be cut at any time, without reason or notice. As for the alternative you mention? Ya, isn’t that a great hammer to keep ’em in line with unemployment high and good jobs hard to find.

    Isn’t it great to say I stand for the American way !!!

  8. Mike says:

    Mandatory over-time laws do a lot to contribute to these 30 hour a week jobs.

    If an employer has a requirement for 100 hrs of low-wage unskilled labor, it might be cheaper for them to hire three people to work 33 hrs a week instead of two who can work 50 hrs.

    An additional side-effect of this is that the three people working 33 hrs, probably wind up juggling a second job to make up the pay they could have had if they were allowed to work 50 hrs at their regular salary.

  9. T.C. Moore says:

    On the other hand, I’d like to make this point about Wal-mart.

    Alex in post #9 alludes to some reporting done by a FRONTLINE episode on Wal-mart (“Is Walmart good for America?”). It details how Wal-mart has so much purchasing power, they can pursuade and almost force suppliers to move production overseas (i.e. China), or retaliate against suppliers that don’t toe their line on price reductions (Rubbermaid).

    To the free marketers here, I now think this is true and a distortion of the market. Especially given some recent reading I did in “Culture and Prosperity” by John Kay (Awesome book.)

    In a perfectly competitive market, products are commodities and there are enough buyers and sellers that neither have control over the price. For the most part, most items at Wal-mart and many retailers are essentially commodities (spatulas, pans) because there are so many potential substitutes. [This is actually irrelevant to my argument, but I think its interesting.]

    Yet Wal-mart is so huge and purchases so much, they have overwhelming influence in the purchase of many of these goods. The wholesale market in these consumer items becomes like an oligopsony – a market with limited number of buyers: namely Walmart and everyone else. Not technically an oligopsony, but Walmart’s decision whether or not to buy can greatly affect the suppliers production decisions, and so they have strategic influence over supplies and prices.

    And they use this power to enforce ever falling prices. They may switch suppliers over just a 1 penny difference in price. And if they don’t get their way, they may cut off a huge national brand like Rubbermaid, which all of a sudden loses 30-40% of its sales. That’s tough for any company to deal with, especially one with a conscience.

    Jobs are moving overseas no matter what. There’s not much we can do to keep low skill manufacturing jobs here in the U.S.
    But we don’t need Wal-mart exerting undue influence on the market and speeding things up. You may say “they’re doing us a favor”, but it doesn’t seem kosher that one company and its purchasing managers have such a huge influence over prices and the cost structure of its suppliers.

    Prices will fall eventually. Manufacturers face facts on their own every day and move production overseas. Why should one company be speeding that up?

  10. Mr. Fusion says:

    oligopsony

    Ya just gotta love that word. I still remember it being on an Economics exam a few eons ago.

  11. Alex says:

    If Wal-Mart was losing money, you could argue that regulations are hurting its business. On the contrary, Wal-Mart is taking advantage of the law to make a bundle of money. If Wal-Mart operated fairly, by paying its employees a fair wage with benefits, I would not have a beef with them. Instead they have a mostly part time workforce that receives little or no benefits. Wla-Mart should use some of that profit and share it with the people who make it possible for Wal-Mart to make such profits.

  12. Mike says:

    Alex,
    If the employees believe that their wages are unfair, they can work somewhere else; and then WalMart will have to adjust accordingly to be more attractive to employees. This is how competition in the labor market works.

    As long as people are willing to work part-time for $7 an hour, there is no incentive for any employer to pay more.

  13. Alex says:

    If the only job in town is a part time job at Wal-Mart, what are you supposed to do? Once all our jobs are outsourced to China and India, we won’t have a choice.

    Just because you are paranoid it doesn’t mean that people aren’t trying to kill you. Wal-Mart employees are right, they are being exploited. When a Wal-Mart opens up smaller shops usually close or go bankrupt. Where do those people go get jobs? You think they have a lot of options? If these people had better jobs available, they would be working elsewhere. Its easy to make these arguments when you don’t have to survive on $7.00/hr with no benefits. In order to pull oneself by one’s bootsraps, one has to have boots. Wal-Mart should at least provide their employees with the boots they have earned.

    I don’t understand how it is ok to reduce welfare for families while increasing it for corporations; especially for ones that make as much money as Wal-Mart. The government should not be helping subsidize Wal-Mart’s profits or it’s employees benefits.

  14. Mike says:

    If the local consumers didn’t abandon the local small businesses to shop at Wal-Mart, then we wouldn’t hear about so many cases of “Mom and Pop” store closing would we? People often create the circumstances they find themselves in; and retail price isn’t the sole factor to make purchasing decisions with.

    And how exactly is the government subsidizing Wal-Mart’s employee benefits? I will assume you are talking about healthcare here.

    As has been stated above, Wal-Mart (or any company for that matter) has no obligation to provide any health benefits to anybody. The reasons they do include: increasing productivity from healthier workers, and providing incentives to attract more qualified workers. That the government chooses to create inefficient, bureaucratically run state healthcare programs has no relation with the employee benefits Wal-Mart gives to its employees.

    Maybe, instead of complaining about a company not giving unskilled part-time labor free healthcare benefits, we should spend our time determining why healthcare is so expensive that people cannot afford to obtain it themselves (because ultimately we are all responsible for our own health). Excessive regulation, inefficient and expensive approval processes, and out-of-control litigation have all helped to make our healthcare system the mess that it is today.

  15. meetsy says:

    why are some of you actually defending the crap peddler called Walmart. It has nothing to offer anyone, except lots of cheap, poorly made, morally bankrupt trash. It’s all about MORE MORE MORE for ME ME ME, short sighted thinking, isn’t it? As long as you can have your fat-inducing food and cheap Walmart trinkets, you’ll be happy. Is that it?
    Wake up folks. Walmart is a corporation that cares less about it’s workers than your credit card company cares about your finances. We are a nation of complacent idiots!

  16. Mike says:

    Mr Fusion,
    The reason why Wal-Mart considers 34 hrs (I don’t know that number is correct or not) to be full-time is so you can work less than 40 hrs and still qualify for the extra benefits that full-time workers receive. Otherwise they could just let somebody work 39 hrs (so they don’t risk having to pay over-time), call them part-time, and just give them the very limited benefits that go along with it.

    So this is actually to the employee’s benefit. Nothing onerous about it.

  17. Alex says:

    The united states spends more and gets less back in healthcare than any other industrialized nation. The problem is not excessive regulation, or litigation the problem is that the health care in the US is extremely inefficient. For example, why are the same drugs that are affordable in Canada are very expensive in the states? Don’t buy that excuse about the R&D costs. I suppose only the US pays those costs. We are being ripped off. We need universal insurance and a single payer system instead of the disaster we have.

  18. Greg Mc says:

    Wow – two days spent beating on big, bad WalMart. I don’t like them either, don’t shop there and generally don’t like the low-budget atmosphere that the stores seem to radiate. In most cases though, they’re only doing things that every other business does; they’re just so large that the aggregate looks horrendous.

    Fundamentally, the retailer is not the problem. The problem is the CONSUMER. If people were not willing to abandon their local small business to save a dime at WalMart, the mom-and-pops wouldn’t go out of business. If it wasn’t WalMart, it would be someone else (I still remember arguments about Kmart in years gone by).

    It may be an ugly metaphore, but I see WalMart as the crack cocaine of the retail world. People are so addicted to bargain hunting and saving a dime that they’re willing to sell out the local economy to support their habit. If people truly hated WalMart and what it represents, they would go back to the small market world. But they won’t. If you could eliminate demand, you will eliminate the supply. As long as people line up with money in their hands, some company (pusher) will step up to take it.

  19. david says:

    What blog has the Dvorak Uncensored record for most comments posted?

  20. site admin says:

    the most comments goes to this post – GHOST-CAR – nothing else really comes close. It’s currently at 459 and still generating comments. Hunter Thompson’s obit is number two.

  21. david says:

    John, I just renewed my subscription recently to PC Magazine. Tell the publisher it was only because of you. Seriously.

    Thanks for GHOST CAR. And your blog.

    …my jaw is starting to hurt…

  22. Mr. Fusion says:

    Mike

    You have to be reptilian or something. You are just too cold blooded to be human.

    While the “full” work week at Wal-Mart is 34 hours, less then half of the employees do that many. It is easy to say “go find another job”, but not to easy to do. The majority of Wal-Mart workers are not there to do something during retirement. They need a job. Few have reliable transportation and so must work close to public transportation or within walking distance. Few have college education and thus have fewer choices. Many have spent many years outside the workforce and through divorce are doing the best they can find. Others are not as bright as you so they are not as impressive during interviews. And not every McDonalds or Taco Bell is hiring either.

    Although allowed to happen under Clinton, outsourcing has steamrolled during the Bush years. And Bush has not done anything to slow it, let alone stop it. Each new job being created today pays on average $9,000 LESS then the jobs that were lost to outsourcing and Bush conjobomics. As these are service jobs, they only spread wealth. The manufacturing jobs leaving the country created wealth. When wealth is created in an economy everyone is stronger. This lack of wealth has created the largest public debt and trade deficits in history. We don’t create enough wealth to cover this deficit anymore. We are using up our banked money. Too soon, it will be gone.

    The majority of drug research takes place in public institutions. When anything shows some promise then the drug companies get involved. Most of the western world has much cheaper drugs then the US. A heck of a lot of R&D takes place outside the US too. No drug company in Canada is complaining they don’t earn enough money. The R&D costs are factored into the price they are allowed to sell their products for. Only in America do the drug companies gouge so much. Their return on investment is the highest of all manufacturing sectors.

  23. Me says:

    I live in a relatively small town (16000) and a few years ago a survey was done that showed 80% of the local population had to leave town at least once a month to shop because they couldn’t find what they needed here. In the space of 18 months we gained a Target, Wal-Mart Supercenter and Menards.

    You know what, now people come here to shop. That traffic has spawned a number of other construction projects for new businesses. Also, the quality of the prodcuts in the other grocery stores improved to compete. Yeah a couple of mom&pop’s have folded but overall it’s been very positive.


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