Making Wal-Mart Pay

Lance Burri

Wal-Mart: the Sith Lord of unbridled capitalism. Modern-day barbarians, burning and looting their way through America. The company everyone loves to hate. Everyone, that is, except their stockholders.

Kicking at Wal-Mart is becoming a national pastime. They are the poster child of predatory capitalism. They move in, undercut the competition, and drive the competition out. It happened in my own home town: a downtown hardware store and the east-side grocery store both closed after Wal-Mart moved in.

Of course, that east side location is home to a new grocery store now. And the downtown is flourishing with small shops. Not sure how that fits with the I-hate-Wal-Mart narrative.

There’s a new reason to hate Wal-Mart these days: they cost us taxpayers money, because they don’t provide health insurance for their low-paid employees. This forces those employees onto state-sponsored, taxpayer-funded health care.

An excerpt from a recent Milwaukee Journal Sentinel editorial:

“Walmartwatch.com estimates that U.S. taxpayers pay $1.5 billion subsidizing Wal-Mart Medicaid costs, 15% of Wal-Mart's $10 billion in profits last year.

Now we are all for free enterprise, but some companies think this means a free ride on the people's dime.”

For the sake of discussion, we’ll take those numbers at face value.

Note the rhetorical ju-jitsu: a free-spending government creates, then improves taxpayer-funded health care for the poor. Naturally, the poor use it. Costs grow. Taxpayers balk. It’s Wal-Mart’s fault.

Doesn’t Wal-Mart pay taxes? Yes, in fact they do. Like Jane Fonda and Michael Moore, they’re paying exactly the share of Medicaid that the law requires.

And who, precisely, is getting the “free ride?” It’s not free, exactly – heavily subsidized describes it better – but it’s the poor who are benefiting. Medicaid and BadgerCare offer health care subsidies to the poor. They aren’t “Wal-Mart Medicaid costs” any more than they’re my Medicaid costs.

I know. It’s hateful and selfish of me to point that out.

And, the anti-Wal-Martists will say, it’s beside the point: if Wal-Mart used some of their incredible profits to pay better wages, or to provide health insurance, the taxpayers wouldn’t be paying so much.

Surely, a company as successful as Wal-Mart can afford health coverage. Arguing with that means you favor greed and anyway, come on, they made $10 billion last year. How much is enough?

An interesting philosophical question. A question the government won’t help to answer, I hope.

It is funny, though: so much profit, yet no one’s complaining that Wal-Mart is overcharging its customers.

I’ve had a lot of jobs in my life. Fast food, convenience store, restaurant, landscaping. Low-level, low-pay, low-skill kinds of jobs. Wal-Mart kinds of jobs: cashiering, stocking, bringing back the shopping carts and buffing the floor at 2 a.m.

When did jobs like that start offering health care packages? They didn’t. They never have.

But wait: Wal-Mart does. They’ll pay 2/3 the cost of health insurance after 6 months, for full-time employees, and after 2 years, for part-timers.

That’s a dirty little fact that doesn’t play well with the theme of the day, I’m afraid.

Here’s another: corporations pay their costs with the prices they charge their customers. That’s true for multinational conglomerates right down to the Mom & Pop on the corner. The rule is: make enough of a profit to justify your existence, or forgo said existence.

Put another way: if costs go up, so will prices.

How many people bought a bag of charcoal at Wal-Mart this weekend? Let’s say it was 5 million. Now let’s say the state taxes Wal-Mart more for Medicaid, or forces Wal-Mart to provide health insurance.

Wal-Mart has to protect its profit margin, thus its stock price. So to cover the additional cost, they raise the price of charcoal by 5 cents a bag.

That means Wal-Mart customers pay $250,000 more for charcoal than they would have otherwise. That’s $250,000 that isn’t spent on hot dogs, movies, gas, flowers, newspapers, or beach towels. A quarter million dollars in lost economic activity.

But at least the taxpayers won’t be paying for it.

Ah, but we will. Forcing private companies to offer better benefits, even if it puts Medicaid into the black, won’t save the taxpayers a single dime. Face it: government can always find a way to spend money. Force those costs onto private companies, and government will spend the money they “save” on something else, plain and simple. We pay the same in taxes, plus we pay more at the store.

We pay more. That’s the government solution for everything.


Lance Burri blogs with Wisconsin's best at www.BadgerBlogAlliance.blogspot.com. His biweekly column is archived at his website, www.LanceBurri.blogspot.com.