Wednesday, July 1, 2009

What's Wal-Mart's Angle?

Neil Trautwein, of the National Retail Federation, is "flabbergasted" by Wal-Mart's recent letter to President Obama, voicing support for mandated employer health care. (interview here) How could Wal-Mart, leader in low prices, do such a thing?

A few suggestions:
1) (interviewer) Wal-Mart is in cahoots with SEIU and the Obama Administration. Quid pro quo is that if Wal-Mart helps health care reform, the others will soften on unionization.

2) (Neil Trautwein) Wal-Mart could use supply chain to get competitive advantage in health care costs, but if not, the move at least improves public relations.

3) (The Distributed Republic) Wal-Mart is obviously signing onto this because a mandated health care regulation would stifle small businesses.

4) (The Hill) The only sentence in the letter that actually mentions the mandate states: “We are for a mandate that is fair and broad in its coverage, but any alternative to an employer mandate should not create barriers to hiring entry level employees,” The Senate Finance Committee is considering a policy requiring companies to pay for a portion of their workers’ Medicaid costs. Wal-Mart would be particularly affected by such a requirement because its workforce consists largely of low-wage employees, therefore it is attempting to present a more favorable alternative.

Four seems most convincing to me, though I'm sure knowing the good publicity that would follow (everywhere except Fox News) didn't hurt the decision. Three is a little disappointing to me because it is such a knee-jerk libertarian reaction, stated with such complete confidence, and with such a small grasp of the facts. It doesn't appear the commenter even looked at the letter. Besides, as I understand it, employer mandated health care would only affect large firms, giving smaller firms an advantage.


Pete Abbate said...

The Wall Street Journal offers some repetitions and a little insight.

52% of Wal-Mart's employees receive company-funded insurance (retail industry average: 45%). Only 5% are uninsured (the rest get their insurance from outside sources). Presumably this means the cost increases they expect from the President's policies will be relatively low due to their recent expansion of health benefits among their employees.

Pete Abbate said...

Should've finished reading first. Here is the ever-vigilant Megan McArdle.

"Wal-Mart is in favor of this because it raises the barriers to entry in the retail market, and hammers Wal-Mart's competition."

She goes on to point out that academic literature suggests that regulations disproportionately benefit incumbents, market leaders, and firms with the most employees. Wal-Mart is all three.

Josh Knox said...

At Cato, Michael Cannon claims that the target is, Target.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty