Using Government As A Weapon Against Your Business Competitors

06 Apr, 2005 by John Hawkins

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What happens when a business can’t compete with its rivals? It can try to improve its performance, go out of business, or if it’s in a liberal state like Maryland, it can sic the government on its competitors to try to slow them down.

It’s especially helpful when you’re picking on Wal-Mart, a company liberals love to hate. Here are some of the details of the socialist scheme Maryland is targeting Wal-Mart with:

“Wal-Mart, the largest US retailer, is facing a new political challenge as Maryland’s state assembly moved yesterday towards passing a bill that would require the company to increase significantly the amount of healthcare coverage it provides its employees.

The bill, which if passed would require the signature of Robert Ehrlich, Maryland’s Republican governor, reflects the continued pressure on Wal-Mart over the issue of healthcare for its more than 1m US employees. Critics accuse the retailer of burdening state Medicaid medical insurance systems with its uninsured and low-paid part-time workers.

The Maryland bill would require any private employer with more than 10,000 workers to ensure either that its contributions to its workers’ health insurance are the equivalent of at least 8 per cent of its total payroll, or to make compensatory payments to the state.”

Of course, when you start digging into the details, you find out that the concerns about the State picking up the tab for Wal-Mart’s health care have been largely exaggerated:

“Wal-Mart says that it funds medical insurance for about 56 per cent of its employees through its medical plan, and that 86 per cent of its workers have health insurance of some sort.”

Wal-Mart in Maryland employs 15,000 people and if 86% are covered already, then you’re only talking about 2100 employees who aren’t insured and that includes employees who just got hired, part-timers, and of course there are always going to be some people, usually those who are very young, who simply choose not to get coverage. So if 86% of Wal-Mart employees are covered, that’s not too shabby.

So what’s this legislation really about? It’s about Giant Foods trying to hamper a much more efficient competitor:

“The Maryland bill was backed by an unlikely lobbying alliance between local groups: the United Food and Commercial Workers International union and Giant Foods, the state’s largest supermarket operator, which is owned by Ahold, the Dutch retailer.

Giant and Wal-Mart are believed to be the only two private employees in Maryland with more than 10,000 workers.

According to the Maryland Citizens’ Health Initiative, which has pushed for the legislation, Wal-Mart spends only 3.5 per cent of its payroll on healthcare for more than 15,000 workers in Maryland. Giant, with 18,000 unionized members in the state, says its healthcare costs are equivalent to around 20 per cent of its payroll.

…The Maryland governor’s department of business and economic development has said it opposes the bill, calling it bad for business, and suggesting it is being used by Giant to block competition.”

If this passes, the real losers here will be the people of Maryland. They’ll pay higher prices at Wal-Mart, thousands of their fellow citizens may lose their jobs at Wal-Mart, new businesses may be discouraged from coming to Maryland, and all because Giant Foods can’t compete because they’re saddled with a union. The people of Maryland deserve better than this…