business news in context, analysis with attitude

Lots of Wal-Mart related news this morning, as the company continues to come under attack from various quarters…

  • Citing a study claiming that California taxpayers pay $32 million a year to subsidize health care costs for Wal-Mart employees not covered by the company, the California Legislature has said it will hold budget hearings into the matter.

    The Associated Press reports that members of the legislature are threatening to reconsider the $1 billion invested in the company by the state’s pension fund if it is proven that Wal-Mart provides workers with inadequate health care coverage.

    "If some large employers are increasing our budget problems by not taking responsibility for their workers and the state is picking up their tab — we need to find that out," said Sen. Wes Chesbro (D-Arcata) chairman of the Senate Budget Committee. "If Wal-Mart is not providing for their workers it puts more pressure on the system," he said. "It puts pressure on other employers to drop their health care to be able to compete."

    No dates have been set for the hearings. However, the call for a legislative probe comes as there is tough debate over Proposition 72, which would require big employers to pay at least 80 percent of their worker’s healthcare premiums by 2006. Wal-Mart opposes the legislation, and has donated a half-million dollars to the campaign to defeat its passage.

  • Meanwhile, Wal-Mart has sent an email to its 60,000 California employees saying that if Proposition 72 is passed, "associates would no longer be able to choose Wal-Mart's healthcare plan or our HMO offerings."

    According to the Ventura County Star, “Dr. Jack Lewin, chief executive of the California Medical Association, said the Wal-Mart e-mail ‘misrepresents the facts.’ Should it pass, he said, Wal-Mart could continue to offer whatever menu of health plans to employees it chooses, as long as at least one option meets the minimum standards of the law. ‘The intent is for employers to be able to go out and shop around and buy qualifying healthcare plans,’ he said. ‘They could offer a menu of choices of qualifying plans from Kaiser or Blue Cross or any private provider.’”

    Supporters of Proposition 72 have characterized the email as a threat, but Wal-Mart responded that it was a “routine communication” to employees.

  • And, the New York Times reports this morning about the broader health care debate that has enveloped Wal-Mart throughout the country.

    The NYT writes, “Wal-Mart finds itself under attack for what critics see as its miserly approach to employee health care, which they say is forcing too many of its workers and their families into state insurance programs or making them rely on charity care by hospitals.

    “Wal-Mart vigorously defends its health care policies, saying it offers affordable coverage for all employees.

    “The company says it has no way of knowing how many of its employees, whom it calls associates, or their families are insured under state programs. The larger issue of whether companies can and should absorb the soaring cost of health care is a national issue, said Susan Chambers, the executive vice president who oversees benefits at Wal-Mart. ‘You can't solve it for the 1.2 million associates if you can't solve it for the country.’

    “A survey by Georgia officials found that more than 10,000 children of Wal- Mart employees were in the state's health program for children at an annual cost of nearly $10 million to taxpayers. A North Carolina hospital found that 31 percent of 1,900 patients who described themselves as Wal-Mart employees were on Medicaid, while an additional 16 percent had no insurance at all.”

    The NYT also reports that “in Washington State, where the insurance commissioner is pushing the legislature to adopt a law similar to the one on the California ballot, companies that struggle to compete with Wal-Mart while insuring most of their own workers have become openly critical.

    “’Socially, we're engaged in a race to the bottom,’ said Craig Cole, the chief executive of Brown & Cole Stores, a supermarket chain that employs about 2,000 workers in Washington and adjoining states and pays for insurance coverage for about 95 percent of its employees. ‘Do we want to allow competition based on exploitation of the work force?’ he asked.”

    Wal-Mart says that it cannot verify much of the data being used against it, and argues that 90 percent of its workforce has insurance – “many through means other than Wal-Mart's coverage because they are senior citizens on Medicare, students covered by their parents' policies or employees with second jobs or working spouses,” the NYT writes.

  • Wal-Mart reportedly is one of several foreign retailers operating in China that have been threatened with lawsuits if they do not deal with trade unions there. The Communist Party-controlled All China Federation of Trade Unions has 123 million members.

KC's View:
We suspect that at some level, Wal-Mart will be very comfortable comparing the California Legislature with the Communist Party-controlled All China Federation of Trade Unions…

That said, it seems to us that it is going to be increasingly difficult for Wal-Mart to ignore the drumbeat of public outrage about its health insurance policies. “Untrue” and “unverified” are the words that Wal-Mart seems to use the most in denying the charges…but the charges keep mounting. And Wal-Mart keeps saying that the health care crisis is a national problem, and that it shouldn’t be held responsible for solving it alone.

All that means to us is that sometimes it seems like Wal-Mart wants all the benefits of operating the world’s largest retailer, but doesn’t really want all the responsibilities. Can you imagine any other circumstances under which a company like Wal-Mart would want the government to get involved in a policy debate? Normally, you’d think, Wal-Mart (and a lot of other companies) would want the government to steer clear…but not this time.

We don’t know all the facts…just the various sets of “facts” that we’ve seen presented by both sides. But the drumbeat is hard to ignore…

By the way, on another issue…

Just a week or so after Wal-Mart decided not to sell Jon Stewart’s “America: The Book” because it felt that its satirical approach was inappropriate, the company has returned 3.500 copies of George Carlin’s new book, “When Will Jesus Bring The Pork Chops?”

The Carlin book, which offers caustic humor and provocative comments about politics and religion, has a cover that shows Carlin inserted into DaVinci’s painting “The Last Supper.”

In this case, Wal-Mart said it was actually returning the books because they hadn’t ever been ordered.

Whether or not this is true (there are some publishing experts who are dubious), the story further illustrates the Wal-Mart approach to popular culture. It has every right to decide what to sell and what not to sell…but we can’t help but feel that it represents a sanitized cultural mindset that does not encourage diversity of thought and debate.

By the way, when the story broke last Friday about Wal-Mart returning the books, the Carlin book was number 28 on Amazon’s best-seller list. This morning, it is number 15.

When we write our book, we’re going to make sure it gets banned by Wal-Mart…