California To Wal-Mart: Enough! No More Taxpayer Subsidized Profits For You

California To Wal-Mart: Enough! No More Taxpayer Subsidized Profits For You

For years, Wal-Mart—and other large retail operators—have been piling up huge profits by controlling their labor costs through paying employees sub-poverty level wages. As a result, it has long been left to the taxpayer to provide healthcare and other subsidized benefits to the many Wal-Mart employees who are dependent on Medicaid, food stamp programs and subsidized housing in order to keep their families from going under.

With Medicaid eligibility about to be expanded in some 30 states, as a result of the Affordable Care Act, Wal-Mart has responded by cutting employee hours—and thereby wages—even further in order to push more of their workers into state Medicaid programs and increase Wal-Mart profits. Good news for Wal-Mart shareholders and senior management earning the big bucks—not so good for the taxpayers who will now be expected to contribute even larger amounts of money to subsidize Wal-Mart’s burgeoning profits.

But, at long last and in a move gaining popularity around the nation, the State of California is attempting to say ‘enough’ to Wal-Mart and the other large retailers who are looking to the taxpayers to take on the responsibility for the company’s employees—a responsibility Wal-Mart has long refused to accept.

It’s about time.

Legislation is now making its way through the California legislature—with the support of consumer groups, unions and, interestingly, physicians—that would levy a fine of up to $6,000 on employers like Wal-Mart for every full-time employee that ends up on the state’s Medi-Cal program—the California incarnation of Medicaid.

The amount of the fine is no coincidence.

A report released last week by the Democratic staff of the U.S. House Committee on Education and the Workforce, estimates that the cost of Wal-Mart’s failure to adequately pay its employees could total about $5,815 per employee each and every year of employment.

“Accurate and timely data on Wal-Mart’s wage and employment practices is not always readily available. However, occasional releases of demographic data from public assistance programs can provide useful windows into the scope of taxpayer subsidization of Wal-Mart. After analyzing data released by Wisconsin’s Medicaid program, the Democratic staff of the U.S. House Committee on Education and the Workforce estimates that a single 300- person Wal-Mart Supercenter store in Wisconsin likely costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year – about $5,815 per employee.”

Says Sonya Schwartz, program director at the National Academy for State Academy for State Health Policy, “There are concerns that employers will be gaming this new system and taking less and less responsibility for their workers. This may make employers think twice.”

Of course, the California Retailers Association, where Wal-Mart Stores WMT +0.33%, Inc. is listed as a board member company, is not quite so pleased with the legislation. According to Bill Dombrowski, chief executive of the Association, ”It’s one of the worst job-killer bills I’ve seen in my 20 years in Sacramento, and that says a lot. The unions are fixated on Wal-Mart, but that’s not the issue here. It’s a monster project to implement the Affordable Care Act, and having this thrown on top is not helpful.”

One wonders if we will ever see the day when Americans will stop falling for the hostage-taking narrative consistently put forward by those whose job it is to defend the indefensible. At the first suggestion of finally putting a chink in Wal-Mart’s policy of profiting at the taxpayers’ expense—a practice that should have every American thinking about what passes for free-enterprise in the United States today—the response is to always threaten to take away jobs if we dare to challenge their business practices, even if those practices cost us billions.

While the unions may, indeed, be “fixated” on Wal-Mart, it is hard to miss the fact that Mr. Dombrowski did not even attempt to explain why it is acceptable policy for taxpayers to continue subsidizing Wal-Mart’s ever expanding profits. Nor does Dombrowski attempt to deal with the fact that, according to a Los Angeles Times report, an additional 130,000 people working for large and profitable firms will go onto California’s Medi-Cal rolls over the next few years, bringing the total number of Medicaid recipients in the Golden State who are employed by large companies to just under 400,000 people.

Note that these are not people who rely on ‘government handouts’ because they do not wish to work. Rather, these are people who show up to do their jobs for as many hours a week as their employer will permit them to work.

Interestingly, the federal law imposes a penalty on companies with more than 50 employees who do not provide health insurance to an employee working over 30 hours per week. The feds also penalize a company when its workers buy their own healthcare coverage on an exchange and receives a government subsidy to do so.

However, there is no penalty imposed by the federal government on a company when a company’s workers become eligible for Medicaid.

Think that this ‘oversight’ had anything to do with Wal-Mart’s early support of the Affordable Care Act?

The result is that companies like Wal-Mart are actually encouraged by the federal policy to pay their workers even smaller sums without providing healthcare benefits so that even more of their workers will qualify for Medicaid.

What I always find fascinating is that the very people who are so critical of the subsidies provided by Obamacare to lower-earning Americans (how many times have these people reminded us that “someone is paying for these subsidies”) never seem to have much of a problem with the subsidies we pay to support Wal-Mart’s massive profits by picking up the healthcare tab for so many of the company’s employees. But then, those who support taxpayers doing the job that Wal-Mart should be doing tend to be the same folks who are quick to suggest that nobody is forcing workers to take a job at Wal-Mart. Apparently, these people are operating under the opinion that a Wal-Mart worker earning below the federal poverty level wouldn’t readily move to a better paying job if such a job were available to that worker.

The good news is that the proposed California legislation has a very good chance of becoming law. While the proposed legislation will require a 2/3 vote in both the Senate and Assembly, Democrats currently have supermajorities in both legislative bodies in the state.

Let’s hope that California gets this done and other states are quick to follow California’s lead. This is legislative action whose time is long overdue.

Yet another feel good, do nothing piece of legislation. When will progs learn???

It clearly states that it will fine businesses for every FULL TIME worker.

Uh, um, excuse me. Those businesses responded by making those emloyees PART TIME!!!

How stupid are people???

Do something that works, then come to me and brag.

What a successful business hiring hundreds of thousands if not millions of people, often in locations where work is hard to come by? Cant be having that!!

Guess libs think that everyone can and should be paid $40 an hour union bucks. Often seems theyd settle for far fewer jobs, just to raise the wages of the ones leftover.

I haven't shopped at Walmart (except in a case of dire need) in years. First it was because of all the crap they sell from China. Basically, what Walmart is doing is called "corporate welfare" While the Walton heirs, the CEO, stock holders (I guess they have those?), etc are billionaires, because the chain doesn't pay most employees "a living wage", those people are then forced to get food stamps, medicaid, etc. Who pays for those programs? The taxpayers. I guess if you don't mind that the heirs are on the upper end of the Forbes 400 list with billions of dollars, while their employees have to use tax payer funded programs to make ends meet....

In CA, there is a simple solution.... Shop at Costco. They pay a good wage & I think provide medical insurance. I know that folks who work for that company love their jobs. I hope we get a Costco here soon & they put Walmart out of business. 

It's not good enough to be rich as hell? You have to be filthy rich at the tax payer's expense?

Pun wrote:Guess libs think that everyone can and should be paid $40 an hour union bucks. Often seems theyd settle for far fewer jobs, just to raise the wages of the ones leftover.

Libs tend to prefer the Costco model.  The Costco employee does a very similar job to their Walmart counterpart, yet they tend to get paid way better and usually have benefits.  The CEO has a reasonably modest income (relative to his colleagues) and the company doesn't produce as high of stock holder payouts as Walmart, but its prospering none the less and the employees can afford a reasonable standard of living.  Imagine that!

As for Walmart's health benefits, I have a relative who is in a managerial position at Walmart.  One day he had a horrible migraine (by horrible, I mean he couldn't remember where he was or his coworkers names) while at work.  His manager took him to the hospital.  Because he was full time he did have medical insurance, however it only covered long term hospital care.  That trip to urgent care cleaned out his bank account, no thanks to Walmart.

I think everyone, not just Libs, would prefer the Costco model. Unfortunately there are no Costcos in most states so you must live with what you have.

I hear Sam's Club is run better, but that is just hearsay.

Old Sam would be embarassed to see what became of his dream. At one time, Walmart paid well. At one time they sold nothing but US products.

We will see if Costco stays the same after it changes hands a time or two.

Regardless, as a rule i oppose tax subsidies altogether. As for allw world, you dont like em? Dont shop there. That is all of our rights as individuals to make, just as it the companies' right to take up whatever business model they like, within the confines of the law.