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Wal-Mart's Success Tied to Low Health-Care Costs

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Wal-Mart's Success Tied to Low Health-Care Costs


Wal-Mart's Success Tied to Low Health-Care Costs

Wal-Mart's Success Tied to Low Health-Care Costs

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The Retail Industry Leaders Association has filed a lawsuit challenging a Maryland state law that requires large retailers, like Wal-Mart, to contribute more to employee health-care plans. More than 20 states are working on bills that would force large employers to put profits back into employee health care. Host Ed Gordon is joined by Paul Kelly, senior vice president of federal and state government affairs for RILA, and William Rodgers, professor of public policy and chief economist of the John J. Heldrich Center for Workforce Development at Rutgers.

ED GORDON, host:

Joining us now, Paul Kelly, senior vice president of federal and state government affairs for the Retail Industry Leaders Association, a retail industrial trade group. Mr. Kelly, thanks for joining us.

What do you tell people who say government has to step in, that ultimately, the Wal-Mart business model is not good for American workers?

Mr. PAUL KELLY (Senior Vice President of Federal and State Government Affairs, Retail Industry Leaders Association): Thank you, Mr. Gordon, for the opportunity. Our position on this is that the federal government has been very clear in passing a law that says multiple state employers like those RILA represents, that their health plans are governed by federal law, not state law. That's why we've stepped in to challenge the Maryland law, because it clearly violates the federal statute.

GORDON: And what of those who say, for instance, Wal-Mart makes it known by its commercials and the like that they put their employees first. But there will be those who will say that they are putting profit before employees?

Mr. KELLY: Well, our association represents many companies, large employers, large retailers. They work very hard to provide benefits packages that meet the unique needs of their work force. They are in competition with other businesses for good workers. So they want to provide good benefits, good health benefits, good wages. They do the best they can in a competitive environment.

But the real reason we've brought these lawsuits is because we think the Maryland law and those like it which are being proposed around the country really miss the point. The point should not be to force businesses to pay more for health care. We want lawmakers and politicians to focus on bringing down healthcare costs so everyone can afford it, the companies I represent, people who want to go into the individual market and buy their own policy, and even state governments.

GORDON: And what of those who are very concerned, quite frankly, that this will become a trend not only of large retailers, but it will become a watershed that other companies will use to move in this direction?

Mr. KELLY: Well, I would just say that companies continue to work very hard to provide good benefits to their employees. We're concerned, frankly, about a precedent in the other direction where states might start to think this is a good idea. It really represents a failure on the part of politicians, in our opinion, to address the real problems, the real challenges in healthcare.

Simply forcing a sector of the economy to pay a specific amount of really expensive healthcare doesn't make any sense. Let's address the root causes, which is healthcare costs are too high; we need to figure out a way to bring them down so my members can afford to provide better benefits, and state governments can afford to provide better benefits, as well.

GORDON: All right. Paul Kelly is senior vice president of federal and state government affairs for the Retail Industry Leaders Association. I thank you very much for joining us. I appreciate it.

Mr. KELLY: I appreciate the opportunity.

GORDON: I'm joined now by William Rodgers, professor of public policy at Rutgers University. All right, Professor Rodgers, you heard the piece that we just aired and heard from Paul Kelly. Is there some middle ground, in your opinion, that can be found?

Professor WILLIAM RODGERS (Public Policy, Rutgers University): I hope so, and this is a, it's an issue that I agree with your previous guest that, you know, the government, really, at the end, shouldn't be involved, that this is a, should be a relationship between the Wal-Mart workers and the communities in which the stores are located and management. However, it was grown to the, the problem has escalated to the situation where these people in these communities don't have a collective voice to be able to push back and to express their concerns.

GORDON: In your opinion, how do you find that happy medium? The idea that no one, I think, wants government intervention, necessarily, but some will suggest that corporate America, big business has really, as I suggested earlier, put profit before the human being, and there is a concern that who will watchdog that?

Prof. RODGERS: Yeah, I think instead of also focusing on what you call the bad actors(ph). I mean there are some good actors out there. One example that gets trumpeted a great deal is Costco. They run an excellent model where they have input from collective bargaining process, but they also have a unique corporate philosophy where they have a long-run model. It's based upon treating workers as assets to be invested in, and one of their statements is that they feel there's a, if you loyal and well-compensated workforce, that means that you'll, people will be efficient, but they'll also be productive, and their strategy does seem to be working, where they're offering wages and benefits that are above the, sort of, industry average, and you're seeing less shrinkage, which is the industry phrase for less stealing, much lower than what Cos...--much lower than what the industry, and it's also much lower than what Wal-Mart reports.

GORDON: Well, prognosticate for me, if you will. If you had to juxtapose the Costco model to the Wal-Mart model and project that across America, which do you think we're headed? Which way do you think we're headed?

Prof. RODGERS: Mm hmm. I think we're headed towards the Costco model for the very reason in that this is an issue, healthcare is an issue that is near and dear to the hearts of most Americans. And then also, you've also brought in the issue around children, that children of these parents and family members who don't have healthcare. And again, there's been ample studies to show how, you know, investing in people's healthcare not only improves their productivity, but their well-being. And if we just take a longer-term view, which I think--these views are galvanizing around that, we'll move in the direction of the more Costco model, which is the one that's more sustainable in the long run.

GORDON: All right. William Rodgers is a professor of public policy at Rudgers University. We thank you very much for joining us. Appreciate it.

Prof. RODGERS: Thank you.

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