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Does Wal-Mart Finally Get It?

Reported by Judy - January 14, 2006

Being stingy with your workers may be good for the bottom line, but is bad for a company's public image. It looks like some of the folks on Fox News' financial show "Bulls and Bears" are finally getting that message.

On Saturday's show (January 14, 2006), Tobin Smith of Changewave Research predicted the Wal-Mart will close its Maryland stores after the Maryland Legislature overrode a gubernatorial veto and approved a bill requiring the discount chain to provide health care to its workers. "Wal-Mart is going to get the heck out of Maryland," Smith said.

Other panelists disagreed. Scott Bleier, from HybridInvestors.com, disagreed. "They're going to pony up. They're going to offer the health care because it's good business," he said. Adam Lashinsky, writer for Fortune magazine, agreed: "They can't take the public relations hit. Five years ago, they would have taken the public relations hit and gone away."

Why can't Wal-Mart take the hit? Could it be the fallout from Robert Greenwald and Brave New Film's movie, Wal-Mart: The High Cost of Low Price? In a recent email to supporters, Greenwald said Brave New Films has sold 100,000 DVDs and at least a million people have seen the film in some 8,000 screenings around the world. Media attention to the film's release have brought the message of the film to tens of millions more.

The fuss was big enough that Wal-Mart CEO Lee Scott brought up the issue in his annual Christmas Cheer memo to workers, telling them the movie "was full of holes and misinformation and hardly anyone saw it." Nevertheless, Wal-Mart's Christmas sales were the worst in five years.

"Bulls and Bears" host Brenda Buttner promoted the discussion on Wal-Mart with the teaser, "Why this could be a disaster -- not for Wal-Mart but for all of America." The panel never discussed that issue, despite Buttner's hyping of it. It is hard to see how the measure could be a disaster for all of America when the measure approved in Maryland applies only to Wal-Mart. The bill requires employers with more than 10,000 workers to spend at least 8% of their payroll on employee health care or else pay into a fund for the uninsured. According to Media Matters, the other large employers in Maryland already meet the 8 percent threshold, or 6 percent for nonprofit operations. They are Johns Hopkins University, supermarket chain Giant Food (whose business overlaps with Wal-Mart's), and defense contractor Northrop Grumman Corp.

Although Wal-Mart does offer health insurance to its employees, many of its workers do not earn enough to pay their share of it. The company encourages them to sign up for state welfare programs to get their medical bills paid, forcing taxpayers to subsidize their business operations.

The victory in Maryland increases the likelihood that the measure will be considered by other state legislatures. If Republicans at the federal level refuse to address the health care issue for the nation's low-income workers, it appears that Democrats in state legislatures will have to do so.

Wal-Mart may challenge the measure, which takes effect in 2007, in the courts.

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