Welfare State
"Jana's View" Phoenix Magazine
May 2004


You'd think that a company that counts its profits in the billions would be able
to pay its employees enough to keep them off of welfare. Not so. In Arizona,
Wal-Mart has at least 404 families collecting benefits from the state..

    I think Wal-Mart needs to replace its slogan: "Always low prices. Always." Instead, it should be: "Always the greediest. Always."
       It's impossible to look very deep into the world's largest retailer - and Arizona's largest employer - without seeing the economic terror it's spreading across America.
       It offers painfully low wages and skimpy to nonexistent employee benefits; its practices are so predatory that it drives other companies out of business - unlike other discount houses that have coexisted with Main Street America for decades.
        But what many don't realize is the unkindest cut of all: One of the ways Wal-Mart keeps getting richer is by sucking on the public teat.
        Yes, folks, a company that counts its profits in the billions is milking public programs meant to help the poor - and the poor in this case are Wal-Mart employees so badly paid they're collecting public assistance. That's tax dollars. Money from you and me. Money from all those other companies that pay their people living wages and offer decent benefits.
       I've found that in Arizona, Wal-Mart has 404 families signed up for KidsCare, a healthcare plan for the working poor. That's not only the highest enrollment of any company doing business in this state, it's four times higher than anyone else.
       And that's just one program. Arizona officials say they haven't even counted how many Wal-Mart employees are collecting benefits under our version of Medicaid, or are getting food stamps or are on any other public assistance programs. I'd think this would be information Arizona would want to know. That's why I was so disappointed that lawmakers recently nixed bills in the House and Senate that would have forced a public accounting and payback for companies like Wal-Mart, which are exploiting taxpayers. And there are other companies.
       In the House, the Democratic sponsor said he was astonished to hear his Republican colleagues on the House Health Committee declare, "It's none of our business what private business does."
       In the Senate, the Republican sponsor was just as surprised to find lawmakers so unconcerned about how Wal-Mart is being "subsidized" by the state.
       Republican Senator Robert Blendu of Litchfield Park says Wal-Mart goes so far as to hand out public health forms along with its employment forms.
       "This is a difficult issue for me," he says. "I am a stockbroker, I believe in the free-market system. I'm a conservative Re-
publican, but you know what, when I see the state of Arizona subsidizing this activity, I say, 'That's wrong,' and if we don't fix it, every corporation in America is going to start doing it."

    Arizona isn't alone in recognizing the sting of Wal-Mart's corporate stinginess. A state report in Georgia found that more than 10,000 children of Wal-Mart employees are enrolled in that state's public health insurance program, which is called PeachCare.
       And in Washington state, a report found that Wal-Mart had more employees' children on their Medicaid program than any other company. In addition, California lawmakers recently released a blistering report that claimed a "typical Wal-Mart store with 200 employees would cost taxpayers $420,750 per year" in public health and welfare services.
       What makes this all the more shocking is that Wal-Mart is No. 1 in the world in selling everything from Jell-O to jewelry, and is so profitable that Mrs. Sam Walton and her four children are five of the 10 richest people in America.
       This is a company with a million workers in the U.S. and another half-million abroad, a company that does more business than Target, Sears, Kmart, JC Penney, Safeway and Kroger combined. This is a company that measures its sales in the hundreds of billions, and its after-tax profits came to over $8 billion last year - the equivalent of $7,300 for every employee.
       It's so formidable that Fortune magazine calls Wal-Mart "the world's most powerful company." And they proved it in one simple way - they drove the world's largest Bible wholesaler out of business, according to the Associated Press.
       And it all comes from the pitch that its prices will "always" be the lowest. But more people are beginning to realize those low prices are costing America too much. California Assemblywoman Loni Hancock says that Wal-Mart represents "one of the great fortunes in the world that has been built on human misery and public subsidy."
       Consider this fact: In 1970, America's largest employer was General Motors, where its overwhelmingly union workforce earned $17.50 an hour, plus health, pension and vacation benefits. Today, Wal-Mart is the largest employer, and it is rabidly anti-union, paying an average hourly wage of $8, with no real pension plan and a healthcare plan unworthy of the name.
       If you wonder why workers stay with a company that offers so little, consider that they have few options. In the nearly four years of the Bush administration, America has lost some 3 million jobs and seen the value of millions of other jobs deteriorate. Many Americans are thankful to have any job at all, and for those in the lower range, the always thin-pickings have just gotten thinner.
       Western Washington University professor Floyd J. McKay calls this the "race to the bottom." And in a recent Seattle Times column, he nailed it: "Wal-Mart buys offshore, without apology and for the cheapest possible prices, from companies paying the lowest-possible wages. As jobs in America are lost to foreign sweatshops to feed the Wal-Mart engine, American workers are forced to accept jobs at lower pay, with bad working conditions. They are funneled to Wal-Mart's promise of cheap goods, in effect, patronizing the very companies that caused their economic misery. This is a cruel travesty on working people in this country."

   There are two very good reasons why a majority of Wal-Mart employees - and many other retail employees - aren't covered by the company's health plan: The requirements to qualify are strict and the premiums are astronomical.
       The plan has been inspected by a variety of eyes, from national unions to think tanks to national newspapers, including the conservative and decidedly pro-business Wall Street Journal.
While Wal-Mart's flack has told the San Francisco Chronicle that roughly 90 percent of the company's people have health insurance coverage, the claim is absurd - 90 percent of the employees aren't even eligible to apply for coverage.
       The Wall Street Journal recently reported that in most large firms, 66 percent of employees are covered. But at Wal-Mart, less than half (between 41 percent and 46 percent) are covered.
       Here's why: Full-time employees must wait six months to be eligible, compared to the average 2.5-month wait in most retail companies, according to a national study. Part-timers have an even more unattainable hurdle - they must wait two years. Even when they do qualify (if they stay that long, and most don't, since Wal-Mart has about 50 percent turnover every year), part-timers can never get coverage for their families, only for themselves.
       The cost of buying into the plan is so high that many of the low-paid employees can't afford it. Couple that with a giant annual deductible before the plan kicks in. A single Wal-Mart employee choosing the cheapest coverage would spend about 45 percent of his or her annual wages before the medical plan would take effect. Most of the employees simply can't afford it.
       If they could, and if they paid all the deductible and then tried to collect on Wal-Mart's policy, they'd find it doesn't cover the cost of preventive or wellness care, and doesn't even cover childhood immunizations. (Those startling gaps in coverage, by the way, were discovered by the Kaiser Family Foundation.) But leave it to Wal-Mart to add insult to injury.
       Although it's a skinflint on health insurance, it saw a way to make money on dead employees. Get this, from 1996 to 2000, Wal-Mart took out secret "dead peasant" life insurance policies on about 350,000 of its Texas employees. When astonished families found out, they sued. The Houston Chronicle reports that just hours before the 5th Circuit ruled against Wal-Mart for the ghoulish practice, the company agreed to pay 380 families some $10.4 million. (Such insurance policies are illegal unless the worker consents in writing.)
       But getting sued is nothing new to Wal-Mart. The United Food & Commercial Worker's Union says the company was sued 4,851 times in 2000, or about once every two hours. Most of the cases charge the company with refusing to pay overtime, directing employees to work "off the clock," and charges of intimidation, harassment and retaliation.

   Representative Phil Lopes, D-Tucson, didn't have Wal-Mart in mind when he first proposed looking at big business sucking up public money, but his bill soon became known as the "Wal-Mart bill."
       "Wal-Mart was not my target," the freshman lawmaker says. "My target was employers who allegedly have a lot of people on AHCCCS [the Arizona Health Care Cost Containment System, or Arizona's version of Medicaid]. I was looking at the state's investment in healthcare. Employers are supposed to provide healthcare to employees, and letting them be on AHCCCS doesn't seem fair to the state."
       So he sponsored two bills: One would have demanded an accounting of the 200 top employers in Arizona who had employees on the state healthcare plan. His second bill would have required those employers to repay the state for those health costs.
       Lopes' bills were sent to the House Health Committee. "All the Republicans were adamantly opposed to both bills. I can understand the payback, but I couldn't understand why they wouldn't want to know how many employers were using our healthcare system," he told me. "They said it would be an intrusion in the private market, and 'it's none of our business to know what private business is doing.'"
       Lopes says he saw that argument as a horrid double-edged sword. "We don't allow state employees to apply for AHCCCS," he says. And he adds that if the state did, a sizeable number of low-paid state employees would be eligible. "We let private employees apply, but not public employees - how is that fair?"
       Lopes pulled his bills, seeing they had no support, but promises he's going to be back again because he's worried that something awful is happening here. Meanwhile, across the Capitol Mall, Senator Blendu offered a bill that would have prevented companies with 100 or more employees from shifting their health costs to the state.
       "How do Safeway and Bashas and Albertson's, who all furnish healthcare, compete with Wal-Mart when Wal-Mart doesn't and is able to shift that to the state - the answer is they cannot," he notes.
       He says his bill, which has died, was motivated by two very simple principles: "No. 1, the state of Arizona should not be in the business of subsidizing corporate activity to put competitors out of business. And No. 2, if we don't do something about this, every corporation in America will start using this as a model, shifting all those costs to the state."
       But even without new legislation, we know something about the impact of private employers on taxpayer-funded healthcare plans.
       AHCCCS spokesman Frank Lopez says that in January his agency looked at Kids- Care, the program for children of the working poor. It examined how applicants listed their source of income. The computer search found 404 families whose income came from Wal-Mart. Lopez says that amounts to about 700 people.
       No. 2 on the list was identified only as "Southwest," and Lopez says they don't know if that's the airline or the food store or a combination of many sources that have "Southwest" in their name. But that category had 112 families enrolled.
       No. 3 was McDonalds, with 97 families; fourth was Maricopa County, with 87 families; and fifth was Pizza Hut, with 82 families. The 10th company was Target - the only other retail store on the list - with 59 families.
       Almost all of those companies are large, profitable national chains. When the Legislature was debating help for the children of the "working poor," I doubt if they thought those were the companies they were subsidizing. They certainly had no idea that the biggest beneficiary by four times was the largest retailer on the planet.

   There are many websites tracking Wal-Mart's reign of terror across America. And they contrast sharply with Wal-Mart's own internet sites, which tout it as a great place to work. The company's television ads portray it as a "family" business with happy employees. It's hard to think of Wal-Mart without envisioning the American flag, since Wal-Mart and patriotism are tied in so many minds.
       But Wal-Mart tactics force you to ask: Isn't patriotism more than just supporting troops in time of peril? Doesn't it also mean supporting Americans so they can have a sliver of the American Dream, and supporting their children so they have a chance to be all they can be? How in the world can it mean sucking the economic health out of America?
       One slogan, on a website called Wal-Mart Watch, really struck me. It's targeted at this company, but would apply to anyone: "Be a good neighbor. Use your consumer dollars to promote good jobs with living wages and family health benefits for your community." I couldn't agree more.


 

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