PJC In The News

Veto Override Wins: Wal-Mart Must Pay Fair Share of Workers' Health Costs

Wal-Mart veto falls

Lawmakers override Ehrlich, order more spending on worker health

By Andrew A. Green
Sun reporter

January 13, 2006

The Maryland General Assembly overrode Gov. Robert L. Ehrlich Jr.'s veto of a bill requiring Wal-Mart to pay more for employee health care yesterday, a measure that has sparked a nationwide debate over the level of benefits an employer should provide workers.

The so-called Fair Share Health Care Fund Act, the first of its kind to succeed in the nation, became a fight between organized labor and business, raising questions about to what extent government should intervene in private enterprise.

It now becomes law and a model for more than 30 other states, which are expected to take up similar legislation in the coming months. But it might have more immediate consequences in Maryland, where some leaders fear Wal-Mart will withdraw its plans to open a proposed distribution center that would, if built, bring nearly 1,000 new jobs to the Eastern Shore.

"Fair Share health care is going to sweep the nation," said Vincent DeMarco, president of the Maryland Citizens' Health Initiative, part of a coalition of labor unions, Wal-Mart competitors and others that pushed the bill through the legislature.

"This pro-business, pro-working families law makes sense, and the Maryland state legislature is taking the lead."

Wal-Mart officials were tracking the debate from the company's Bentonville, Ark., headquarters last night. Company spokeswoman Sarah Clark said the vote will do nothing to improve health care for Marylanders. The company will continue making its views known as similar legislation is debated in statehouses across the country and will work for what she said are "real solutions to the health care challenge."

"This vote was never about health care," she said. "This was about partisan politics."

Clark said the company has not decided about the distribution center but will be re-examining the project "through a different set of lenses."

Lobbying on the bill was fierce. Wal-Mart hired more than a dozen lobbyists, and advocates brought volunteers to Annapolis this week for rallies and meetings. But on the day of the vote, much of the jockeying disappeared as the override's likelihood for success appeared clearer.

Even Ehrlich, who has a track record of hard lobbying to stop overrides of major vetoes, appeared resigned to defeat on the Wal-Mart bill. For much of the day he was out of Annapolis announcing parts of his legislative agenda, including a plan to reduce Maryland's estate tax.

Before either chamber voted, he told a group of Prince George's County businessmen that the bill will hurt his efforts to bring business to the state.

"I just know when I walk into the boardroom of a business in the next 90 days, I will be asked by a CEO 'What does this mean for the business environment? Why should I bring my business to Maryland?' And I'm not going to have a good answer," he said.

He had no comment after the final vote on the Wal-Mart bill last night.

The law, which will take effect in 30 days, requires companies with more than 10,000 employees to spend at least 8 percent of their payroll on worker health care or pay the difference to a state medical assistance fund. Of the four companies of that size in Maryland, Wal-Mart is the only one that would be affected.

Proponents in the Senate and House argued that the bill establishes an important baseline for corporate responsibility in Maryland and prevents one of the state's largest employers from relying on public assistance programs to care for its employees. They said taxpayers and other businesses that do provide health care are effectively subsidizing the world's largest retailer by picking up the tab for its employees' uncompensated care at Maryland hospitals.

"Who pays? You guessed it. Your constituents, my constituents, other businesses, you and I," said Sen. Gloria G. Lawlah, a Prince George's County Democrat and the lead sponsor of the bill.

Foes of the legislation said it was the product of an unholy alliance between organized labor angry at its inability to organize the retailer's workers; Wal-Mart competitors in the retail industry, particularly Giant Foods; and advocates for universal health care. The result, they said, is a worsening of the state's business climate and the prospect that the measure will be expanded in the future to smaller businesses.

"It's the Bermuda Triangle of jobs," said Sen. E.J. Pipkin, an Eastern Shore Republican. "Jobs go in, and they don't come out."

Clark, the Wal-Mart spokeswoman, said more than three-quarters of company employees nationally have health insurance, and both full-time and part-time employees can become eligible for health coverage for as little as $23 a month. But critics say the company's plans often come with high deductibles and can be unaffordable for its low-wage employees.

The final vote in the House was 88-50. The Senate vote was 30-17, with all 14 Republican senators and three Democrats from conservative Anne Arundel County districts siding with the governor.

The three Democrats, Sens. John C. Astle, James E. DeGrange Sr. and Philip C. Jimeno, who are all targets of the Republican Party in this year's election, also voted against the measure last spring.

Jimeno said the AFL-CIO wrote him a letter saying it would not endorse him in the coming election if he voted against the override. He said he has received threats on other veto votes facing the Assembly.

"It's just been a mean-spirited group of individuals contacting our office," he said. "I guess they know it's an election year, and they think they can use it as a hammer to persuade us to vote accordingly."

More defeats for Ehrlich could be on the way. The Senate voted to override six other Ehrlich vetoes, and the House of Delegates overrode the governor on a $1-an-hour increase to the minimum wage. Each bill needs to be decided by the other chamber.

Additional overrides could occur when the House considers more of Ehrlich's vetoes in the coming days. The Wal-Mart bill, however, was voted on by both chambers in the 90-day session's second day.

The House voted 91-48 to override the minimum-wage veto. The override is also expected to succeed in the Senate, where it is scheduled to be considered Tuesday. Maryland would then join 17 other states that have enacted minimum-wage rates higher than the federal $5.15 an hour.

Opponents of the bill argued that it would place an undue burden on the state's small businesses. Proponents said it will help tens of thousands of Marylanders.

Copyright © 2006, The Baltimore Sun

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