How does Wal-Mart keep prices so low? Taxpayer subsidies, that’s how.
Wal-Mart, the Arkansas-based retail chain that is now the nation’s largest employer, has a dramatic advantage when it builds a store in a Wisconsin community and then starts charging dramatically lower prices than hometown businesses.
Wal-Mart is able to charge those low prices in part because the company does not pay a living wage to most of its workers. But the company really cleans up in the area of benefits; instead of paying for health insurance for its employees, as homegrown Wisconsin retailers do, Wal-Mart steers those employees into the BadgerCare and Medicaid programs.
With Wisconsin and federal taxpayers picking up the tab, Wal-Mart can keep prices low enough to run more responsible retailers out of business.And a hefty tab it is!
According to figures obtained from the Wisconsin Department of Health and Family Services, the annual cost to taxpayers for health care coverage for Wal-Mart employees and their families is $4.75 million. Of that, the state covers $1.8 million, while the remainder comes from the federal treasury. (The feds split the costs of BadgerCare and Medicaid with the state.)
The current enrollment of Wal-Mart employees and their relatives in BadgerCare is 1,175 adults and 638 children. Another 1,952 children of Wal-Mart employees are insured through the Medicaid program.
The first thing to remember is that the Wal-Mart employees who are covered by BadgerCare are not guilty of wrongdoing. They should be covered, as should their children.
The problem is not with working Wisconsinites who need health care coverage. And it is certainly not with their children.
But BadgerCare and Medicaid cannot afford to carry the burden of Wal-Mart’s corporate irresponsibility forever.
It is time for state intervention on behalf of Wisconsin’s taxpayers.
What should be done?
• Wal-Mart and companies like it do not begin to pay their fair share of taxes into the state treasury. For years, firms doing business in Wisconsin have paid lower taxes than in virtually any state in the United States. And under the foolish single-factor tax reform, which was enacted during the last legislative session and sighed by Gov. Jim Doyle, corporations were given another huge tax break. Step 1 should be to reverse the single-factor reform. Then Doyle should work to develop tax structures that reward companies that create good jobs and pay living wages and good benefits, while penalizing firms such as Wal-Mart that fail to meet basic standards.
• To deal with the specific problem of companies like Wal-Mart, which shift the burden of providing health care coverage onto the taxpayers, Wisconsin should enact a law that requires large employers either to provide affordable, quality health care to all of their employees or to pay fees to cover the costs to BadgerCare.
Of course, there will be screams from the apologists for corporate excess, who will claim that forcing Wal-Mart to pay its fair share will cost Wisconsin jobs. But that is a false premise.
Wal-Mart is not cutting back; rather, the retail corporation has embarked upon an ambitious program of opening new stores across Wisconsin. There is no danger whatsoever that Wal-Mart is going to cut back in Wisconsin. In fact, the danger is that the firm will continue to expand at the current rate, which is too fast for many communities – hence the widespread opposition to Wal-Mart construction and expansion projects.
Asking Wal-Mart to pay taxes and meet basic standards will not harm Wisconsin workers. It will help Wisconsin taxpayers.
The Capital Times