The law injures actual and potential Wal-Mart employees in Maryland, particularly housewives, students and seniors seeking relatively easy part-time work. Mothers want to be home to cook dinner when the kids get out of school. Students who have low-priced health insurance through college are not even allowed to work full-time.
A recent paper by Jason Furman (John Kerry's economic policy advisor) found 81 percent of Wal-Mart employees are eligible for health insurance, compared with 61 percent for retailing in general. He also noted that "Wal-Mart is relatively unusual in that it offers health insurance both to full- and part-time employees. By comparison ... only 17 percent of firms offer health benefits to part-time workers."
Although Wal-Mart pays 70 percent of the cost of health insurance, the company cannot possibly induce working homemakers and students to pay the other 30 percent, because most of them already have health insurance -- usually through the husband/father. And most of them work part-time.
Brigitte Madrian of the Wharton School surveyed "The U.S. Health Care System and Labor Markets" in a new paper for the National Bureau of Economic Research. She notes that "some individuals have cheaper insurance from another source (for example, the government or a family member), and they may place a very low value on having employer-provided health insurance." These individuals are clearly injured by any Wal-Mart bill that forces employers to switch the mix of compensation from wages to health benefits that are worthless for those already insured.
Madrian found that "married women with health insurance through their husbands ... are much more likely to be employed in part-time jobs that typically do not provide health insurance." Much more likely, that is, if they can find part-time jobs. But because health insurance is "a fixed cost of employment," she adds, studies show this "give firms an incentive to economize on the cost of providing health insurance in two ways. The first is by hiring fewer employers but at longer weekly hours. ... The second is by hiring fewer but more productive employees."
Requiring big employers to devote a larger share of paychecks to the fixed cost of health insurance must give them an incentive to substitute full-time workers for part-time workers. That is bad news for those seeking part-time work. Mandating that a higher share of payroll be devoted to health insurance also gives employers an incentive to shun future job applicants with labor market disadvantages -- such as teenagers, elderly seniors, those with little schooling, those in poor health and those with an imperfect command of the English language. That is bad news for those at the bottom of the ladder of opportunity.
The "Wal-Mart bills" are calculated cruelty disguised as kindness. They should be renamed as what they are -- wage- and job-reduction bills.