California Lawmakers Aim To Fine Wal-Mart, Other Corporations For Subpar Employee Health Insurance
A central topic during the runoff for Los Angeles mayor, as well as one that has long burdened the state of California as a whole, has been the troublesome financial situation of the area. New legislation is coming through the pipeline that looks to change that, and Wal-Mart has become one such target for reform.
To be clear, the financial outlook for the state of California is not pretty. The budget deficit for the city of Los Angeles alone has been projected to possibly hit the $100 million mark in the near future. Projections for the state have been, of course, much higher. Now lawmakers are aiming to make big business help out with some of the costs.
Wal-Mart has often been derided for paying its employees so little and offering such meager benefits that those working for them must often request assistance from the government. With the passage of the Affordable Care Act many have become concerned that companies like Wal-Mart will only continue to slash health benefits, so lawmakers are stepping in to ensure that does not happen.
"There are concerns that employers will be gaming this new system and taking less and less responsibility for their workers. This may make employers think twice," says Sonya Schwartz, program director at the National Academy for State Academy for State Health Policy.
The proposed legislation aims to fine large businesses that offer unattractive health benefits by fining them for each employee that must get their benefits from the state instead. The fine would amount to a whopping $6,000 per employee. That number was not some figure that was randomly pulled out of thin air, however, but rather was the result of a fair amount of research into the economic impact of Wal-Mart's business practices.
"After analyzing data released by Wisconsin's Medicaid program, the Democratic staff of the U.S. House Committee on Education and the Workforce estimates that a single 300-person Wal-Mart Supercenter store in Wisconsin likely costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year -- about $5,815 per employee," noted a recent report by the Democratic staff of the U.S. House Committee on Education.
By fining Wal-Mart $6,000 per employee receiving public benefits, lawmakers in California will force the company to pay for their employee's health benefits one way or another. Hopefully, this will encourage Wal-Mart to offer more attractive health insurance plans to its employees so that they will not have to spend the money out of pocket. Many small business are applauding the decision.
"There are a lot of responsible employers who provide healthcare coverage and pay middle-class wages," said Sara Flocks, public policy coordinator for the California Labor Federation. "They have to compete against Wal-Mart slashing wages and slashing hours. This is a way to level the playing field."