By Evan Wagstaff
Special to Calbuzz
As President Obama prepares to deliver a crucial speech on health care reform to Congress tonight, he has found a surprising ally in his bid to expand medical insurance to all Americans: retail giant Wal-Mart.
On June 30, Wal-Mart joined the liberal research group, Center for American Progress, and the Service Employees International Union in issuing a public letter to the White House that called for a “pay or play” plan, requiring businesses either to pay $750 per employee per year for government health care coverage or to offer an insurance plan through the company.
Wal-Mart’s unlikely alliance with liberal groups in pushing for a controversial employer mandate for health care plan was in part a conciliatory move to placate consumers in California, according to UCSB history professor Nelson Lichtenstein, who has published a new book about the company.
“Wal-Mart isn’t in danger of going bankrupt, but it wants to expand into coastal California,” Lichtenstein said. “Wal-Mart knows it has a problem there.”
But company spokesman Greg Rossiter said the plan simply reflects the company’s good business sense, citing a letter cosigned by Wal-Mart CEO Mike Duke noting that as much as $244 billion is lost from the U.S. economy every year due to sick time taken by uninsured Americans.
“We’re focused on efforts to reform the country’s health care system,” Rossiter said. “It’s costing all of us a great deal of money. All of the projections are for increasing costs.”
Wal-Mart’s support for the principle of universal coverage for workers appears at odds with the reputation of the company with a reputation for keeping prices low and profit margins high at the expense of workers, who have frequently and bitterly complained about wages and working conditions.
Lichtenstein’s new book, “The Retail Revolution: How Wal-Mart Created a
Brave New World of Business” details the growth of Wal-Mart, from its beginnings to its gradual expansion into Canada and Mexico, a history plagued by questionable business practices and accusations of employee abuse.
He told Calbuzz that Wal-Mart has been “stymied” in its attempts to enter the retail market in large areas of California. While the retailer operates a number of stores in the Central Valley, they have been unable to establish “supercenters” in densely populated urban areas like Los Angeles and San Francisco.
According to Lichtenstein, Wal-Mart’s surveys have shown that 10 percent of people say they don’t shop at the retailer for political reasons, and such opposition to Wal-Mart’s practices has made it difficult to expand into the highly profitable urban areas of the Golden State.
The endorsement of expanded health care insurance is part of a concerted effort to clean up the company’s image, a trend that began in December 2008 when Wal-Mart resolved 63 standing lawsuits in 42 different states to avoid possible federal intervention. Although the company does not need positive press to survive, Lichtenstein said that a better image would encourage business in areas like California.
“California is a cockpit of opposition to Wal-Mart’s expansion into urban America,” Lichtenstein said. “California has a well-unionized grocery sector; the unions fought Wal-Mart and won.”
While Wal-Mart’s decision to back an employer mandate plan is viewed favorably by progressives, the conservative National Retail Federation (NRF) called the employer mandate proposal a “tax on jobs.” The NRF is the nation’s largest retail trade association, but does not include Wal-Mart. According to organization’s web site, NRF Senior Vice President for Government Relations Steve Pfister said that an employer mandate would worsen the recession.
“We can think of few more dangerous steps to take in the middle of our present recession,” Pfister said. “We need to add new jobs, not exacerbate the near double-digit unemployment numbers. We cannot afford to have new and existing jobs priced out of our collective reach because of mandated health coverage.”
Lichtenstein noted that although Wal-Mart made a significant gesture in its endorsement, nothing will change if Congress cannot pass health care reform legislation. If no action is taken, Wal-Mart associates will have to make do with what Lichtenstein called “phony health insurance” with large deductibles and coverage caps.
“If an Obama plan passes, Wal-Mart would brag about helping to put it through,” he said. “If nothing happens in Congress, Wal-Mart goes back to its old way of doing things and that’s the end of it.”
Obama’s speech will be broadcast on most network and cable news channels at 5 p.m.
Calbuzz intern Evan Wagstaff is Opinion Editor of UCSB’s Daily Nexus.
