Saturday, January 14, 2006

Maryland Wal-Mart Update

We have new details on our earlier report on Maryland's legislative mugging of Wal-Mart. The Washington Times reports on Wal-Mart's future in Maryland:

Executives for Wal-Mart Stores Inc. are debating whether to cancel plans for new outlets in Maryland in response to a new state law requiring the discount retailer to provide a certain level of employee health benefits, a company official said yesterday.

Officials at the Arkansas-based company also are considering challenging the law in federal court, in addition to scrapping plans to build outlets such as a store at Capital Plaza Mall in Landover Hills and a distribution center on the Eastern Shore, Wal-Mart spokeswoman Rhoda M. Washington said.

The legal basis for Wal-Mart's potential challenge is actually pretty simple:

Baltimore lawyer Henry A. Smith, who reviewed the law for the Maryland Chamber of Commerce, said it violates the federal Employee Retirement Income Security Act, the Associated Press reported yesterday.

"Any state attempt to regulate an employee benefit plan is pre-empted by the federal employee benefit law because of the Congress' belief that a single federal regulatory scheme for employee benefits is preferable to 51 separate, varying state schemes," Mr. Smith said.

He said there have been no court cases dealing with a law identical to Maryland's. But he cited "a very close case" from the District in which a federal court struck down a law mandating employee benefit levels because it was pre-empted under federal law.

I'm not an ERISA expert, but it sounds like a promising approach.

The Washington Post adds:

The Maryland Chamber of Commerce and other business groups have argued that the bill is preempted by ERISA...

It's unlikely Wal-Mart will move out of Maryland, though the fate of a distribution center planned for Somerset County, one of the state's least wealthy, hangs in the balance. It could be located in Delaware instead.

It might not be worth withdrawing entirely from Maryland, especially if various solutions are implemented, but the distribution center should be built in Delaware whether the law is overturned or not. By passing the law in the first place, Maryland has demonstrated its hostility to business. Delaware has not.

I should also add some important statistics for the policy debate (from the Times):
"More than three-fourths of Wal-Mart associates have health insurance," company spokeswoman Sarah Clark said Thursday. "And every Wal-Mart [worker] in Maryland -- both full-time and part-time -- can become eligible for health coverage that costs as little as $23 per month."
And from the Post:
[Wal-mart's 2004] health care spending amounted to about 5 percent of payroll. Last year... it had risen to more than 7 percent. Recently, Wal-Mart began offering a more affordable benefits plan, costing as little as $23 a month for a single worker in Maryland.
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2 comments:

Speedmaster said...

I made a blog post about this earlier today, I think the linked article is very well done.

http://amateureconblog.blogspot.com/2006/01/incredible-stuff-machine-by-llewellyn.html

yachismom said...

We have a problem here in Spokane with Wal-Mart wanting to open a center on the South Hill. Area residents do not want it. Interestingly many of the people who are anti Wal-Mart come out to Spokane Valley to shop at our Wal-Mart. We make the money off of them. :) I love it! I hate government interfering with business. Wal-Mart needs to just locate their new stores as close as they can to the areas that do not want them. And make money off of the very people who are against them.