Monday, July 20, 2009

Raising Rivals' Costs?

Walmart is supporting health care reform that would extend employer mandated health insurance coverage to more employees who currently have no employer provided coverage. In doing so, they have attracted the ire of other retailers as expressed through their lobbying group, the National Retail Federation. Has Walmart seen the light and is merely becoming more magnanimous? Of course not. Walmart's optimal compensation scheme has led them to extend coverage to more of its employees up to 52% from 46% just three years ago. In contrast, retailers as a whole cover 45% of their workers. It is safe to assume that the costs of this reform would be greater for Walmart's competitors than to Walmart.

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