"Fair Share" Bill is Unfair and Impractical
January 2006
They're at it again. Labor union activists don't think someone in America is being "socially responsible." Their solution? Pass a law and make them do it.
A bill before the Washington legislature takes exactly this approach by slapping Wal-Mart and a handful of other employers with a costly new mandate and payroll tax. The so-called "Fair Share Act," would require all companies with 5,000 or more employees to provide a certain level of health care benefits or pay 9% of their payroll to the state treasury.
Washington Policy Center's analysis of finds there are just two things wrong with this idea: it is wrong in principle and wrong in practice.
It is wrong in principle because it unfairly targets a narrow group of companies. Citizens should always be concerned when certain groups or businesses are singled out as the focus of government power.
The idea is unfair to workers because it denies them choice in how to gain access to health coverage. Some people would rather get health coverage through a spouse. Others prefer Health Savings Accounts (HSAs) that put workers in charge of their own health care. Forcing one-size-fits-all health care deprives people of choices in one of the most important areas of life.
It is also unfair to business owners who should have the right to run their businesses free from micro-management by the state. If the largest companies can be hit with a costly and inflexible mandate, then no business in Washington is safe.
The "Fair Share" bill says, "It is not the intent of the legislature to influence the establishment, content, or administration of employee benefit plans." That is simply not true. The entire purpose of the bill is to direct employee benefit plans by allowing only two legal options: provide health benefits or pay the state. There can be no freedom of choice when the government controls all the options.
The "Fair Share" mandate discourages job opportunities. It creates a strong incentive for companies to maintain no more than 4,999 employees in Washington, and severely punishes successful employers who hire more workers. Applying the restriction to more companies, as proponents want, would only compound the problem.
The Maryland legislature has already passed a similar bill over Governor Ehrlich's veto. The Maryland bill applies to companies with 10,000 employees and imposes an 8% payroll tax. In describing the Maryland bill the Washington Post, hardly a bastion of free-market thinking, calls it "a legislative mugging masquerading as an act of benevolent social engineering." The Post's editorial is aptly titled "Beating up on Wal-Mart."
Labor activists say they want the Maryland restrictions to apply to more companies and they have picked Washington as the next battleground. The Washington "Fair Share" bill is similar to the "Pay or Play" legislation that died in committee last year. That bill applied to companies with as few as fifty employees.
The "Fair Share" idea is also wrong in practice. It says its purpose is "to further the state's interest in ensuring that its residents have access to appropriate health care services." By imposing a top-down solution, however, the bill actually makes it harder for Washingtonians to gain access to affordable health care.
This coercive approach ignores the large artificial costs the state imposes on health coverage. The greatest barrier to health coverage is cost, and state law adds significantly to the high cost of health insurance. Here is how elected leaders could really make health care more accessible and affordable:
The "Fair Share" approach does nothing to make health coverage more affordable, personal or portable. It is not only unfair, it moves our state in exactly the wrong direction.