By Arnold Kling
Maryland lawmakers yesterday approved legislation that would effectively require Wal-Mart to boost spending on health care…
Lawmakers said they did not set out to single out Wal-Mart when they drafted a bill requiring organizations with more than 10,000 employees to spend at least 8 percent of their payroll on health benefits — or put the money directly into the state’s health program for the poor.
Basic economic theory says that what the lawmakers are doing is reducing the take-home pay of Wal-Mart workers. The more money that goes into health care benefits, the lower will be their net wages.
For Discussion. How do legislators know that 8 percent is the right number for the percent of payroll to spend on health care benefits?