Tuesday, November 02, 2004
Wal-Mart not so big on employee health care
[Wal-Mart], despite its popularity with consumers, has grown accustomed to being accused of crushing Main Street merchants with its sprawling stores and low prices and of driving down wages for workers across the retail industry. And more than a million former and current female Wal-Mart employees are part of a sex discrimination lawsuit that the company is fighting.
Now, Wal-Mart finds itself under attack for what critics see as its miserly approach to employee health care, which they say is forcing too many of its workers and their families into state insurance programs or making them rely on charity care by hospitals.
Wal-Mart vigorously defends its health care policies, saying it offers affordable coverage for all employees.
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A survey by Georgia officials found that more than 10,000 children of Wal-Mart employees were in the state's health program for children at an annual cost of nearly $10 million to taxpayers. A North Carolina hospital found that 31 percent of 1,900 patients who described themselves as Wal-Mart employees were on Medicaid, while an additional 16 percent had no insurance at all.
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The company says it spent about $1.3 billion of its $256 billion in revenue last year on employee health care to insure about 537,000 people, or about 45 percent of its work force. Wal-Mart says that 23 percent of its employees are not eligible for coverage, but that it covers 58 percent of those who are.
That compares with an insured rate of 96 percent of eligible full-time or part-time employees of Costco Wholesale, the discount retailer that is Wal-Mart's closest competitor nationwide. Costco employees - most of whom are not represented by a union - become eligible for health insurance after three months working full time, or six months part time.
At Wal-Mart, which has no union employees, many who work full time must wait six months to become eligible. Part-time workers are not eligible for at least two years. Because of turnover, some employees never work long enough to become eligible.
If there is any place where Wal-Mart's labor costs find support, it is Wall Street, where Costco has taken a drubbing from analysts who say its labor costs are too high. Costco's pretax profit margin is only 2.7 percent of revenue, less than half Wal-Mart's margin of 5.5 percent.
Wal-Mart now asks employees to pay 33 percent of the company's cost of providing insurance, but says it plans to reduce that to 30 percent. So far, Costco has resisted pressure to increase employees' share of health care premiums beyond a planned target of 8 percent in 2007, reasoning that too many of their workers would be forced to drop coverage.
Story.
posted by chris at 2:27 PM
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