retail news in context, analysis with attitude

The Washington Post this morning reports that Walmart plans to "eliminate health insurance coverage for about 30,000 of its part-time workers, a move that the nation’s largest retailer says is aimed at slashing its rising health-care costs." The workers who will see their health care coverage eliminated are those who work less than 30 hours a week, or, as the Post describes it, "2 percent of the company’s 1.3 million U.S. workers and about 5 percent of its part-time workforce."

In addition, Walmart said yesterday that in 2015 it will raise the health care premiums for its employees that retain health care coverage.

The Associated Press reports that " The move, which would affect 30,000 employees, follows similar decisions by Target, Home Depot, and others to eliminate health insurance benefits for part-time employees."

The Los Angeles Times writes that "in January, Target Corp. said it would stop offering health insurance to part-time workers, partly because employees could probably get cheaper — and in some cases better — coverage through the Affordable Care Act. Home Depot Inc. made a similar announcement several months earlier."

"We had to make some tough decisions," Sally Wellborn, Walmart's senior vice president of benefits, tells the AP, saying that the company will use a third-party organization to help part-time workers find insurance alternatives: "We are trying to balance the needs of [workers] as well as the costs of [workers] as well as the cost to Walmart," she says.

According to the Post, "Greg Foran, chief executive of Wal-Mart U.S., told investors during a conference call in August that health-care costs were up $180 million compared to the previous year, a figure he said was 'well above' the company’s initial estimates.  By the end of the fiscal year, Wal-Mart expects to see a $500 million increase in health-care expenses due to higher levels of employee enrollment in its plans and higher costs.  Almost 1.2 million employees and their family members are covered by Wal-Mart health-care plans."

In 2012, Walmart said that new employees working less than 30 hours a week would no longer be offered health care coverage, though existing employees would remain grandfathered. In 2011, it had eliminated health insurance for employees working less than 24 hours a week.
KC's View:
Good thing that Walmart also recently announced that it will run a promotion in its stores that will have kiosks offering customers the ability to check out health care options, saying that it wants to be the nation's best option for one-stop health care shopping. The only problem may be that the customers may be fighting with the employees for places on line.

I'm actually sympathetic to Walmart here - we're talking about an enormous amount of money, and I'm sure they believe that it could be better invested elsewhere … though in the long run, I'm not sure you can invest dollars anywhere better than in your own people.

I guess I worry that policies like these lead to companies hiring more part-time people, because they cost less. Which leads to more people being under-employed, which hurts the economy in the long run, and leads to a great gap between the haves and have-nots, as the middle class continues to vanish.

I'm not sure that these kinds of policies create a sustainable economy.