Published on: October 9, 2014
Lots of email yesterday about the decision by Walmart to end health care coverage for some 30,000 part-time employees working fewer than 30 hours per week.
One MNB reader wrote:The conversation can continue; if you compete against Wal-Mart and they just lowered their cost of doing business. Then guess what happens next? It is just a horrible race to the bottom. IE: who can pay the lest, who has the lowest benefit package, all in the name of cheap retails. When you drive down the cost of business sometimes there are losers. When companies look at their employees the way most retail employers look at them, not a field I would encourage my children to get into.
And another:I do not know why employers should provide health care. I can see wanting to provide a benefit to attract good employees, but that only works when there is not a shortage of jobs. The sooner we migrate to a basic uniform national health care plan for everyone, the better for everyone. Then if companies choose to induce employees with an expanded benefits plan over and above the base plan, great.
Businesses should not be saddled with the costs and administration of products that are not their own area of expertise.
And from MNB reader Bob Overstreet:Why is any one surprised at this? Obamacare was designed to transfer people from private insurance to the taxpayer’s cost. If it wasn't designed to create more part-time, taxpayer subsidized people, then maybe someone should have read the law.
MNB reader Scott Nelson wrote:This is not really surprising to me. From the beginning we have been hearing that the real goal of the ACA is to move the country towards a single payer, aka government provided health care. To me this is evidence that it is coming sooner rather than later. I agree with your sympathies towards Walmart. Money will always flow to the path of least resistance, tax, or cost, like it or not.
Still another MNB reader chimed in:“I'm actually sympathetic to Walmart here - we're talking about an enormous amount of money,…” (KC)
On what planet does investment in healthcare insurance for that large a population of employees on which they depend on so much, become an “enormous” amount of money?
And they’re announcing it on the same week that they announce that they’ll be offering healthcare services at their store locations for a fee? George Orwell couldn’t have written it better.
Why does WalMart, which posted $16 Billion in profits last year, get a pass on this?
You know what IS an enormous amount of money? The $16 Billion in profit that WalMart made in profit last year.
From another reader:Considering that WM made $15.88B in profit last year, which equates to $43M/day in profit. The extra $180M for taking care of their employee’s equates to a little more than 4 days of profit for the entire year. Seems like a small investment in taking care of their second most important asset after taking care of their customers. Just another reason to shop elsewhere.
MNB reader Terry Pyles wrote:I think the folks who run the "Bentonville Behemoth" need to do some collective soul searching. I'm not saying they are wrong on this subject. From a business perspective it seems to be a rational decision. But having said that, if they took all the money paid in bribes to foreign governments, combined it with all the money paid to get themselves out of the bribery scandal, I'll bet they could have funded employee health care for years to come.
I think it was Benjamin Franklin who said you can do well by doing good. Words the folks at Walmart would do well to heed.
MNB reader Jeff Totten wrote:I agree with your comments. It's sad to see more value being placed on the bottom line than on providing people with the income and benefits they need to have a viable life in this country. I do hope and believe that they will be able to find lower insurance via the Affordable Care Act. Now if we could just stop insurance companies from finding loopholes, but that's another issue.
And yet another:Kevin, you hit the nail on the head about the sustainability of our health care system and the fact that employers are choosing to hire more part time employees as a way to cut costs.
The part that infuriates me is the unfairness of a system that encourages this corporate behavior. There is a pervasive strategy of “whatever my competitor is doing” I must follow suite in order to compete. To some degree that’s true but what you end up with is the lowest common denominator of corporate behavior and the lowest ethical standard. All the while Congress has been content to sit back and watch it all happen with no penalties for these dubious acts. In my view the lack of a penalty for bad behavior is the same as an incentive. I recently left a company that was patting itself on the back for creating jobs when in reality they were carving up full time positions for part time to save on rising health care expenditures, funny how you can spin such a move. I’m sure that company wasn’t the first to think of it. I am further convinced that this rising tactic of corporate behavior accelerated the trend in rising health care premiums. Take people out of the system and those who do pay must now pay more.
I also think that in the case of Walmart the Affordable Care Act may have accelerated the issue. I was glad to hear even though the overall numbers are large, it was only to a small percentage of their workforce…unless of course it’s you who’s losing your coverage.
I would have rather seen a bill from Congress forcing companies to play fair by their employees by mandating proportional coverage. Work 20 hours get half the coverage. Go get another part time job at 20 hours and you get your other half covered. If the employee elects no coverage it goes back to the employer, like if the person is covered under a spouses plan. If that had been the course rather than the ACA, it would have forced companies to higher ethical ground and completely eliminated the need for the ACA and its enormous bureaucracy. Ok, rant over!
Y'know, I thought a lot about my commentary on this story yesterday … and upon reflection, I think I blew it.
I expressed sympathy for Walmart since the money saved is "a lot of money." But you're absolutely right - it is nothing compared to the $16 billion in profit it made last year. And the $500 million more it says it will spend on health care expenses is a number that is remarkably close to the $400 million it says it has spent so far
on the global bribery scandal - and it hasn't even been charged with anything. Yet.
I'm not smart enough to completely understand all the implications of the new health care law. I do think, and have always thought, that the US needed a better, more sophisticated and national approach to providing health care for its citizens that also could be economical and efficient. I'm by no means sure that Obamacare is that approach, and the Walmart decision may end up shining a spotlight on whether it makes sense or not.
But there's another spotlight here, and it is being trained on exactly how Walmart feels about part-time employees who staff its stores. For better or for worse, we now know how the company ranks those people on its priority list.
There are other retail companies - Starbucks, Costco and The Container Store are three that immediately come to mind - that provide far better coverage to their employees, and seem to remain viable business entities while doing so. Their positions, I think, stand is sharp relief compared to what Walmart is doing.
The problem, of course, is that Walmart is helping to drive a national trend. we have to hope that it also helps drive a national conversation about how companies value their workers, and how they express that valuation.
(Out of curiosity, I wonder what will happen to all these part-time workers if the GOP takes back the Senate, and then the White House in 2016, and does what it says it wants to do, which is to defund and eventually get rid of the Affordable Care Act. How many uninsured people will there be in the US? What impact will that
have on the economy?)
Hey, Walmart made a decision. Legal, and fiscally advantageous. But it seems to me that it also has said that it views its employees as costs, not as assets.
It will have to live with the long-term implications of that statement.