Wal-Mart Interested Only In Physically-Fit Employees

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An internal memo sent to the Wal-Mart Stores Inc. board proposes numerous ways to hold down health care and benefits costs with less harm to the retailer's reputation, including hiring more part-time workers and discouraging unhealthy people from seeking jobs, the New York Times said Wednesday.

To discourage unhealthy job applicants to save on insurance, the paper suggests Wal-Mart arrange for "all jobs to include some physical activity (e.g., all cashiers do some cart-gathering).

From Wal-mart Watch:

Washington, D.C., October 26, 2005 – Today’s New York Times reports on a confidential Wal-Mart memo, obtained by Wal-Mart Watch, that outlines their strategy to cut spending on employee health care, hire more part-time employees, and discourage unhealthy people from working at Wal-Mart.

In response, Wal-Mart Watch Executive Director Andrew Grossman issues the following statement:

The mythology of Wal-Mart Stores, Inc. has been shattered by the revelations in this newly-obtained health benefits memo. This company has been selling a false image of itself to the public. Anyone who truly wishes to understand Wal-Mart need look no further than this document. We thank the good person or persons inside the Wal-Mart company who bravely shared this with us. While we are appalled, it is Wal-Mart’s associates who stand to suffer most.

Below are excerpts from the story:

An internal memo sent to Wal-Mart's board of directors proposes numerous ways to hold down spending on health care and other benefits while seeking to minimize damage to the retailer's reputation. Among the recommendations are hiring more part-time workers and discouraging unhealthy people from working at Wal-Mart.

In the memorandum, M. Susan Chambers, Wal-Mart's executive vice president for benefits, also recommends reducing 401(k) contributions and wooing younger, and presumably healthier, workers by offering education benefits. The memo voices concern that workers with seven years' seniority earn more than workers with one year's seniority, but are no more productive. To discourage unhealthy job applicants, Ms. Chambers suggests that Wal-Mart arrange for "all jobs to include some physical activity (e.g., all cashiers do some cart-gathering)."

The memo acknowledged that Wal-Mart, the world's largest retailer, had to walk a fine line in restraining benefit costs because critics had attacked it for being stingy on wages and health coverage. Ms. Chambers acknowledged that 46 percent of the children of Wal-Mart's 1.33 million United States employees were uninsured or on Medicaid…

A draft memo to Wal-Mart's board was obtained from Wal-Mart Watch, a nonprofit group, allied with labor unions, that asserts that Wal-Mart's pay and benefits are too low. Tracy Sefl, a spokeswoman for Wal-Mart Watch, said someone mailed the document anonymously to her group last month. When asked about the memo, Wal-Mart officials made available the updated copy that actually went to the board.

Under fire because less than 45 percent of its workers receive company health insurance, Wal-Mart announced a new plan on Monday that seeks to increase participation by allowing some employees to pay just $11 a month in premiums. Some health experts praised the plan for making coverage more affordable, but others criticized it, noting that full-time Wal-Mart employees, who earn on average around $17,500 a year, could face out-of-pocket expenses of $2,500 a year or more…

Acknowledging that Wal-Mart has image problems, Ms. Chambers wrote: "Wal-Mart's critics can easily exploit some aspects of our benefits offering to make their case; in other words, our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance..."

The memo, prepared with the help of McKinsey & Company, said the board was to consider the recommendations in November. But the memo said that three top Wal-Mart officials - its chief financial officer, its top human relations executive and its executive vice president for legal and corporate affairs - had "received the recommendations enthusiastically."

…The memo noted that Wal-Mart workers "are getting sicker than the national population, particularly in obesity-related diseases," including diabetes and coronary artery disease. The memo said Wal-Mart workers tended to overuse emergency rooms and underuse prescriptions and doctor visits, perhaps from previous experience with Medicaid. The memo noted, "The least healthy, least productive associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart."…

"It will be far easier to attract and retain a healthier work force than it will be to change behavior in an existing one," the memo said. "These moves would also dissuade unhealthy people from coming to work at Wal-Mart."

Ron Pollack, executive director of Families U.S.A., a health care consumer-advocacy group, criticized the memo for recommending that more workers move into health plans with high deductibles.

"Their people are paying a very substantial portion of their earnings out of pocket for health care," he said. "These plans will cause these workers and their families to defer or refrain from getting needed care."

The memo noted that 38 percent of Wal-Mart workers spent more than one-sixth of their Wal-Mart income on health care last year…

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