News Intelligence Analysis
October 28, 2005
Editorial
Inside Wal-Mart, a Larger Debate
After a peek behind the curtain at Wal-Mart, the world's largest
retailer, one thing is certain: the company is listening to its
critics. Predictably, management's responses are about window
dressing as much as substantive change, but there is still a
lot we can learn from them.
The week began with a series of unusual announcements from Wal-Mart: it called on Congress to raise the minimum wage and announced that it would expand health care access for hourly workers and improve its environmental record. But the wary applause has died down. An article in The Times on Wednesday described an internal memo sent to the company's board about plans to hold down the cost of benefits.
The 26-page memo (PDF) is required reading for all legislators, business people and advocates for change in the country's health and retirement systems. Prepared by the company's executive vice president for benefits with the help of McKinsey & Company for the Wal-Mart board, this memo injects much-needed honesty into the national debate over health care and retirement.
At times it can make for difficult reading. It confirms that 46 percent of the children of Wal-Mart's employees are uninsured or on Medicaid. In their drive for a healthier and therefore cheaper work force, the drafters recommend adding physical activity, like rounding up shopping carts, for all employees, simply to discourage the weak and the sick from seeking jobs there. But it can also be surprisingly forward-thinking. The internal analysis raises the prospect of increasing discounts on healthy foods to cut down on obesity among workers and putting health clinics into stores.
The changes in the Wal-Mart health plan announced on Monday would allow an employee to see a doctor three times a year for a $20 co-payment per visit and to receive three generic prescription drugs for $10 each before hitting the high deductibles that many employees cannot afford. While that may be cold comfort for those with chronic or serious illnesses, it could help encourage checkups and preventive care. We cannot blindly throw out the good along with the bad as we sift through the retailer's dirty laundry.
As a publicly traded company, Wal-Mart has no incentive to spend additional money on employee benefits. Investors have hammered its share price over the last year because of rising costs. Wal-Mart's approach is a symptom of economic forces: cold, logical conclusions based on the set of rules society has given the company to play by. Wal-Mart is a mirror image of the health care triage affecting all Americans. It isn't pretty, but we have to look.
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