Case Analysis Report
Wal-Mart Health Care Dilemma
There have been some concerns about Wal-Mart’s treatment of its employees, suppliers, the environment, and the overall economic impact on communities. Wal-Mart has been criticized by some community groups, women’s rights groups, grassroots organizations, and labor unions, specifically for its extensive foreign product sourcing, low wages, low rates of employee health insurance enrollment, resistance to union representation, sexism, and management efforts to pressure employees to vote for specific parties during national elections. Wal-Mart, one of the world’s largest retailers, has the reputation of paying its employees poorly, along with providing inadequate and unaffordable healthcare plans. The Bentonville, Arkansas based retailer is the largest private employer, yet the employees are not treated as the number one priority. Wal-Mart gets the maximum amount of work from its employees and in return, employees were rewarded with high-end rates for insurance and low wages for their time. By keeping unions at bay, Wal-Mart keeps its wages low, even by general industry standards. According to Representative George Miller (2004), The average supermarket employee makes $10.35 per hour. Sales clerks at Wal-Mart, on the other hand, made only $8.23 per hour on average, or $13,861 per year, in 2001. Some estimate that average “associate” salaries range from $7.50 to $8.50 per hour. With an average on-the-clock workweek of 32 hours, many workers take home less than $1,000 per month. Even the higher estimate of a $13,861 annual salary fell below the 2001 federal poverty line of $14,630 for a family of three. About one-third of Wal-Mart’s employees are part-time, restricting their access to benefits (p 4). These low wages, to say the least, complicate employees’ ability to obtain essential benefits, such as health care coverage. According to “More of the Same” (2009), to get Wal-Mart’s choice network family plan with a $322.60 bi-weekly premium, $700 annual deductible, $500 health care credit, and $4000 out-of-pocket medical expenses could potentially cost over $12,000 a year and the average Wal-Mart employee makes approximately only $20,000 a year. This makes it almost impossible for a Wal-Mart employee to be able to afford adequate health insurance without worrying about going broke if something was to happen and they need medical attention. In addition, after finally reaching eligibility after six months or one year, depending on employment status, an employee must wait an additional year to receive full coverage for a pre-existing condition. By comparison, nationally, the average waiting period for health coverage for employees at large firms like Wal-Mart is 2.6 months (“More of the Same,” 2009, p 1).
Although the wages tend to be higher than minimum wage, the few hours that employees are allowed to work ensure that associates can barely cover living expenses. This means that the taxpayer has to pay the difference. “According to ‘The Case Against Wal-Mart,” a typical Wal-Mart store with two hundred employees cost federal taxpayers $420,750 per year – about $2103 per employee” (Ferrell, Ferrell, and Fraedrich, 2010, p 297). This pays for things such as free and reduced lunches for Wal-Mart families, additional child tax credits, federal health-care cost, and low-income energy assistance. According to one article, Despite Wal-Mart's mammoth profits, the company actually burdens us – taxpayers – with its workers' health care costs. In a disturbing nationwide trend, more state studies are revealing that Wal-Mart employees are the top recipients of taxpayer-paid health care. The scope of this corporate failure is massive: Wal-Mart is the largest private employer in the United States, with over 1.3 million associates, yet they fail to give health insurance to 54 percent of its employees (“Low Prices,” 2009, para 2)....