Inside Wal-Mart, a
Larger Debate
EDITORIAL, NYTimes on
the Web, October 28, 2005
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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