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Wal-Mart's Clean Bill of Health?

By Wendy Zellner For years, critics have accused Wal-Mart, the world's largest retailer, of pushing employees into federal and state health-care programs and forcing taxpayers to subsidize the retailer's low-cost operations. Now, as part of a sweeping campaign to improve its image, Wal-Mart (WMT) is fighting back by releasing the results of a of new survey about its employees' health-care coverage.

While reports critical of the retailing giant in such states as Wisconsin, Georgia, and Tennessee have highlighted large numbers of Wal-Mart workers in government-funded health programs, Wal-Mart's survey showed that 5% of its hourly workers receive coverage through Medicaid, the federal-state program for the poor.

INDUSTRY STANDARD. Among employees who have been with the company more than two years, that number dropped to 3%. And the survey showed that 7% of Wal-Mart employees were on Medicaid three months before joining Wal-Mart. In contrast, 7% of the hourly workers at other retailers in the study were on Medicaid, up from 6% before their employment.

"Wal-Mart does not encourage our associates to apply for public assistance," says company spokeswoman Sarah Clark. "We work hard to keep our associate premiums affordable and think we are doing a good job."

The nationwide survey, commissioned in December from Segmentation Co., a division of consulting outfit Yankelovich, found the percentage of workers with health-care coverage is about the same at Wal-Mart as at other retailers.

CONFLICTING NUMBERS. About 86% of Wal-Mart's workers have medical insurance, according to Wal-Mart. In total, nearly one-half (48%) of Wal-Mart hourly associates surveyed receive their medical insurance through their employer. Significantly fewer other retail employees receive their benefits through their employer (36%), according to the survey.

Wal-Mart says its survey also showed that the children of Wal-Mart workers use public-assistance health-care programs at similar rates as other retailers' employees, and at rates similar to the U.S. population as a whole. In contrast, a survey done by Georgia's Dept. of Community Health using September, 2002, data showed that Wal-Mart workers had a child in the state's health-care program for every 4 workers, vs. 1 for every 22 workers for the next-highest employer in the program. Wal-Mart says it couldn't verify those numbers.

Wal-Mart refuses to release its survey, nor will it say which other retailers are included in the report. Clark says the comparison group includes other national discount chains, warehouse-club stores, grocery stores, department stores, and others of varying sizes.

LEADER OR LAGGARD? Wal-Mart's findings are little comfort to Greg Denier, a spokesman for the United Food & Commercial Workers, a longtime critic of Wal-Mart's wages and benefits. "Working is supposed to make you less poor, not as poor," he says. He's also skeptical of the company's numbers, especially without knowing the details of the comparison group.

Wal-Mart now employs more than 1.2 million workers in the U.S. It offers health-care coverage to full- and part-time employees, but part-timers must wait two years before they are eligible. Wal-Mart says 30% of its employees had no health insurance from any source three months before joining the company.

Denier argues that since Wal-Mart often sets the standard for other retailers, it can't easily be compared to its rivals, saying, "They're not in a league with anybody else." If his reaction is any indication, the world's biggest retailer can't count on its survey making the health-care issue go away. Zellner is BusinessWeek's Dallas bureau chief

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