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Retailers and HealthCare: Opinions, Facts, and Inferences

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With the big announcement last week that the U.S. Supreme Court had ruled favorably on the constitutionality of the Affordable Care Act (ACA), commonly referred to as “Obamacare “, the two big trade organizations in the U.S., the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) were quick to react, although the tone of their reactions differed significantly.

NRF CEO Matthew Shay said in a statement that, “As it stands, the law wrongly focuses more on penalizing employers and the private sector than reducing health costs. For these reasons, NRF has been a consistent skeptic of the Affordable Care Act. “

RILA president Sandy Kennedy more cautiously stated, “While retailers are committed to continuing to provide health coverage to their employees, overregulation jeopardizes their ability to do so… RILA continues to urge the Administration to protect retailers’ ability to offer quality, affordable coverage that fits the unique needs of their workforce and not to undermine the flexible, voluntary system that provides coverage to millions of employees and their families. “

Okay, that’s pretty much what my Irish grandmother would characterize as “being damned by faint praise. ” Beyond the politics of the issue, the concern is about the continually escalating cost of healthcare overall, and how that will affect the profitability of a notoriously thin-margin industry.

The Facts

Well, as one of the nation’s founding fathers, John Adams, said, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence. ” And one thing that the U.S. Government has is a lot of facts. According to a government agency called CMS (part of the Department of Health & Human Services), median overall healthcare costs rose thus:

  • 2008: 7.1%
  • 2010: 3.9%
  • 2011: 4.8%
  • 2012: 4.3%
  • 2013: 5.5% (projected)
  • 2014: 8.3% (projected)

The explanation for these numbers is that the relatively small increases in the years 2010 through 2012 are the result of the slow economic recovery; in periods of recession, people tend to postpone healthcare spending as much as possible. 2013 is expected to reflect something of a return to “normalcy “, but then in 2014, most of the ACA bill will go into effect, pushing the overall rate to 8.3%.

That of course is what the industry associations are so concerned about. Cost increases to healthcare affect employee benefits programs, and thus profitability.

But the next question has to be, how many employees do retailers actually offer health insurance to? Here are some more facts (from the U.S. Department of Labor Statistics). According to the published 2011 statistics, almost 41% of “grocery ” employees and about 64% of “fashion ” employees are either cashiers, sales people, or first line supervisors of sales people, or as yet another government agency calls them, “sales and related ” employees. The U.S. government’s 2010 National Compensation Survey offered these statistics to indicate how many of those kinds of employees participate in healthcare plans:

  • Medical: 41%, 85% which are required to make an employee contribution if it’s a single coverage plan, and 93% which are required to contribute if it’s a family coverage.
  • Dental: 28%
  • Vision: 15%
  • Out-patient Rx coverage: 40%

The same study offered these inferentially important stats:

  • For employees making under $10.63/hour, the number of those participating in healthcare plans dropped to 22%;
  • Only 14% of part-time workers participated in healthcare insurance plans compared to 64% of full time workers

Here’s one more fact. Since 2006, there has been a dramatic rise in the number of “involuntary part-time employment ” jobs in the U.S. Between 2006 and 2008 in particular, there was a 100% increase (2X) in the those kinds of jobs. The retail industry was one of three (the others being fast food services and construction) that contributed to 40% of that increase.


As another famous guy, Bob Dylan said, “you don’t need a weatherman to know which way the wind blows. “

Putting the numbers quoted above together, the inference is pretty clear that the retail industry has already done a lot to beat back the overall costs of offering healthcare to employees, and doesn’t want to lose hard-fought ground.

But here’s a problem. A company called CareerBliss that among other things surveys employees in a number of industries, recently published a study based on more than 53,000 independent employee reviews, to discover the “happiest ” vs. “unhappiest ” industries to work in. Factors included employees’ relationship with the boss and co-workers, work environment, job resources, compensation, growth opportunities, company culture, daily tasks, and control over the work done does on a daily basis. CareerBliss evaluated each item on a five-point scale and also indicated how important it was to employees’ overall happiness.

You know where this is going…Retail ranked as the #4 “unhappiest ” industry. That can’t be too big of a surprise. I know from my time of managing a big operation that while a good compensation package may not be a motivator, lack of one certainly is a DE-motivator.

This in a roundabout way gets us back to the issues of “showrooming ” that we’ve been writing about for the past several weeks. If the biggest opportunity for retailers to beat “showrooming ” is to create a relevant and fun shopping experience in the store for consumers, retailers need to do something about de-motivated employees. Helping them deal with their life issues, not the least of which is being able to afford basic healthcare, is a good place to start.

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Newsletter Articles July 3, 2012
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