Study Finds Low-Wage, Retail Workers
Suffer from Health Benefits Divide

Policymakers should begin to focus on employees in the retail sector,
regardless of company size or wealth

WASHINGTON-Workers in low-wage jobs are less likely to receive health coverage than their counterparts in high-wage jobs, according to a new study published in the current issue of Health Affairs. This phenomenon is especially apparent in the retail sector, regardless of company size. "The Benefits Divide: Health Care Purchasing in Retail Versus Other Sectors" is the first study of its kind to examine health care purchasing patterns in the retail versus other sectors of the Fortune 500.

"Low-wage workers, even in major business firms, pay more for health care than high-wage workers, unless they have unions to advocate for them," says Peter Temin, at the Massachusetts Institute of Technology. Temin, along with co-authors James Maxwell and Saminaz Zaman note that, with millions of low-wage workers, the retail sector accounts for the largest number of uninsured workers in the economy.

"We found nearly a five-fold difference in the offer rates for coverage between the retail and other sectors of the Fortune 500," notes Maxwell of JSI Research and Training Institute, "a difference that can be explained largely by the coverage practices for part-time workers." Some companies, like Disney and Starbucks, are bucking this trend and offering generous benefits in order to attract and retain the best workers.

The researchers found that the economy's bifurcation by sector and by employment type (full-time core workers versus part-time peripheral workers) now extends to the area of health benefits. Part-time workers are much worse off in terms of coverage than full-time workers, and unionized workers in large low-wage firms get the same benefits as better paid workers in other large firms, according to the study. Examples of Fortune 500 retailers include Wal-mart (holding the top spot in 2002), Target, Home Depot, Darden Restaurants, and Safeway.

Maxwell suggests that, to address the challenge of providing coverage to low-wage service sector employees, "policy must shift from focusing solely on small businesses, to workers in all low-wage retail establishments where coverage is often inadequate or non-existent."

For a copy of the article from the September/October 2002 issue of Health Affairs, visit www.healthaffairs.org/ or call Kari Root at AcademyHealth at 202.292.6700.

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This study was supported by a grant from The Robert Wood Johnson Foundation through its Changes in Health Care Financing and Organization (HCFO) (www.hcfo.net) program. AcademyHealth (www.academyhealth.org) is the national program office for HCFO.