SON OF SAM

Bob Krummert

Wal-Mart has taken plenty of heat for its employment policies over the past year-and-a-half. A lot of it comes from activists, who complain about low wages, unpaid overtime, denial of the right to organize and more. It's a nasty set of problems, but one in which restaurants don't share.

The company's employee healthcare policy is different. It has become a hot-button issue not because activists decry it, but because state governments have begun to figure out how much it actually costs.

The first inkling came from a study done in Georgia. It analyzed the state's PeachCare for Kids effort, a healthcare program for uninsured kids. The results: More than 10,000 children of Wal-Mart employees got this aid; the next largest employer, the Publix supermarket chain, had 700. Then other states began to analyze their Medicaid and other benefit program rolls; many found Wal-Mart employees present in a disproportionate share. An outcry ensued, and it hasn't gone away.

To this point in the game, the issue of restaurant employees had never come up. It's a good thing, because Medicaid, an expensive state-run, taxpayer-funded program, is one touchy subject. The fact that Wal-Mart's business model includes passing on employees' healthcare costs to taxpayers via public assistance programs is more than a political issue. Reaction has been strongest in jurisdictions that, in the name of job creation, have subsidized Wal-Mart to build stores and/or distribution centers in their locales-only to find that holders of many of the jobs so created go immediately onto the public assistance roles.

Ohio's analysis of workers who depend on public benefits wasn't the result of any get-Wal-Mart protests. The Ohio Department of Job and Family Services (ODJFS) performed the review primarily because the state legislature was wondering why Medicaid was consuming such an ever-growing share of Ohio's state budget. In addition to Medicaid, the review looked at food stamp and welfare recipients. Where was all the money going?

Surprisingly, a lot of it was going to people who had jobs. In all, 104,652 workers from 40 companies in Ohio got Medicaid benefits in 2005, to the collective tune of $236 million per year. Wal-Mart, with 12,000 employees and family members receiving benefits, topped the list. But six of the next seven companies on the list were restaurants. McDonald's, with 11,359, was second, followed by Yum! Brands, Wendy's, Bob Evans, Burger King and Frisch's.

It looked even worse for restaurants when ODJFS looked at food stamp usage. McDonald's (employer of 8,886 recipients), edged out Wal-Mart (7,327) for the top spot. Seven out of the top 10 companies were restaurants. The tenth-place finisher, Subway employed 1,810 food stamp recipients.

With more than one thousand participants in the Ohio Works First program (participants receive public assistance checks), McDonald's topped that list, as well. Eight of the top 10 companies on this list were restaurants.

Equally bad were the trend lines uncovered for these programs. Between 2004 and 2005, the number of Wal-Mart (and many restaurant chain) employees added to these programs increased significantly, often by double-digits over the prior year.

Ohio legislators were stirred by the findings. "Businesses are saying they don't want universal health care, that it will hurt them, when in fact they do have universal health care," said state Sen. Bob Hagan of Youngstown. "It just so happens that other people are paying for it through their taxes that go to Medicaid programs and food stamp programs. It's time to stop playing games and own up to the responsibility of running a business."

The problem protestors and state officials have with Wal-Mart is not that it does something other companies don't do. Or that it is doing something that is illegal. It's that it does it on a scale that goes miles beyond that of any other company. Except, in Ohio, for restaurant companies. Collectively, these companies are seen as gaming the system.

But they're gaming a system in which those paying the freight also get to make the rules. If companies in the restaurant industry are going to be asking state legislators and local rule makers for favors and/or concessions in the future-and we're betting you will-you probably don't want to be lumped in with perceived freeloader Wal-Mart when you submit your request.