No. of Recommendations: 2
Ok, I got my numbers from my friend. All I can say is I'm glad I don't live in the States with respect to your Health Insurance costs (this is a whole other topic so let's not get distracted).

So, based on our worker earing $20,000 per year and assuming that the worker is 30 years old and a non-smoker we get the following plan (those last two assumptions affect life and LTD insurance, not big factors if we're wrong):

Employee Portion Employer Portion
Health $500 $1,500
Dental $200 $ 200
LTD $ 18 $ 52
Life $ - $ 40
----- -------
Total $718 per year $1,792 per year per employee

The Health plan is an HMO. Let's assume that Walmart can get a better plan than that for the same cost. Let's also round it off to $1,800 per employee per year for Walmart's cost. Now based on our assumptions we get:

Oops, just realised these are probably all single person coverage and not family coverage. We'll double the single person coverage to estimate the family coverage. If anyone has anything better let us know the results. Also, I read somewhere in Fooldom that the split for full time / part time is 70/30.

So with the assumptions from my previous post we end up with 422,500 people needing family coverage and the same number needing single coverage. This comes to a total annual cost to Walmart of: $2.27 billion! Almost 30% of last years profits.

(My math might be wrong here so please feel free to correct me)

At 4% margin Walmart needs raise an extra $57 billion in revenue. With revenue from last year at $245 billion (this I assume isn't revenue from sales so that number should really be used, but I don't know it) the price increase to cover this plan would be 23%. This is much, much higher than Burghy's number so I'm sure I did something wrong. Someone please check this. If this number holds up though I can't see Walmart's customers absorbing it.

At 30% of annual profits (again assuming numbers are static – everyone laugh with me now) shareholders aren't going to go for it. Ok, ok, I know, it's an above the line number so it wouldn't actually be 30%, but it would be a lot. Even half that number is still a lot.

Finally, each employee would still have to pony up $718 per year. Would that be reasonable for someone earning $20,000 a year? I dunno.

So, those are the numbers, please fix them, because I know that last bit MUST be wrong. Then lets talk about if Walmart should do it.

Simon
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