I caught a bit of CNN’s American Morning today while getting ready for work. During the "Minding Your Business" segment with CNN brain-trust Miles O’ Brien and Andy Serwer, there was a brief discussion regarding the release of an internal memo by Susan Chambers, Wal-Mart's executive vice president for benefits. The memo explores strategies on how Wal-Mart can cut the costs of healthcare benefits for its burgeoning work force. While discussing the controversy, Serwer described the controversy over the memo as "a tempest in a teapot," and O’Brien described the practices in the memo as "perfectly legal" (or words to that effect). To put their comments in the proper context, it’s necessary to bone up on the controversy a bit further:

From CNNMoney:

Wal-Mart memo: Unhealthy need not apply

Report: Document sent to retailer's board by VP seeks ways to cut health care, benefit costs.

NEW YORK (Reuters) - An internal memo sent to the Wal-Mart Stores Inc. board proposes numerous ways to hold down health care and benefits costs with less harm to the retailer's reputation, including hiring more part-time workers and discouraging unhealthy people from seeking jobs, the New York Times said Wednesday.

The paper said the draft memo to Wal-Mart's board was obtained from Wal-Mart Watch, a pressure group allied with labor unions that says Wal-Mart's pay and benefits are too low.

The paper said in the memorandum Susan Chambers, Wal-Mart's executive vice president for benefits, also recommends reducing 401(k) pension contributions and wooing younger, and presumably healthier, workers by offering education benefits.

The memo is quoted as expressing concern that workers with seven years' seniority earn more than workers with one year's seniority, but are no more productive, said the paper, which posted the memo on its Web site

To discourage unhealthy job applicants, the paper said, Chambers suggests Wal-Mart arrange for "all jobs to include some physical activity (e.g., all cashiers do some cart-gathering),"

[...]

The memo acknowledged that Wal-Mart, the world's largest retailer, had to walk a fine line in restraining benefits because critics attacked it for being stingy on wages and health coverage. Chambers in the memo acknowledged 46 percent of the children of Wal-Mart's 1.33 million United States employees were uninsured or on Medicaid.

Wal-Mart executives said the memo was part of an effort to rein in benefit costs, which have soared by 15 percent a year on average since 2002. Like much of corporate America, Wal-Mart has been squeezed by soaring health costs, the paper said. (full article)

Wal-MartWatch has archived the memo on their web site. The specific language regarding " discouraging unhealthy people from seeking jobs" includes the following passages:

(page 3)

Our workers are getting sicker than the national population, particularly in obesity-related diseases. For example, the prevalence of coronary artery disease in Wal-Mart's population grew
by 6 percent compared to a national average of 1 percent, and the prevalence of diabetes in our population grew by 10 percent compared to a national average of 3 percent. (That said, our workforce is no sicker at present in absolute terms than the national. population.)

A segment of our workforce consumes healthcare inefficiently, in a pattern similar to a Medicaid population. Our population tends to over-utilize emergency room and hospital services and under-utilize prescriptions and doctor visits. This pattern is most evident among our low-income Associates, and the team hypothesizes that this behavior results from prior experience with Medicaid programs.

(page 10)

Given the significant savings from even a small improvement in the health of our Associate base, Wal-Mart should seek to attract a healthier workforce. The first recommendation in this section,
moving all Associates to consumer-driven health plans, will help achieve this goal because these plans are more attractive to healthier Associates. The team is also considering additional initiatives to support this objective, including:

Design all jobs to include some physical activity (e.g., all cashiers do some cart gathering)

[...]

A healthier workforce will lead to lower health insurance costs, lower absenteeism through fewer sick days, and higher productivity. It will be far easier to attract and retain a healthier workforce than it will be to change behavior in an existing one. These moves would also dissuade unhealthy people from coming to work at Wal-Mart. Even a modest shift in Wal-Mart's ability to attract and retain a healthier workforce could result in significant savings: $220 million to $670 million in FY2011. The key tasks in implementing this fourth bold step, once the team has developed a more complete list of actions, are to create a clear set of metrics to measure success, to run pilots in several stores to understand each idea's effectiveness, and then roll-out the most successful ones.

(download full memo as PDF)

I am still struggling with CNN’s rationalization of the Wal-Mart’s strategies. The fact that the nation’s largest employer — and the world’s biggest retailer — are conspiring to implement a strategy which is implicitly discriminatory and sexist is hardly a "tempest in a teapot."

The strategy is implicitly discriminatory because it provides management with approval to reject applicants based on their physical health, including individuals with preexisting medical conditions, pregnancy and disabilities. The mere notion of this as an accepted practice turns the Americans with Disabilities Act on its head. Consider the following excerpts from the ADA:

SEC. 102. DISCRIMINATION.

(a) General Rule.--No covered entity shall discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.

(b) Construction.--As used in subsection (a), the term "discriminate" includes--

(1) limiting, segregating, or classifying a job applicant or employee in a way that adversely affects the opportunities or status of such applicant or employee because of the disability of such applicant or employee;

(2) participating in a contractual or other arrangement or relationship that has the effect of subjecting a covered entity's qualified applicant or employee with a disability to the discrimination prohibited by this title (such relationship includes a relationship with an employment or referral agency, labor union, an organization providing fringe benefits to an employee of the covered entity, or an organization providing training and apprenticeship programs);

(3) utilizing standards, criteria, or methods of administration--

(A) that have the effect of discrimination on the basis of disability; or

(B) that perpetuate the discrimination of others who are subject to common administrative control;

(4) excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association;

(5)

(A) not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless such covered entity can demonstrate that the accommodation would impose an undue hardship on the operation of the business of such covered entity; or

(B) denying employment opportunities to a job applicant or employee who is an otherwise qualified individual with a disability, if such denial is based on the need of such covered entity to make reasonable accommodation to the physical or mental impairments of the employee or applicant;

(6) using qualification standards, employment tests or other selection criteria that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities unless the standard, test or other selection criteria, as used by the covered entity, is shown to be job-related for the position in question and is consistent with business necessity;

(Full text of the ADA)

I read a post on another site earlier today that described the Wal-mart strategy as "corporate eugenics." We’re getting pretty close to this, it seems. The next step would be for employers to require detailed data from applicants (and their spouses) regarding diets, hobbies and sexual activities. And who is to stop them if they decide to require applicants to disclose family medical histories in efforts of ascertaining whether or not an employee is at risk for inherited medical conditions?

CNN and Wal-Mart want us to believe that this is simply a small matter and that everything is above board and in the best interests of the working class and consumers alike.

Who is kidding whom here?