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Trader Joe's trading in benefits

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Trader Joe’s – that kitschy retail grocery chain started by San Diego native Joseph Coulombe in 1967. The 300-plus stores are known for their friendly staff that don Hawaiian shirts while working cheerily among store décor that’s reminiscent of a Tiki hut, an idea Coulombe came up with while vacationing in the Caribbean. The stores are a treasure trove of mostly organic, environmentally friendly, gourmet foods, along with the usual staples of milk, eggs and bread. And they’re sold at a discount since Trader Joe’s skips the middle man and buys directly from local and international vendors. We can also thank the huge volume of products sold for the low prices; it is estimated that Trader Joe’s sells $1,750 in merchandise per square foot, more than double the sales generated by Whole Foods. If there was ever a cult following within the retail grocery industry: Trader Joe’s reigns supreme.

But the chain also prides itself on customer service and doing the right thing. In June 2009, Trader Joe’s ranked second in customer service in MSN Money’s Customer Service Hall of Fame. Ethisphere Magazine listed the store among its most ethical companies in the U.S. in 2008, 2009 and 2010. And though they resisted at first, the company joined the Campaign for Fair Food in 2012, and by doing so, the chain put forth efforts to improve wages and working conditions for farmworkers in the tomato supply chain. Going beyond what is expected from a large, national grocery chain, the company even stopped selling foods imported from China due to concerns that standards on organic products there are not as stringent as they should be. The company even extends affordable health care coverage to many of its part-time employees, which is a rarity, and, it is said, they are also paid well – no wonder they’re so happy. Round of applause for Trader Joe’s.

Or maybe not.

In a memo to staff dated Aug. 30, Trader Joe’s CEO Dan Bane announced that the company would cut insurance benefits for those who log fewer than 30 hours a week. Bane said the company will cut part-timers a check for $500 in January and assist them in finding a new insurance plan under the Patient Protection and Affordable Care Act. In a statement to Huffington Post recently, a spokeswoman for the company said the changes “will be a benefit to all Crew Members working in our stores.”

I’m not so sure the “Crew Members” feel the same way. It doesn’t take a Wharton grad who also doubles as a health insurance expert to figure out that this is — solely — a benefit for the corporation. Trader Joe’s, along with other companies, are using the Affordable Care Act as a scapegoat – an excuse to abolish benefits. True, it may not be cost-effective for the company to continue offering health care benefits, but it keeps employees happy. And luckily, there are actually a few individuals out there who realize that happy employees are critical to success.

A few days ago, Robert Crisan, senior vice president for health care reform and strategic growth at Hylant, told me: “I recently worked with a 283-employee company that determined it would pay $506,000 in yearly penalties if it decided to drop health care benefits. Those fees would be a relative bargain compared to the firm’s current annual net cost of $1.8 million for employee health care. However, the company will likely stick with its current benefit offerings to keep its employees happy. If you’re the employer next door and you offer benefits, you’re going to get your pick of those employees.”  

Unhappy workers are unproductive workers, and, over time, unproductive workers cost even more money than what a company such as Trader (also known as Traitor) Joe’s may have forked over for health insurance for all workers.

Want productive employees? Keep them happy.