Obesity-profitability link called into question

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The latest buzz in wellness is companies’ disclosing employees’ obesity to shareholders. This way, shareholders could assess the company on this dimension, which, according to its promoters, is linked to profits.

The idea that healthy employees make a healthy company has an appealing symmetry, but reality does not have to be pretty. Take Wal-Mart, the largest publicly traded company in the world, as an example. Of their 1.3 million U.S. employees, 500,000 earn $10 per hour. In fact, to bring their wage up to this level, Wal-Mart gave raises two years in a row.

Also see:Wal-Mart bumps minimum wage nationwide.”

At this wage, a family of two is near 133% of Federal Poverty and a household of one is at 200% of Federal Poverty. (This is why Wal-Mart and McDonald’s have been called “welfare queens” – so many of their employees qualify for assistance.) Low wages go hand-in-hand with overweight and obesity, especially for women. While obesity has been increasing at all income levels, a greater proportion (42%) of lower-income women are obese compared to higher-income women (29%), according to data from the Centers for Disease Control and Prevention. Twenty-nine percent of low-income men are obese.

The idea that healthy employees make a healthy company has an appealing symmetry, but reality does not have to be pretty.

We can reasonably surmise that Wal-Mart has a large population of obese employees. In theory, Wal-Mart should have poor stock market performance. Yet, in the past 10 years, Wal-Mart’s quarterly earnings have increased in every quarter except for five. It has also consistently paid shareholders quarterly dividends.

Wal-Mart is a prominent example, but many enterprises have similar workforces and make money. Indeed, any profitable company that has a large proportion of low-wage employees would disprove the obesity-profit link. (Granted, some enterprises pay employees well and make money too. And while these companies may be more appealing as employers, shareholders likely have a different algorithm to select their stocks.) The point is that having tens of thousands of obese employees has not hindered Wal-Mart’s profitability.

If the connection between employees’ obesity and company profit is shaky, the connection between body mass index and productivity is even more so. To wit – higher-income men are more likely to be obese than low-income men. Assuming that wages at least roughly equate to the person’s contribution to the company, then having a bunch of highly paid men would mean two things: the company has more obese men, and therefore has lower profits – which doesn’t make sense since the company would pay these men more because the company was profitable.

In short, the obesity-profit theory cannot explain two widespread phenomena: profitable companies that have a lot of low-wage employees; and successful companies run by men. Those holes seem, to me, large enough to sink this theory. Time will tell whether it floats despite its flaws.

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