How corporations profit from workers' deaths
August 2, 2002 | Page 4
Dear Socialist Worker,
Companies are always looking for ways to extract surplus value from their employees, but I don't think that even Marx could have anticipated one of the recent scams U.S. companies have cooked up.
Some companies have been taking out life insurance policies on low-income employees--without informing them. These policies are officially known as Corporate-Owned Life Insurance (COLI), but within the insurance industry they're often referred to as "dead janitor's insurance" or, more colorfully, "dead peasant's insurance."
Recently, Jane Sims found out that when her husband Douglas, who had been a Wal-Mart employee for 11 years, died of a heart attack, the company received $64,000--not a dime of which went to her or her family. "I never dreamed that they could profit from my husband's death," she told the Houston Chronicle. It seems that Wal-Mart has taken out 350,000 life insurance policies on employees.
National Convenience Stores received $250,000 when one of its employees was killed in a robbery. An attorney for Hartford Life Insurance, which sells such policies, estimated that one-fourth of the Fortune 500 companies have them, and they cover the lives of between 5 million and 6 million people.
Some companies use the money from COLI to pay for benefits for their executives. Portland General, a subsidiary of Enron, uses money from COLI to pay for long-term compensation and for supplemental retirement payments for its executives. The company has $80 million in a trust fund for this purpose.
Of course, many of Portland General's workers lost their life savings, invested in 401(k) plans, when Enron went bankrupt.
Currently, only five states require employee consent for COLI. A bill was recently introduced in Congress that would require employee consent in all states for the insurance.
These policies, however, should be outlawed. Companies that exploit workers shouldn't be able to benefit from their deaths, too.
Evan Kornfeld, Los Angeles