First off....I think $8.50/hr is a ridiculously low figure for the amount of work performed (in comparison to other PT jobs).
Having said that....here is my theory.
There are two types of people seeking these jobs. The first is the student who is looking for some spending money or money to help out his parents in paying for that schooling. Still covered under his parents insurance with no need for his/her own. The second is someone who is self employed or working another job without benefit coverage. To them the coverage is the most important part of their compensation.
I still don't see why the company can't offer a choice that would benefit both type of workers. There could be a choice at the time of employment where the employee could choose whether they want the benefit pkg or not. Those that don't need it would receive a little more hourly wage compensation. If later the situation changed, they would have a 1-time chance to reverse that decision.
I'm sure that ideally the company would like to choose the student over the non-student employee, but in some areas it might not be possible. And if I were a student, the choice between flipping burgers or busting my tail moving pkgs for the same amount of money, would be a no-brainer. For the non-student employee, the benefits pkg is most likely the attraction, not the hourly wage. JMO