Wal-Mart's strategy for holding down benefits spending

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Kobrin, Steve" <kobrins () wharton upenn edu>
Date: October 26, 2005 3:56:13 PM EDT
To: David Farber <dave () farber net>
Subject: Wal-Mart's strategy for holding down benefits spending


From the New York Times today:

“An internal memo sent to Wal-Mart's board of directors proposes  
numerous ways to hold down spending on health care and other benefits  
while seeking to minimize damage to the retailer's reputation. Among  
the recommendations are hiring more part-time workers and  
discouraging unhealthy people from working at Wal-Mart.

In the memorandum, M. Susan Chambers, Wal-Mart's executive vice  
president for benefits, also recommends reducing 401(k) contributions  
and wooing younger, and presumably healthier, workers by offering  
education benefits. The memo voices concern that workers with seven  
years' seniority earn more than workers with one year's seniority,  
but are no more productive.

To discourage unhealthy job applicants, Ms. Chambers suggests that  
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 benefit costs because critics  
had attacked it for being stingy on wages and health coverage. Ms.  
Chambers acknowledged that 46 percent of the children of Wal-Mart's  
1.33 million United States employees were uninsured or on Medicaid.”

It is worth looking at the Times website as they have the full text  
of the memo to Wal-Mart’s Board.  They are very clear about finding  
ways to discourage older and less healthy workers from either joining  
or remaining with the company.  Adding a strenuous “physical  
component” to all jobs looks like an end run around anti- 
discrimination legislation.  But, of course, the answer is it will  
result in lower prices to consumers.



http://www.nytimes.com/2005/10/26/business/26walmart.ready.html



Steve







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