The NewStandard ceased publishing on April 27, 2007.

Wal-Mart Exec. Sought to Cut Benefits, Discourage Disabled Labor

by Brendan Coyne

In a memo executives are now scurrying to downplay, a Wal-Mart executive advised her colleagues to consider cutting healthcare benefits and instituting policies to discourage "unhealthy" workers.

Oct. 27, 2005 – Just one day after news outlets across the country reported that Wal-Mart, the world’s largest retailer, was planning to implement a new health-insurance policy to dramatically lower employee costs and expand the pool of workers buying into the company health plan, a labor-union project group revealed an internal company memo suggesting the opposite.

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The leaked memo says Wal-Mart could lower overhead by cutting employee benefits, taking on more part-time workers and discouraging elderly, disabled and unhealthy people from working for the company.

The memo outlines several steps that the Bentonville, Arkansas-based company could undertake to cut employee-benefit costs.

In a statement, campaign director Paul Blank said the very existence of the memo "robs Wal-Mart workers of their human dignity and instead treats them like products in their stores."

Wal-Mart Watch, which reportedly first obtained the memo, said it "shattered the myth that America’s largest corporation has a unique culture that prizes its Associates and cares for them." The group has outlined a series of statements by company officials that appear in direct opposition to the contents of the memo.

Crafted by M. Susan Chambers, Wal-Mart’s executive vice president for benefits, the document represents the work of a fifteen-member team convened to assess ways the company could address rising benefit costs. The Chambers committee made its recommendations using three factors: cost trends, public relations and employee satisfaction, according to the document.

Among the suggestions offered are raising obstacles to family health coverage eligibility and lowering company contributions toward spousal coverage, cutting life-insurance payouts, hiring more part-time workers and increasing individual employee hours, restructuring retirement offerings, and offering a variety of benefits packages, some of which would end up costing Wal-Mart less than current plans.

The memo also suggests that some employees "would happily give up some paid time off in exchange for a more generous discount card."

In addition, Chambers wrote, the company should attempt to educate workers on healthy lifestyles and set up in-store health clinics to ensure the workforce is healthy, "design all jobs to include some physical activity," and offer discounts and benefits that "appeal to healthy associates."

The memo reads: "It will be far easier to attract and retain a healthier workforce than it will be to change behavior in an existing one. These moves would also dissuade unhealthy people from coming to work at Wal-Mart."

The Chambers group also focused on the costs associated with long-time employees, noting that though benefits and pay increase with the length of time an employee stays with the company, increases in productivity are not assured. Additionally, the benefits manager found, granting better pay to reliable employees may actually prevent them from leaving the company.

"Because we pay an associate more in salary and benefits as his or her tenure increases, we are pricing that Associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart," Chambers wrote.

In a surprising admission about critiques of Wal-Mart’s healthcare offerings, Chambers admits in the memo: "Our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance."

In an interview with the New York Times, Chambers denied the suggestions were aimed at cost-cutting measures, stating: "We are investing in our benefits that will take even better care of our associates. Our benefit plan is known today as being generous."

Earlier this week, the company announced plans to expand healthcare coverage by lowering monthly premiums, some to as low as $11. The plan includes a $1,000 deductible that goes into effect after several doctors’ visits, a first-year $25,000 cap and a range of out-of-pocket payments for hospital stays and prescriptions.

Wal-Mart’s critics quickly attacked the plan as a repackaged version of the existing one that serves fewer than half of the company’s employees. In a side-by-side comparison, maintains that the deductibles under the new proposal are actually higher than those under the company’s two current plans.

According to the Times, the plan also includes individual health-savings accounts, one of the many proposals put forth in the Chambers proposal.

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The NewStandard ceased publishing on April 27, 2007.

Brendan Coyne is a contributing journalist.

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