retail watch

Walmart Cuts Health Benefits as it Grapples With the Economy

Posted by Dale Buss on October 21, 2011 05:01 PM

Walmart may employ more than 1% of the U.S. labor force, but it's not ingratiating itself with the 99% who are marching in its streets — at least, the ones who were marching in the nation's capital last night.

Economic pressures in the United States continue to roil the world's biggest retailer, which this week told its U.S. employees that it plans to shift a substantial share of the health-care cost burden back onto them in a roll-back of the major coverage expansion the company made just a few years ago.

Citing rising costs, the nation's largest employer stated, according to the New York Times, that all future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the company's health-insurance plans. Related moves include a significant health-insurance premium boost for full-time staff.

Walmart has been plagued by recent spikes in health-care costs, just like most other American companies. Some critics of the increases blame them on the onset of Obamacare; others allege that the huge premium boosts are simply a result of the same mammoth pressures underneath health-care costs that the unfolding federal health-insurance plan is meant to address. In either case, Walmart didn't cite Obamacare in its decision, though presumably it played some sort of role.

Neither did Walmart cite the recent poor performance of its U.S. outlets, which have struggled in same-store sales comparisons because of the weak economy and in the wake of the chain's own strategic misstep a couple of years ago away from its traditional formulae for product selection and merchandising — a mistake that the company reversed earlier this year.

While widely hailed when Walmart expanded health coverage just a few years ago to help its 1.4 million workers afford insurance, the company's skin-back now simply puts it back in the category of most large U.S. employers, more than half of which offer no company-sponsored health-care plan for part-time workers. Many of Walmart's retailing rivals don't offer such policies.

Still, the regression is sure to be widely critiqued by the enduring claque of haters who target Walmart no matter what it does. Faced with the choice between more such bile and making a necessary business decision during a time of that is making the best companies defensive, Walmart did what it had to do.

Last night, meanwhile, Walmart chairman Rob Walton encountered that bile during a visit the nation's capital. According to the Washington Post, more than 100 people, including those from the Occupy D.C. offshoot of the Occupy Wall Street movement, "poured into Union Station at 7 p.m. Thursday night to chant and sing their opposition."

A Walmart spokesman responded that the protest "seems particularly misguided given the fact that Walmart is focused on serving 'the 99 percent.' We’re helping to lower the cost of living for millions of Americans by providing more convenient access to affordable groceries and we create and support jobs that offer competitive pay, good benefits and the chance to build a career."

Walmart CMO Stephen Quinn, meanwhile, addressed attendees at the American Association of National Advertisers annual conference in Phoenix today about the economy's impact on the brand.

"Coming out of the 2008-2009 financial crisis, things are fundamentally different, and they're permanently different in the U.S. economy, " Quinn stated at the growth-focused ANA event, according to Ad Age's account, which added that

Walmart's own struggles and the appointment of Bill Simon as U.S. CEO last year led the marketing department to reassess what was working and not working, based on a fundamental reassessment of customers. With a disappearing middle class, declining median family incomes and rising poverty rates in the U.S., [Quinn] said consumers value things differently today.

"We've gorged ourselves on mass affluence, and we did it by piling up a mountain of debt," Quinn commented, prompting customers to make a "shift to responsibility" and the chain to reintroduce its layaway program, which was announced in September.

Comments

walmart employee United States says:

All righty then ... let us add another class of discrimination .... work alongside someone doing the same job  getting more pay/bennies

October 22, 2011 04:33 PM #

Colin United Kingdom says:

It's awful but it's the state of the economy

October 23, 2011 04:19 PM #

Sam United States says:

Who still uses terminology like "Obamacare". This (healthcare) is a serious matter and should be handled as proper journalism, not on the level some fringe loonie blog. It's life and death - or bankrupcy - at stake for many here.

October 24, 2011 02:58 AM #

sm United States says:

Just picked myself up off the floor for laughing so hard......the article looks to have been written by a lobbyist for WalMart......WalMart, hugely successful, massively profitable, the last thing you want to do is create in the minds of the not so well paid employees that you want to add more costs to their daily economic struggles.......Pretty simple - take care of your employees and they will take care of you long term.......Rising costs by WalMart's offshore suppliers, rising costs in transportation, rising costs in health care and more are squeezing everyone. WalMart, look around. Now your employees can be seen shopping quietly at Target and others cause they think you shafted them

October 24, 2011 12:58 PM #

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