Walmart slashes employee insurance benefits, harms America

Sam Walton's original Bentonville, AR 5 & Dime store
Sam Walton's original Bentonville, AR 5 & Dime store, now a Walmart visitor center. It's a different America now. (Via Wikipedia)

WASHINGTON, October 10, 2014 — There has been a growing trend for businesses to cut employee health insurance benefits or to displace added costs onto employees.  Wal-Mart, for example, has announced it plans to raise healthcare costs for its employees while no longer offering benefits to more than 30,000 part-time workers a day after it launched a program to help sell insurance to its customers. In many ways, Wal-Mart is actually shooting itself in the foot as it hurts the US economy.

Given that Wal-Mart is a corporation, it can only be expected to do what is in its perceived interests. It is, therefore, tempting to focus on external factors for the decision of Wal-Mart and other businesses attempting to suppress in health insurance liabilities. The Affordable Care Act, for example, has introduced great uncertainty when it comes to the cost of healthcare, whether for better or for worse. Obamacare, which Wal-Mart supported, has created liabilities for business while offering employers an out for employees working under 30 hours a week. Yet it is also the culture in today’s corporate world to treat employees as replaceable. Thus, a likely majority of American businesses support a culture of depressed wages with increased overhead costs displaced onto workers.

Wal-Mart may be behind the curve of other retailers in their efforts to trim healthcare costs, but Wal-Mart is, sadly, the biggest private sector employer in the United States. At the same time, it generally offers low-wages, yet expects to attract low-wage earners as customers to expand its profits, which are then transferred to the pockets of investors outside of the communities their stores serve. Consequently, Wal-Mart is ahead of the pack when it comes to competing on cutting payroll costs, instead of better service, that diverts capital out of the communities its feeds off.

In essence, Wal-Mart embodies the unsustainable nature of the US economy that businesses have engineered. Where Wal-Mart depends on American customers to feed its ever-growing appetite for increased profits, it then undercuts the spending power of Americans by finding ways to pay employees less and to displace traditional employment costs, such as healthcare, onto their low-wage earners. To boot, Wal-Mart also helps undermine the Middle Class manufacturing jobs that could actually support the revenue its investors carve by leading the import market.

If an interviewee stepped into most companies and said he wanted a job for as much money as he could get, yet cared little about what the business did, he probably would not have a very good job. On the other hand, businesses do this all the time to America, sometimes with grave consequences to the company as well as the broader US economy. Wal-Mart is one such company that has little concern for the broader needs of its employees and other customers. Wal-Mart is here to profit and damn the broader consequences.

Furthermore, it is sometimes necessary to step back and understand why society supports the existence of commerce. It is because businesses serve the needs and wants of the communities they operate within. Investors and corporations have forgotten over the past few decades that a decent profit is still a profit. Profits cannot perpetually increase at the expense of employees who also happen to be their customers. When it comes to Wal-Mart, this is a lesson that it−and other companies in the large-cap universe−must learn. Otherwise, the U.S. economy will continue to see diminished consumer spending with fewer decent paying jobs that provide benefits worth having.

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  • lobosolo

    Obamacare seems to be working as well as expected !

  • RGZ_50

    Matt, which NBA team did you enjoy playing on the most, Miami, Charlotte or the 76’ers? Just kidding.

    Seriously though, your points on WalMart are well taken. There are a number of reasons no one in my household shops at WalMart, but at the top of the list is the fact that WalMart is a corporation that has leveraged its growth on government influence and rent seeking – while at the same time using the taxpayer to subsidize the social needs of its employees that they don’t cover.

    They have also deceived the public with their “Buy American” public relations scam. WalMart executives recently told Chinese officials that their goal was to source a minimum of the goods sold in their stores from China. So, WalMart is also cratering American manufacturing and jobs. Vote with your pocketbook – shop elsewhere.

    • RGZ_50

      excuse me, that was supposed to read “a minimum of 70 % of the goods sold in their stores”