An Example for WalMart, who uses taxpayers to subsidize employee healthcare

[Rez O. Lewshun]

WalMart, the largest and wealthiest worldwide corporation admits its business plan includes depending on an employees spousal health benefits (other corporations) or for all you free marketologists.... the government. More employees for WalMart than any other corporation use, food stamps, child health insurance programs and other gov't assistance programs to make up for
Betonville's pathetic health care plans. (can this be justified?)

That means you really don't get those low prices at Walmart. In fact we all subsidize those low prices with our tax dollars and we take advantage of the employees by supporting WalMart. We all know Costco is better, they just don't have the selection....[before you renew your Sams Club membership now you know... Perhaps there is another way, that even Costco can learn from.....

Investor's Business Daily, December 17, 2004

How Whole Foods Can Help Wal-Mart Beat Scrooge Rap

by Sally C. Pipes



Despite its enormous popularity with consumers, Wal-Mart is under attack for paying nonunion wages and shorting employees on health care coverage. The massive discounter recently dodged an electoral bullet aimed at it by union and other left-wing activists in California that would have forced it to offer a government-approved health care plan or ante up millions in additional taxes. Although victorious this time around, Wal-Mart's status quo is anything but stable. Wal-Mart's critics often compare it to Costco, another successful, largely nonunion discount retailer, and find its compensation and benefits package wanting. Costco pays an average wage of $16 an hour and offers a generous health care package. Wal-Mart, in comparison, pays on average only $10 an hour and covers roughly two-thirds of the cost of its employees' health care.

Critics charge that many Wal-Mart employees work such few hours and make such little money that they burden the public system by signing up for Medicaid and other government health care programs.

Rising Costs

Both retailers ought to look to a third company: Whole Foods. The cutting-edge healthy-food retailer combines a zealous belief in the free market, a dedication to employees and a fierce focus on the customer. It's been wildly successful in the competitive grocery sector.

Its CEO, John Mackey, thinks the company has found a workable solution to the high cost of employee health care -- health reimbursement accounts.

In 2002, the Fortune 1000 retailer hit a wall with its spending on employee health. The company spent $7 million more on employee health care than it collected in premiums, and costs were projected to continue rising.

Whole Foods' employees, or team members, valued their health coverage. But left unchanged, the three plans the company offered employees would soon start to compromise profits and wages.

Expenses Capped

Mackey ran across a solution among the scribblings of free market health care advocates: consumer-driven health care, with health reimbursement accounts at the core. Under such a plan, Whole Foods would no longer pay for routine medical care, but rather offer a high-deductible health insurance plan with a tax-advantaged savings account from which team members could pay routine expenses.

The plan, for which the company pays 100% of premiums for longtime employees, started paying for medical claims after a $1,000 deductible. It pays for prescriptions after an employee has spent $500. Total employee out of pocket spending is capped at $3,500 a year. In addition, the company deposits $300 to $1,800 in employee personal wellness accounts, depending on length of service. Any money not spent in one year can roll over, tax free, to be used in the future.

When presented with the option, Whole Foods team members adopted the program by an overwhelming vote of 83%. It is proving to be a win-win solution for everyone. In the first year, costs dropped by 42%. A total of $14 million of unused money rolled over for use in the future. Mackey expects the plan to move to even higher deductibles as account balances increase. He also expects employees will vote to adopt a similar program, health savings accounts, that lets them keep the money if they leave Whole Foods.

A health plan based on health reimbursement accounts would be a boon for Wal-Mart and Costco. By relying on high-deductible insurance, it controls the administrative costs associated with processing thousands of small claims.

Just as people compare prices and often end up at Wal-Mart and Costco for a purchase, employees will have an incentive to shop prudently for routine health care as any money they save stays in their account. Contributions to the savings account can be based on employee tenure, rewarding longevity and reducing expensive employee turnover.

Whole Foods, for example, puts in $300 for employees with up to one year's service and $1,800 for employees who have worked nearly five years. And an HRA plan even blunts the employer pain when employees leave. Only the employer can deposit money into the HRA. And when an employee leaves the firm, the money stays behind. For high turnover employers, this will have the effect of lowering the health care costs for employees who stay. That's not a bad side effect.

Less Is More

A consumer-driven plan would prove profitable for both Wal-Mart and its employees, as it has for Whole Foods. The average retailer spends $5,804 on health care for each employee. Wal-Mart spends $3,500 per employee. Whole Foods now spends $2,998. A consumer-driven health care plan might just be the tool that lets Wal-Mart answer its critics, serve its employees and keep the public coming through its doors for the rock-bottom prices on which they depend. '

 

[cforst513]

Wal-Mart is the Microsoft of discount stores

I heard from one of my teachers a while ago that Wallyworld is demanding that their suppliers outsource to China or else they cannot sell their merchandise in Wal-Mart. This causes several problems. First, we lose jobs b/c the manufacturing of these products will be done in China. However, they still don't pay the Chinese what they deserve. Second, China's standard of living is rapidly improving. But when this happens in a country of over a billion, it spells bad news for the environment. When their standard of living imporves, they have more money for things like cars, boats, and other toys. China has recently surpassed the US in overall oil consumption. If there was ever a blatant source of global warming pollution, it is the new China. So I'm not saying if you shop at Wallyworld you're aiding to the global warming problem (just like if i drive an SUV i support terrorists, right?), but what I am saying is that people need to be informed about the shady business dealings of this company. Mr. Walton's probably spinning in his grave right now. Also, I heard Wallyworld is opening over 3,000 stores this coming year or 2. That's insane. The parking lots ALONE will increase global warming! So, do like I do and avoid this awful company. They have shady business dealings, treat their empolyees like crap, and are causing problems like job loss in america.

 

[Wiggums]

It's a little more complicated then just rasing pay and improving health care benifits. If Walmart working at Walmart became a $16/hr job with good benifits would it really help the current and future employees? Better quality workers would be applying for the same job, and would be taking the jobs away from the current employees that will work for lower wages. Think about this analogy, if Mesa started paying FO's 100k and captians 200k you'd see a huge jump in the average experience of applicants. Sure, things would be better for the pilots at Mesa, but the people that are getting hired now would be displaced by better qualified applicants. Potential Mesa employees would have to go work for another regional, with likely the same low pay and benifits. The same would be true for future Walmart works, they would be priced out of the market and end up at a different $10/hr job.

Hey, if you want to feet better you can look at it this way. At least it is a progressive tax that pays for Walmart's employe benifits. If they improved their benifits and pay then it would be a regressive tax. Other $10/hr employees that shop at Walmart be paying for benifits that they don't pay for today.

 

[Rez O. Lewshun]

Maybe you like pickles from China? What's the point if Walmart makes a co. bankrupt?

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Wal-Mart `Eats' More
[/font][font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]U.S. Manufacturers[/font][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]by Richard Freeman[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]In mid-November, Wal-Mart, the world's largest corporation and leader of the "globalization" drive, forced the closing of a national children's clothing store, Kids 'R' Us, and pushed the famous Hoover vacuum cleaner manufacturer to the brink; by the end of November, it is expected that Hoover may announce the shift of a substantial portion of its production facilities to Mexico, laying off hundreds of American workers.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Forcing the closure of competing retail stores is a Wal-Mart specialty, as is its destruction of many of America's leading textile and apparel manufacturers and food companies.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Wal-Mart is a driving force for America's implementation of the Imperial Rome model: Unable to reproduce its own population's existence, the United States has, for the past two decades, used an over-valued dollar to import goods from abroad. Wal-Mart markets an immense volume of these goods, many of which are produced under slave-labor conditions. It pays below-subsistence wages to its American workers, and drives down the wages of competing retail stores.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Gutting Companies[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]On Nov. 17, the national retail chain Toys 'R' Us, announced that it would close 146 of the stores of its Kids 'R' Us subdivision, which sells clothing, as well as 36 of its Imaginarium stores (which sell "educational" toys and games). The shutdowns will be completed by Jan. 31, 2004, eliminating up to 3,800 jobs. Kids 'R' Us was unable to slash the prices of its children's clothing deeply enough to compete with Wal-Mart.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Moreover, Wal-Mart has launched an aggressive campaign, through cut-throat pricing, to destroy the parent company, Toys 'R' Us, the second-largest toy seller (after Wal-Mart) in America. As an example of how this strategy operates: The popular Hot Wheels T-Wreck Play Set toy sells for $42 wholesale. However, according to the Nov. 19 Wall Street Journal, Wal-Mart is now selling that very toy at $29.74, a loss of more than $10 per unit. Wal-Mart sells 21% of all toys sold in America, and if it knocks out its leading competitor, its share could reach 30%.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Hoover has been a leading name in vacuum cleaners for nearly 100 years. During the third quarter of this year, Hoover's vacuum-cleaner sales declined by 20%, which the company blamed on competitors' models priced at $79—made in Asia to meet Wal-Mart's price demands—outselling Hoover's $100-plus vacuums produced in the United States. Hoover cannot withstand such drops in sales volumes. Hoover's parent company, Maytag, is demanding cuts in health insurance and other benefits, plus changes in job-security rules for production workers at its Hoover vacuum manufacturing plant in North Canton, Ohio. If the workers don't cave in, Maytag has stated that it will move Hoover vacuum production to cheap-wage sites in Texas, and to maquiladoras in Ciudad Juárez, Mexico.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Textile and Apparel, and Food Sectors[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]No company is safe from Wal-Mart's unswerving assault, but particularly at risk are manufacturing concerns in the textile and apparel sector, and in the food sector.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Wal-Mart has ravaged companies by leveraging its enormous sales power, and its access to products produced by slave-labor, to make suppliers follow its pricing decisions. If the supplier company doesn't sell its goods at the price Wal-Mart sets, Wal-Mart denies them shelf space at its stores, which destroys that company. However, even when a supplier meets Wal-Mart's prices, the prices are so low, and the supplier loses so much money, that the supplier is forced into bankruptcy. Wal-Mart's 2002 sales of $244.5 billion were larger than the sales of Sears, Target, J.C. Penny, K-Mart, Safeway, and Kroger combined.[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Textiles and Apparel:[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Carolina Mills is a 75-year-old company that supplies thread, yarn, and textile finishing to apparel-makers—half of which supply Wal-Mart. But since 2000, Carolina Mills' customers have begun to find imported clothing sold so cheaply at Wal-Mart, that Carolina Mills could not compete even if they paid their workers nothing! Since 2000, Carolina Mills has shrunk from 17 factories to 7, and from 2,600 employees to 1,200. Steve Dobbins, the CEO of Carolina Mills, told the December issue of Fast-Company magazine: "People ask, 'How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?' But you can't buy anything if you're not employed. We are shopping ourselves out of jobs" (emphasis added).



[/size][/font][font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Lovable Garments, which was founded in 1926, had, by the 1990s, become the sixth-largest producer of women's lingerie in the United States, employing 700 workers. Wal-Mart became the biggest purchaser of Lovable's goods; in 1995, Wal-Mart demanded that Lovable slash its prices to compete with cheap imports. When Lovable indicated it could not do that, Wal-Mart illegally reneged on its contract, and outsourced the lingerie production to Ibero-America, Asia, and China. Without the Wal-Mart market, in 1998 Lovable had to close its American manufacturing facilities and fire the workers. Stated Frank Garson, who was then Lovable's president, "Their actions to pulverize people are unnecessary. Wal-Mart chewed us up and spit us out."[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Food:[/size][/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular][size=-1]Vlasic Pickles was roped into a contract with Wal-Mart, in which Wal-Mart sold a 3 gallon jar of whole pickles for $2.97. Wal-Mart sold 240,000 gallons of pickles per week. But the price of the 3 gallon jar was so low, that it vastly undercut Vlasic's sales of 8 ounce and 16 ounce jars of cut pickles; further, Vlasic only made a few pennies per 3 gallon jar. With its profits tumbling, Vlasic asked Wal-Mart for the right to raise the price per 3 gallon jar to $3.49, and according to a Vlasic executive, Wal-Mart threatened that if Vlasic tried to back out of this feature of the contract, Wal-Mart would cease carrying any Vlasic product. Eventually, a Wal-Mart executive said, "Well, we've done to pickles what we did to orange juice. We've killed it"—meaning it had wiped out competitor products. Finally, it allowed Vlasic to raise prices; but in January 2001, Vlasic filed for bankruptcy.[/size][/font]

cont....

 

[Rez O. Lewshun]

cont...

Destroying Labor Overseas



Wal-Mart buys a lot of its goods from China, which in many sections of the country, pays very low wages. One case that has come to light concerns the Ching Hai Electric Works Co. in Shajing, which produces electric fans. The factory makes several million fans per year, and sells them under many of the world's leading brand names, and also under two of the company's own names. The workers' starting salary is $32 per month, which is more than 40% below China's minimum wage of $56 per month. There are also reportedly many workplace accidents in the factory. In the late 1990s, Wal-Mart started making demands that the price of the fans be lowered, and they have fallen from approximately $7, to $4 per fan. But to lower the price, the manager of the plant had to cut its workforce in half, to 1,500 workers, while maintaining the same level of orders. This has led to many workers working 14 hours per day, for a pittance.



Meanwhile, American factories that produce fans are shutting down.



International Spotlight



The situation has become so outrageous, that it is drawing international attention. On Nov. 19, the Observer of London carried an article on the destruction of the City of Buffalo, New York, mentioning the role of Wal-Mart. The article tells the story of Buffalo Color, a manufacturing plant where indigo dye for denim was produced. Once employing 3,000 workers, Buffalo Color lost business to plants established in China, which produce the indigo dye at half the cost that Buffalo Color does. The indigo dye is used to color the denim, most of which is used in clothing, and Wal-Mart has driven down the price it will pay for clothing, and thus all its constituent ingredients must be cheaper. Buffalo Color now employs 12 people, and functions strictly as a resale operation. The article also reports on the Made in the USA group, which consists of many small- and medium-sized manufacturers, whose chairman states that its primary enemy is Wal-Mart.



On Nov. 18-19, the City of London's mouthpiece, the Financial Times, ran four articles on Wal-Mart, centered on Wal-Mart's practices of hiring and directing cleaning companies that employed foreign illegal workers who cleaned Wal-Mart stores, seven nights a week, under hideous conditions.

 

[Wiggums]

I heard from one of my teachers a while ago that Wallyworld is demanding that their suppliers outsource to China or else they cannot sell their merchandise in Wal-Mart.

I'm guessing that you are in university. Something will learn over time is that professors are NOT an unbiased source of information.

This causes several problems. First, we lose jobs b/c the manufacturing of these products will be done in China. However, they still don't pay the Chinese what they deserve.

Nov 2004 unemployment rate is 5.4%, which is historically low. The job situation is getting better and better in the US. Sure, you can show me a story of where a plant closed in a small town somewhere, causing massive unemployment. While I feel sorry for those people and I agree that we should help retrain them for other jobs, this is what happens when a town/person puts all their eggs in one basket. How many times on this board have you read people always recommending newbies to have a backup plan? If a someone on this board got themselves a Boeing 707 type rating and then complained that they couldn't find work because the only job they were trained for is going away, would we really feel sorry for them?

Second, China's standard of living is rapidly improving. But when this happens in a country of over a billion, it spells bad news for the environment. When their standard of living imporves, they have more money for things like cars, boats, and other toys. China has recently surpassed the US in overall oil consumption.

This is a good thing. As standard of living rises in China, and other nations that compete with us for labor, it will be less attractive for companies to move jobs over there. Also, as people their buy more consumer goods this benifits American's and other Western nations. Alot of that money spent will make it back to American companies. Also, who are we to say that China cannot use oil? Sure it drives up the price for us, but it's not unfair.

If there was ever a blatant source of global warming pollution, it is the new China. So I'm not saying if you shop at Wallyworld you're aiding to the global warming problem

Hey, its called "Global Climate Change". Didn't you see Al Gore's movie?

Also, I heard Wallyworld is opening over 3,000 stores this coming year or 2. That's insane. The parking lots ALONE will increase global warming! So, do like I do and avoid this awful company. They have shady business dealings, treat their empolyees like crap, and are causing problems like job loss in america.

Also, I heard that Boeing and Airbus will deliver 600 new airplanes in the next year or two. The ground service equipment alone will increase global warming! (sorry, global climate change, if it even exists). So do what I do and avoid companies such as Mesa and CHQ. They treat employees like crap and are causing job loss at the majors!