Wal-Mart Memo Suggests Ways to Reduce Benefit Costs

New York City, An internal memo sent to Wal-Mart Stores’ board of directors proposes numerous ways to hold down spending on health care and other benefits in ways that minimize damage to the retailer’s reputation, including hiring more part-time workers, according to a report in Wednesday’s The New York Times. The paper said the draft memo was obtained from Wal-Mart Watch, a pressure group allied with labor unions that are critical of Wal-Mart’s pay and benefits. A spokesperson for the group said someone mailed the document anonymously to Wal-Mart Watch last month.

The paper said in the memo that Susan Chambers, Wal-Mart’s executive VP for benefits, recommends reducing 401(k) contributions, reducing company-paid life-insurance policies, and attracting younger, and presumably healthier, workers by offering education benefits and by arranging for all jobs to involve some physical activity.

Other proposals include reducing the amount of time, from two years to one, that part-time employees would have to wait before qualifying for health insurance. Another would place health clinics in stores, in part to help reduce expensive employee visits to emergency rooms. The memo also promotes health savings accounts.

Wal-Mart executives said the memo was part of an effort to rein in benefit costs, which have increased by 15% annually on average since 2002. Like other retailers, the company finds itself increasingly squeezed by soaring health-related costs. The proposed plan, if approved, would save the company more than $1 billion a year by 2011, according to the newspaper.