So, Wal-Mart, already something of a poster child for stingy health benefits, is slashing its health benefits. It surely says something about our economy and the unemployment situation that the traditional motivation for offering health insurance -- attracting and retaining employees -- doesn?t mean much to a company that employs about 1% of American workers.
Most of the unemployed are the type of low-wage earners that comprise the bulk of Wal-Mart?s head count. Therefore, the company presently has no trouble meeting its staffing needs. So why not make the cuts? Even considering the retailer?s low per-employee benefit contribution, with 2 million workers worldwide the savings will buy a lot of groceries.
But wait a minute. We can all see a cat chasing its tail here, can?t we? Not just at Wal-Mart but within the employer universe generally, there is a low level of business investment. The reason: consumer demand is low. The reason for that: millions of people are unemployed or underemployed. The reason for that: low business investment. We?d better set about pulling one of those strings.
It should be plain, I think, that the economy remains sickly as a result, in some part, of employers? collective actions to shed employees, freeze hirings, minimize raises, and shrink benefits. Yes, any particular company can credibly say, ?We had no choice. We can?t have a cost structure that?s out of whack with our competitors. We have a duty to our shareholders.? But with everyone doing the same, the population simply has less money to spend on products and services.
Long term, presumedly the job market will make a comeback. I hear very intelligent people saying that much of the corporate cost cuts that have transpired over the past few years will stay in place forever. I wonder if that?s really true. It would seem that spending is necessary to be a market?s employer of choice at a time when employees actually have a choice.