Wal-Mart: Dump the Old, Hire the Children

Last week the Times reported on the embarrassing memo that escaped this year's top-secret Board of Directors retreat for Wal-Mart managers, where they discussed ways to dump older employees to escape the burdens of paying the paltry benefits that they do provide. Here is a sampling from the 26-page memo:

Growth in benefits costs is unacceptable (15 percent per year) and driven by fundamental and persistent root causes (e.g., aging workforce, increasing average tenure). Unabated, benefits costs could consume an incremental 12 percent of our total profits in 2011,
equal to $30 billion to $35 billion in market capitalization.

While Associates are satisfied overall with their benefits, they are opposed to most traditional cost-control levers (e.g., higher deductibles for health insurance). Satisfaction also varies significantly by benefit and by segment of Associates. Most troubling, the least
healthy, least productive Associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart.

Could it be that Wal-Mart's quandary presents the perfect opportunity to deal with the problem of youngsters dropping out of school or being pushed out of school for testing reasons? We know that the fines associated in hiring illegals proved too expensive to make up for the peanuts they were being paid. Could it be that a doddering "Good Morning" greeting could be replaced this holiday season by a smiling "S-up"?

Well, the Labor Department seems to be trying to help that effort--at least they were, until this turned up in the Times today:

The Labor Department's inspector general strongly criticized department officials yesterday for "serious breakdowns" in procedures involving an agreement promising Wal-Mart Stores 15 days' notice before labor investigators would inspect its stores for child labor violations.

The report by the inspector general faulted department officials for making "significant concessions" to Wal-Mart, the nation's largest retailer, without obtaining anything in return. The report also criticized department officials for letting Wal-Mart lawyers write substantial parts of the settlement and for leaving the department's own legal division out of the settlement process.

If you are an investor, you shouldn't get worried yet. Wasn't that Poppy Bush pinning the Medal of Freedom on Sam Walton back in 1992? And don't forget about good ole Arkansas ingenuity blended with Rovian spin--this just in on Wal-Mart's new War Room:

BENTONVILLE, Ark., Oct. 26 - Inside a stuffy, windowless room here, veterans of the 2004 Bush and Kerry presidential campaigns sit, stand and pace around six plastic folding tables. Open containers of pistachio nuts and tropical trail mix compete for space with laptops and BlackBerries. CNN flickers on a television in the corner.

The phone rings, and a 20-something woman answers. "Turn on Fox," she yells, running up to the TV with a notepad. "This could be important."

A scene from a campaign war room? Well, sort of. It is a war room inside the headquarters of Wal-Mart, the giant discount retailer that hopes to sell a new, improved image to reluctant consumers.

Wal-Mart under siege and the White House under siege on the same holiday season? Too much. Read the rest here.

Jim Horn