Walmart And Cheapness

Prem Shankar Jha writes about Walmart entering India in DH. Tucked at the end is this:

Stiglitz has also pointed out greater efficiency is only a small part of the reason for Wal-Mart’s edge in pricing. Most of it comes from squeezing its suppliers, driving down wages and denying social benefits. Someone pays, only not Wal-Mart.

Reminded me of something I read sometime ago about Walmart. It is a neat little trick: longtime employees cost more in terms of wages and benefits. So gently prise their hands off the jobs and replace with part-timers as needed:

In the confidential memo sent to Wal-Mart’s board last year, M. Susan Chambers, who was recently promoted to be Wal-Mart’s executive vice president in charge of human resources, questioned whether it was cost-efficient to employ longtime workers. “Given the impact of tenure on wages and benefits,” she wrote, “the cost of an associate with 7 years of tenure is almost 55 percent more than the cost of an associate with 1 year of tenure, yet there is no difference in his or her productivity.”

The memo said, “the shift to more part-time associates will lower Wal-Mart’s health-care enrollment” even though Wal-Mart was reducing the amount of time to one year, from two, that part-time workers would have to wait to qualify for health insurance.

Workers say there is some evidence that the goals outlined in Ms. Chambers’ memo are being put into practice. At several stores in Florida, employees said, managers have suddenly barred older employees with back or leg problems from sitting on stools after using them for years while working as cashiers, store greeters or fitting-room attendants. Wal-Mart said it had no companywide policy on stool use and did not have enough information to comment.

A bit heartless, but it brings home the bacon for Walmart.