Tuesday, April 01, 2008

Wal-Mart. Always Low Values. Always.

UPDATE: WAL-MART CAPITULATES! (See link below initial post.)

Wal-Mart. Either you love 'em or you hate 'em. Some people love 'em because of the low prices. What many people do not understand is that low prices can come at a high cost. I know you folks aren't dumb, but let me start at the beginning. A corporation takes in money (from customer sales, investors, etc.) and pays out money (in payroll, vendor payments, taxes, etc.) The profit, at the end of the year, is what's left when all the money that has to go out goes out, and all the money that's going to come in comes in. A corporation increases its profits each year by either taking in more money, by spending less money, or a combination of both. Now, you can't make people go to Wal-Mart and spend money, but you can lower your expenses in various ways. One of those ways is by keeping payroll expenses down. This is one of Wal-Mart's key business strategies.

Wal-Mart likes to call its employees "Associates", possibly because "Government-Aid-Eligible-Hourly-Wage-Peon" was having a negative impact on employee recruitment and retention. Many Wal-Mart Associates are on Medicaid. And because many cannot afford the company's health insurance plan (they have to buy it, it's not a "free benefit"), many go without insurance for themselves or their children. And Wal-Mart knows this. They also understand that because their employees cannot afford the health plan, a large strain is placed on taxpayers to pay for Associates' emergency room visits. And they know they have an image problem when it comes to benefits.

Did you know that some employer-provided health insurance plans come with a stipulation that if you are ever injured, and you receive a settlement or judgment award from a court, your employer can sue you to recover what they paid out for your medical expenses? I didn't either. I know that some very large companies are "self-insured", meaning they pay out claims themselves, and not through some outside insurance company. I guess it makes sense if you're large enough to have the capital to pay for it. And if you were going to hire another company to do it, they would charge you enough to cover their expenses and make a profit. So just cut out the guy making the profit, and you save money. And you can save even more if what you charge your employees for their insurance also brings back a profit, but I do not know if Wal-Mart does that. But I do know that they don't like to lose money from paying out medical claims.

Debbie Shank had worked for Wal-Mart for eight years. She signed up for the company's health plan and, not long after she started working there, she was in a terrible car accident that left her brain-damaged, wheechair-bound, and in a nursing home. She sued the trucking company whose vehicle caused the accident and won nearly a million dollars in the settlement. After the lawyers took their slice, she was left with $417,000, which would be needed to give her the lifelong, full-time medical care she would be needing.

But Wal-mart wasn't happy with this. Prior to her settlement, Wal-mart had paid out $470,000, and they wanted it back. For some reason, they felt it was necessary to do this, because it would not have been fair to the other employees if they didn't. Wal-Mart spokesman John Simley said in a statement: "Wal-Mart's plan is bound by very specific rules. ... We wish it could be more flexible in Mrs. Shank's case since her circumstances are clearly extraordinary, but this is done out of fairness to all associates who contribute to, and benefit from, the plan." It's only out of fairness because you must do this to all of the other associates who win money in settlements - you sue them for it in court. I guess if you let Debbie Shank keep her money, you wouldn't be able to justify suing the other associates for theirs, would you? I guess you feel you can't start making exceptions to the rules, no matter how humane it makes you look to do so. Tell me something, Mr. Simley. If you were to ask all of the other Wal-Mart Associates if Wal-mart should have pursued Debbie Shank's case as hard as they did, do you think that they would have agreed that Wal-Mart acted "properly"? And what if Debbie Shank was your wife? Would the statement you released have been the same?

On Sep 6, 2007, one week after Wal-Mart won the appeal, Debbie's 18-year-old son, Jeremy, was killed in Iraq. Even though Debbie attended the funeral, her brain damage causes her to forget that he is dead. So when she asks family members how he's doing, and they tell her that he was killed, it's like she's hearing it for the first time, and she breaks down in tears all over again. So now she's not only brain-damaged, wheelchair-bound, and in need of constant medical attention for the rest of her life, she has to continuously be told that her son is dead, because she can't remember.

As despicable as all this is, there may be a way for Wal-mart to salvage their image. They may not make people forget entirely, but at least they can make it look like they're taking a step back, realizing how bad this makes them look, and investing some money in order to stave off a customer relations disaster. Here is what Wal-mart must do:

They should send a very high-level Wal-Mart representative (possibly one or more of the Walton Children) to apologize to Debbie Shank in person. They should also bring a hand-written letter of apology, so she'll have some evidence that they apologized to her. Because she will forget.

Give her back the money, every penny of it, you won from her in court. That money was supposed to be for the long-term care she'll need for the rest of her life.

Give her a check for the difference between what she won in her settlement, and what she actually ended up getting. Her lawyers are to get none of this. They didn't come up with this settlement idea, I did, and Debbie can keep my fee for this service.

Pay for her son's funeral expenses, even if she got money from the military. Not that losing her son was in any way Wal-Mart's fault, but it would demonstrate a level of empathy by Wal-Mart unheard of by most people.

Pay for a memorial to her son, one that honors his sacrifice and at least makes her proud each time she learns that he is dead. Pay to have it placed wherever she wants, be it on her own lawn or in the town square.

Make sure that the IRS can't get their grubby paws on any of the money you are giving her. If necessary, cover the taxes she might owe on it, or structure it in a way so that it's tax-free to her. Your own tax liability on this should not be an issue.

And last, don't ever do something like this to another employee again.

In 2007, Wal-Mart earned $11,284,000,000 in profits. That's about $357 per second. The amount of money Wal-Mart was looking to recoup from Ms. Shanks represented the amount of profit earned by Wal-Mart in about 29.1 minutes. That's less than a lunch break.

nwmuse at The Zoo has more.


Wal-mart has issued the following statement:

Wal-Mart Statement Regarding Shank Case
April 1, 2008

Occasionally others help us step back and look at a situation in a different way. This is one of those times. We have all been moved by Ms. Shank's extraordinary situation. Our current plan doesn't give us much flexibility, so we began reviewing the guidelines for the trust that pays medical costs for our associates and their family members.

We wanted to understand the ongoing impact of any potential changes to the trust, and ensure that any action we take is in the best interests of our associates and their family members who participate in and contribute to our plan. We have decided to modify our plan to allow us more discretion for individual cases, and are in the final stages of working out the details.

Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with the family to ensure the remaining amounts in the trust can be used for her ongoing care.

We are sorry for any additional stress this has put on the Shank family.

As well they should be sorry, but I am not satisfied that they have done enough. Wal-Mart demands loyalty and enthusiasm from its "associates", and Debbie Shank gave them that while she worked there. I have listed above what Wal-Mart can do to remedy this situation, and theyhave taken the first step. For that, I congratulate them, but I await the rest of the recompense the Shank family is due.

Come on, Wal-Mart. Just one half-hour's profits is all we're asking here. You mean to tell me that you can't demonstrate the kind of magnamity only a corporate giant of your size can pull off without breaking a sweat, and you won't do it, even if it's to save your sorry corporate image's ass?


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Anonymous said...

Your writing is just so good Wayne. Really good post. Your blog is looking fantastic!

Anonymous said...

This is but another nail in the coffin that is Walmart (to me). I stopped shopping at Walmart when they decided to devise a little Ponzi scheme to rent their facilities and pay rent (to their own companies) and then deduct the rent from their state taxes hence screwing those states out of millions of dollars. NC and WI has sued Walmart for not paying their fair share of taxes.

If I don't pay taxes I get the IRS breathing down my neck. They get a pass.

All that money that they didn't pay in state taxes would have gone to firefighters, police and other local needs...and at a time when there is so little money going around (thank you Gdumbya for everything you have done against the people of this country), that money Walmart pocketed is just frigging wrong!

There are too many reasons to not shop at Walmart and too few to.


Wayne A. Schneider said...

I did not know that, MsJoanne. I know about enough of their practices to consider them one of the most evil corporations to slither across America, but I did not know that they deliberately screwed states out of taxes (though I know that they pressured communities where Wal-Marts were built to go easy on property taxes, so they got screwed both ways). Thanks for the info. I suppose if I really delve into this, I'll hate them even more.

Wal-Mart. Always low values. Always.

Anonymous said...

Great Blog! Another thing to add to their repertoire, is that when you become a vendor of their's. Each year thereafter you have to lower your price of your product by 15%.

I co-owned a Fair Trade Company, and this is why we said "No Thanks". We are trying to help these women out of poverty not put them back there.

I will be a regular here, Thanks for letting everyone at TP know.

Freedom Rebel

Anonymous said...

Wayne, I read about it on HuffPo and I am sure you an Google it. Both WI and NC are suing Walmart.

I am sure you could do justice to a thread on that.

I HATE Walmart!


Wayne A. Schneider said...

Thank you, Freedom Rebel. I appreciate the kind words. Oay, then, vendors have to drop prices each year. Got it. Add it to the list.


Thank you, again. I believe I have been successful at convincing my mother to, at the very least, think twice about shopping at Wal-Mart. Anything better than that could only make me happier.

I know that there are several sites dedicated to keeping an eye on Wal-Mart. (I believe I linked to one earlier, I don't remember, I'll have to look.) I should start my research there in order to not "discover" something aslready known or observed about them.

But if you hear anything more about the lawsuits, you can either post it here (I get e-mails of the comments posted here, so I know when and where they are left; otherwise, who kows when I might have noticed?) or e-mail me at my standard e-mail.

Anonymous said...

For anyone reading this:

I saw that Walmart Watch setup a fund for the Shanks. You can donate here:


Also from Walmart Watch:


And will do, Wayne!


Anonymous said...

Hi Wayner 'n Jayner...

It's O/T, but, hey, it's besibol season again!

Anyways... never shopped at a Wal-mart and never will. It's nice to see what a little bad publicity can accomplish in a short lenght of time, huh?

Place is lookin' good... you guys put up new drapes or sum'pin?


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