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Wal-Mart Weekly: $2 billion in bonuses coming to Wal-Mart employees

Posted Mar 23rd 2009 5:20PM by Brian WhiteBrian White RSS Feed
Filed under: Wal-Mart (WMT), Columns

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Welcome to the 102nd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.

Wal-Mart Stores, Inc. (NYSE: WMT) has had one big, black eye in recent time that it just can't get away from: its relationship with labor. Wal-Mart's fiercest critics have pointed out many examples of the low pay, pricey health insurance, and low-end working conditions.

Are Wal-Mart workers really in that big of a bind, or does the largest retailer in the world have pay and benefit parity with all its competitors? When you're the biggest, you have the target painted on your back -- and Wal-Mart has been there for some time. However, the company has just announced a rather large bonus plan for its employees with a sizable target indeed: $2 billion dollars.


Hourly employees get a lift

One could say that Wal-Mart employees (mostly hourly) get the market rate for the jobs they perform. After all, do Kroger and Target employees enjoy a huge wage increase over their Wal-Mart worker friends? Doubtful. While Wal-Mart is the first to point out that it pays its employees well, many employees have taken the victim route and have joined the critics' circles. These critics state that Wal-Mart employees just can't get by with the low wages the retailer pays. In a country where almost everyone can have a choice to work, this entitlement mentality runs rampant in the Wal-Mart bashing industry.

On the flip side, those who claim many Wal-Mart employees are "forced" to work there or somehow be homeless (or the equivalent) take up the cause for trying to get the retailer to pay wages that would give workers a living wage. While "living wage" is a completely relative term, the basic needs should be covered: shelter, food and medical. If those three needs are not met sufficiently with a job's wages, then there's a problem. What to do?

Wal-Mart is raking in the dough

While many (if not almost all) retailers are struggling heavily through the current recession, Wal-Mart is the one who is growing and making money. The reason, which has been discussed ad nauseam in the last three months, is due to many millions of retail consumers "trading down" to get the best prices on everything they need every day, from tires to food to light bulbs.

As such, Wal-Mart will be shortly rewarding many of those store-level employees with cash bonuses. The total being given out? About $2 billion, according to the retailer. The bonuses won't just come in the form of cash, though: pension savings accounts are also included. While many retailers and companies have suspended matching 401k contributions in light of the economic crisis underway, Wal-Mart is increasing contributions using these bonuses.

The breakdown as given by CEO Mike Duke:
  • $933.6 million in cash bonuses
  • $788.8 million in profit-sharing and pension contributions
  • Merchandise discounts and contributions to its employee stock purchase plan
Duke also wasted no time in comparing the current bonus level to 2008's level of $636 million in cash bonuses for 900,000 hourly employees. Additionally, the health care coverage given to Wal-Mart workers inched up from 92.7% in 2008 to 94.5% so far this year. So, what's not to like about Wal-Mart's generosity here? Any bonus -- even $50 per employee -- is a bonus. While critics may still argue that Wal-Mart's health insurance options are still too pricey for many of its employees, isn't some insurance better than none at all?

Why the open wallets?

At a time when the movement to unionize as many Wal-Mart locations as possible is underway, is Wal-Mart's increasing generosity indicative of an ulterior motive, or is it really part of a plan to share the corporate wealth to its employee base? We again have to think about whether Wal-Mart's worker treatment (pay and benefits) is on par with the competition's. Should Wal-Mart be held to a higher standard than its competition based on its standing of being the largest retailer on the face of the planet? If so, why?

Wal-Mart critics will surely see the retailer's bonus tactic here as a ruse intended to guide attention from potential collective bargaining movements. Wal-Mart workers, on the other hand, will welcome the bonus in all its forms with open arms. One thing remains clear: while large corporations are taking federal taxpayer money in the form of bailouts and paying large bonuses to executives and sending millions down the "perk" hole, Wal-Mart is giving back to its workers -- the exact opposite of the incredible greed currently gripping incompetently-ran, brink-like companies like AIG. That alone stands for something, and Wal-Mart's fiercest critics can't shake a stick at that.

Join me right here this time next week for another edition of the Wal-Mart Weekly. Until then, stay safe and keep your wallets and purses protected.

Tags: inc., wal-mart, wal-mart stores, wal-mart weekly, Wal-martStores, Wal-martWeekly, WMT

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