Sign of times: Wal-Mart laments 'hollowing out of middle class' as it cuts own employee benefits
Wake up and good morning. The challenge of being Wal-Mart in Florida, one of its biggest markets, crystallized recently in two stories about the world's biggest retailer.
Stephen Quinn (photo, left), executive vice president and chief marketing officer for the Walmart U.S. division of Wal-Mart Stores, told the opening general session at the "Masters of Marketing" annual conferences of the Association of National Advertisers in Phoenix that a major change is "the hollowing out of the middle class." That, he said, is creating "the hourglass economy where our country is divided between the haves and the have-nots." (Maybe he should give this same speech to Occupy Wall Street...)
Quinn noted that Florida is among seven of Wal-Mart’s top 10 states that have a higher unemployment rate than the national average -- with Florida's jobless rate edging ever so slightly down from 10.7 percent in August to 10.6 percent in September. The national jobless rate is 9.1 percent.
Shoppers, Quinn said, are talking about "adding water to their milk and taking half the dosage of their prescriptions."
That is a reason "why we brought back layaway" plans, Quinn added, which can help budget-minded consumers because "you pay for something first and then you get it." Quinn's remarks appears in Stuart Elliott's advertising column in the New York Times. Read it here.
Yet when "so many people feel sour," Quinn said, Wal-Mart sees a need to "reject negativity" and project optimism. He offered a preview of a cheerful Christmas commercial, complete with a merry song, which carries the theme "More joy for all," the New York Times reported.
So that's Wal-Mart's marketing message as we stumble into the holiday season. But here's Wal-Mart's reality.
Citing rising costs, Wal-Mart told its employees last week that all future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the company’s health insurance plans. And any new employees who average 24 hours to 33 hours a week will no longer be able to include a spouse as part of their health care plan, although children can still be covered. As reported here by the New York Times: "This is a big shift from just a few years ago when Wal-Mart expanded coverage for employees and their families after facing criticism because so many of its 1.4 million workers could not afford or did not qualify for coverage — rendering many of them eligible for Medicaid."
The same story quotes a company employee in Florida -- Tammy Yancey, a $9.50-an-hour gas attendant at a Sam’s Club in Pinellas Park -- who complains she would no longer be able to afford health insurance from the company. A smoker, Yancey says her premiums would jump to $127.90 every two weeks — or $3,325 a year — up from $53.80 at present, when she earns $12,000 a year from her job.
"I won’t be able to afford the insurance," she said. "And I really can’t go without insurance because I have a heart problem."
So there's the dilemma. Wal-Mart marketers are trying to figure out how to sell to a "hollowed out middle class" and "hourglass economy" while imposing economic decision on its own employees that contribute to people slipping out of middle class lifestyles.
It's not just Wal-Mart, obviously, that's watching its own employee base fall further under economic stress. But it's one very big example.
-- Robert Trigaux, Business Columnist, St. Petersburg Times