For the past four years, Wal-Mart has watched the cost of its non-wage employee benefits grow faster than its sales. These benefits include healthcare, paid time off, profit sharing, and a 401(k) retirement savings program, and the cumulative cost is increasing on a trajectory where it could reach 12 percent of net profits. From the perspective of a discount retailer in a competitive market space, that number is alarming. In response, Wal-Mart's board of directors is looking to do what any responsible business leader would do in order to ensure the survival of the company, the jobs of 1.7 million associates (employees are called associates at Wal-Mart), and the continuing value it delivers to its hundreds of millions of customers: it is looking to cut costs.

Wal-Mart's cost consciousness is legendary: the corporate headquarters is located in Arkansas and resembles an old elementary school, employees take out their own trash, and account managers traveling on the road still stay in budget hotels. Wal-Mart's customers—most of whom are on tight budgets themselves—adore the low prices that result from such parsimony. But health benefits have become the third rail of corporate cost initiatives. For a large company even to speculate on strategies to bring health benefit expenditures back into line usually brings cries of scandal and greed.

The latest leaked internal memo, reported by the New York Times ("Wal-Mart Memo Suggests Ways to Cut Employee Benefit Costs," October 26, 2005) and other news sources is giving self-appointed watchdogs plenty to talk about. The report includes recommendations for such cost-saving measures as attracting and retaining healthier associates, adding duties to some positions to make them more physically active, and giving associates greater control of their care through consumer-driven health plans.

Predictably, the report has put the so-called consumer-advocacy groups back into the spotlight for another round of public concern-expressing. The report has also practically guaranteed that Wal-Mart, which already faces class-action lawsuits surrounding its hiring and promotion practices, will be served with new discrimination claims. (After all, Wal-Mart gets sued on average about every two hours, 365 days per year).

Employees, however, are not primarily the ones up in arms. They largely understand that business is business, as do most people in America who work for a living. It is the activist groups such as Wal-Mart Watch and Families U.S.A. who have been, and will continue to be, the force driving the attack campaigns. They vilify corporations in the name of advocating such things as "employee's rights" and "the right to health care," as if these newfangled rights are legitimate, and as if the real rights to life and property are not sufficient. Non-wage benefits are comparatively unimportant to associates, most of whom would rather have their productivity rewarded through merit-based pay scales than receive coverage for a medical condition they are unlikely to develop, or coverage for a spouse that they do not have (Wal-Mart pays far more in health plan premiums per spouse than it does per associate). In their own survey, just 3 percent of associates reported that benefits played a key role in attracting them to their job. And, other internal surveys have found that associates would prefer to be able to exchange lesser-valued benefits for more greatly-valued benefits, such as paid time off and gift cards. Still, the activist groups want to dictate what benefits Wal-Mart must provide and what benefits associates ought to want.

Wal-Mart, like any private corporation, has the right to set its own benefits structure, period. In a free economic system, it would be able to increase benefits, decrease benefits, make them interchangeable, or eliminate them altogether. It is not the activist groups' business.

The reason it is only Wal-Mart's business is because it is Wal-Mart's business. Just because a company is publicly held on the stock market does not mean that its assets and business practices become public property. They are still private property, held by the individual owners. If Wal-Mart chooses not to adjust their benefits structure, their business will suffer as they lose market share to competitors. If they rescind more benefits than is acceptable to the associates, then their business will suffer as skilled associates leave. The right level of total package compensation is an economic question, not a political one. These arguments (presented only in passing here) are what interventionists—who make careers out of convincing other people that they know what is best for them—cannot allow people to discover.

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