Friday, September 4, 2009

Yet Another Reason To Avoid Wal-Mart

Wal-Mart has given me lots of reasons to avoid shopping there over the years. Their appearance in many towns has led to a blight of specialty shops and other mom and pop stores. This in, turn, has helped lead to greater concentration of wealth in America. They've been one of the leading motivations for American housewares and sundries manufacturers moving their plants overseas. They've also been one of the leaders in refusing to provide health insurance to their employees.

And I don't like smileys.

Now, thanks to, I have another reason to avoid them:

Wal-Mart was the biggest user of [corporate-owned life insurance (COLI)] in the 1990s, taking out insurance on 350,000 of its workers, and received some negative attention for it a few years ago. But bankers now appear to have taken the lead in perfecting this innovation, using death benefits on current and former workers as a tax-free means to fund executive bonuses and retirement income. “The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.”

Human Capital, “Matrix” Style

When you couple that idea with the Wal-Mart's well-known refusal to provide health insurance for its workers, they start to sound positively ghoulish. It's certainly another example of the company's real attitude about its workers and anyone else it affects.

That the banks are now copying this practice surprises me scarcely at all. These are the same folks who thought nothing of giving themselves huge bonuses after sucking from the public teat to stay out of bankruptcy.

I sometimes think that the only real requirement for being a CEO of a large corporation is to be utterly shameless.

For further reading on Wal-Mart, I suggest this report that was compiled by U.S. Rep. George Miller a few years ago.

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