Walmart offers cheap goods, but from driving out competitors to expanding taxpayer subsidized healthcare, little good actually comes from this.
For untold millions, Walmart is not simply a place to shop, but the place. Considering that the quintessential big-box retailer claims to, and often does, offer just about every conventional item necessary for the family at an affordable price, this should be none too surprising. However, at what cost does this convenience come, and in the grander scheme of things, is what Walmart has to offer really convenience at all? The company’s ownership would most definitely say so, as would throngs of eager consumers. Many economists, social scientists, and former employees, though, have a strikingly different opinion. While one can choose to believe whichever side of the argument he or she likes best, where do the facts lie?…
Article comments
26 - Andy Dabydeen
... but those prices! They're soooo good!
27 - Clavos
Who needs walmart? you ask. And yet at the beginning of your comment you admit you shop there at least every other month. Which is it, Igor?
I've never purchased so much as a stick of gun at a Wal-Mart; I don't shop there, and in my lifetime I've been to a Wal-Mart fewer times than I have fingers, always only accompanying a friend.
Like Doc, I feel I have to take a bath after visiting one of those stores; in honor of its customer base, it should be renamed Creep-Mart.
28 - C&T
Irresponsible journalism is the only way to describe this article. Beyond the factual errors (National avg consumer retail wage is NOT over $12.00 go look at Dept of Labor SIC data.) almost every company is tax subsidised to some degree. Aldi, Home Depot, Lowes, Kroger, Safeway, ALL have employees using public assistance.
The author complains about job losses. That is the indirect consequence of productivity. Only union shills are against worker productivity gains. It hurts their dues collection plans.
Wal-Mart wages and benefits are better than most retailers. There is no legal, moral, ethical, financial, or economic reason for Wal-Mart to pay higher wages.
29 - S.T.M
I must admit to having shopped at Wal-Mart while I was in the US. At the time, a pair of Levi's in Australia cost about 90 bucks ... yes, that's US dollars. Also, I believe the ones you got in Oz were made in HK back in the 80s and 90s. So I went to Wal-Mart and picked up the real deal for, from memory, about 30 or so dollars a pair. They also had lots of different leg and waist sizes, so you got a good fit, whereas the ones I got in Oz had two leg sizes. regular and long. When I had a 30-inch waist, that was fine, but if there was any deviation ABOVE that, you could never get 'em exact.
I did go in to the jeans section of Wal-Mart, bought the jeans, and got out of there quick along with a few Hanes T-shirts. Hanes weren't sold in Oz at the time, and the Aussie equivalent, Bonds, which were also a slightly different style, weren't as good IMO.
So, yeah, Wal Mart was good back then for buying American-made stuff. I'm sure the Levi's and the Hanes are now made in China. Which if true, is pretty sad ...
30 - roger nowosielski
What has worker productivity got to do with Walmart's retail employees. As to the shitload of merchandise they offer, it's of such piss-poor quality one would have to be ashamed of themselves to be an employee on the assembly line which manufactures such garbage.
I'd rather to without than avail myself of a Walmart product, but the typical American consumer never had any class.
31 - Clavos
Interesting typo in my #27:
"stick of gun should, of course, be "stick of gum."
[Paging Dr. Freud]
32 - zingzing
stm: "I'm sure the Levi's and the Hanes are now made in China. Which if true, is pretty sad ..."
well, i dunno about levi's, but hanes is actually headquartered (and manufactures) in good ol' winston-salem, nc. home of hanes underwear and rjr cigarettes. so you can laze about and smoke your fuckin' cigarettes in your fuckin' underwear on the cheap.
33 - jamminsue
Joseph, Right on! I wrote a piece on Wal-Mart awhile back, and found some intersting stuff.
This is not the only big box that does this, but its the one which many like to bash, and one reason its easy is because its records ae easily accessible.
Compare Wal-Mart to Seattle-based Costco, which also is well-documented to see how a big box can be successful and still be good to its employees, suppliers and community.
I'm not suggesting Costco is perfect, but it's a long ways from the rapacious Wal-Mart.
34 - jamminsue
Zen, what planet do you live on? I do not mean to be ride, but really? Wal-Mart is, in some towns, the one only a few retail employers, it empoys more people thatn any other company in the US, I think except the Post Office, and where do you think all those people would find work?
35 - Katinohio56
We live in a small town in the Midwest - the closest bookstore is now over 50 miles away. The selection of goods in the Walmart stores is quite minimal. So sad. Shop locally and keep your local businesses in business!
36 - Nope
The problem is that there are not really any middle class jobs anymore. They're all either entry level or 30+ years experience, which results in people like myself (graduated college in 05) having to work an entry level job because that is the only type available that they are qualified for (as they don't have the experience required for the higher end jobs). So you wind up with people either really overqualified or really underqualified. This is why our economy is in the toilet. We have decided that we need to make the poor poorer and the rich richer and eliminate the middle class entirely. Well the middle class is who drives the economy and that's why it's failing.
37 - Nope
And minimum wage needs to be double what it is now. That's another reason our economy is in the crapper.
38 - Johnny Briggs
When Mom & Pop start selling Mac and cheese for $0.58 I'll shop there.
39 - El Bicho
how good can the mac and cheese be at 58 cents?
40 - Glenn Contrarian
Dana -
If you don't like entry level wages, get educated, get a better job, take responsibility for your own life and quit looking for someone else to take care of you.
Try doing so when you're doing two jobs trying to feed, clothe, and shelter a family...and it's not just Wal-Mart, either - 41% of all teachers in Texas now have to moonlight to make ends meet...so if you think teachers aren't doing a good job, maybe that's one reason why.
41 - Igor
How the heck can so many unemployed people do these things?
"If you don't like entry level wages, get educated, get a better job,..."
Nowadays you need some feed money to get an education, even at a community school. Assuming you've got someplace to live and some food money.
And how do you get a 'better job' in this environment?
My friend Jimmy, about 40, unemployed for a year, living with his mom (and driving her car to interviews, since he parked his truck months ago to save money) has investigated 'education' because he thinks maybe he can dig up $4000 among his extended family to go to school if it's promising, but now there are 'schools' going broke with worthless coursework around here. Leaving their erstwhile students high and dry, with their money gone and no credentials.
Of course, our determined enemies of regulation have prevented proper certification of these schools that are popping up all over. And none of the crooks go to jail.
42 - Kristian
I disagree with most of the article. I will tackle one issue in this post.
You talk a lot about how little the wages are at Walmart (and its competitors) and how they don't pay out benefits. Specifically, you state that "a broad share of persons seeking job at big box chains tend to be young, undereducated, and struggling financially."
Yes, there are plenty of underskilled and undereducated people out there (myself included to some extent). What's the best way for them to learn practical skills and start their ascent? By getting a job!
If it's only worth $5 to pay a teenager to flip burgers or checkout people at Walmart, then that's all it's worth! If you put the minimum wage at $10, then that just means that the employer can only hire one person instead of two, or hire someone with a skill level closer to $10/hr. Why do you think poor minority unemployment is so high? Precisely because most of them are young, undereducated, and struggling financially. Rather than languish among the unemployed or barely-employed for the rest of their lives, why don't they get a cruddy starting job and then have an opportunity to work their way up?
I recommend reading Thomas Sowell on this issue. He articulates it very clearly.
43 - S.T.M
The minimum wage in the US is a disgrace.
It's $US14 an hour in Australia, with more people in work (less unemployment, Kristian). That is also topped up by penalty pay rates for evening/night and weekend/public holiday shifts, so a minimum wage worker working on a Sunday evening, say, can earn $US30 an hour.
And most of the companies in Oz paying these wages aren't going broke. The opposite, in fact.
The country is doing pretty well too compared to where the US is right now. IMO, that kind of kills any argument in relation to this because there's cause and effect here that impacts quite dramatically in terms of living standards, where to draw the line between good profits and taking advantage of a workforce, and the functioning of society in general - in particular the closing of the huge gap in the US between haves and have-nots.
I agree ... get a cruddy job and start at the bottom and work your way up, but at $5 stinking an hour, what's the point. What the f.ck can you do on that. Barely feed yourself, I'd think, let alone pay rent and bills and run a car (if you can afford to get one that doesn't look like it's just come from the finish line of a smash-up derby).
This is what's sending America down the chute. It's the gross inequality. Somewhere in there, between the $5 an hour and the mulyibillionaires paying next to no tax, there's a happy medium that can be shared by everyone.
People getting paid a living wage tend to be loyal employees, they work harder, produce more and they see a future for themselves. Anyone spending a year on $5 an hour is likely to be none of those.
Unfortunately, Americans who've never been to other western civilised social democracies can only draw on their own skewed view of how all this works because they don't have the benefit of seeing the opposite working well somewhere else.
No wonder in the socially depressed parts on the US (which these days is an awful lot of the US, sadly), people get caught in the spiral of poverty, crime, and substance abuse. At $5 an hour, how would anyone see any way out?
Choose between $5 an hour flipping burgers and living in abject poverty, and $500 an hour selling crack, or stealing cars? What other choice would there be, apart from joining the military.
The other sad part about that is that there would be people who might go down the wrong path of crime and welfare who would be willing to live as law-abiding citizens, tax-paying citizens if they could nail a wage, even a decent minimum wage, that would at least put food on the table and a roof over their heads.
Contrast that with the boys' club of CEOs earning multimillion corporate packages, running companies that on most days run themselves, many of whom were the ones who drove the US and global economies into the ground in the first place.
Something stinks, and it doesn't take much to fix it. A bit less money at the top would hire a few more people at the bottom, or at least pay them a decent wages.
And the more money people at the bottom of the tier have to spend, the more jobs are created because spending power is increased across the board.
Sometimes I wonder whether some Americans forget that they actually live in a country, not in an economy.
44 - Christopher Rose
Hi Stan, Good to see you back around the place.
You make several good points but there is an even bigger point to be made around the appalling low wages paid by businesses like Walmart, McDonald's and Starbucks.
As this Business Insider article makes clear, it isn't the loss of manufacturing jobs but the loss of well paying jobs that is the problem. It is also not the case that these businesses need to pay low wages either.
The article is well worth reading but here is just one brief extract: "Walmart, McDonald's, and Starbucks employ about 3 million people (not all Americans). They also collectively generate about $35 billion of operating profit per year. If the companies took, say, half of that operating profit and paid their employees an extra $5,000 apiece, it would make a big difference to the employees and the economy. The companies would still make boatloads of money, and the employees' compensation would finally be above the poverty line".
As an add on question, do their wage policies actually make these businesses anti-American?
45 - STM
Yes, Rosey, I'd say they do. The wages paid in America in some service industries are truly a disgrace. The minimum wage in the US is even more of a disgrace. I know it can differ from state to state, but I understand it doesn't get above about $8 an hour. I have heard stories of wait staff being paid a paltry $4 an hour and depending on tips, which in the current circumstances aren't always forthcoming.
It's OK to pay kids a low wage I reckon, although it at least should give them something half decent for their efforts, but adults should be getting something they can actually live on.
You can understand why the Howard government got voted out in this country when they took away the courts' powers to decide on wages and gave all the power back to employers.
Their catchcry: "You can trust them1"
Yes, of course you can. Just look at what happens in the US when there is no regulatory minmim threshold for wages.
I realise a lot of Americans think everyone else looks to them as the beacon on the hill when it comes to this stuff, but in fact we don't ... we're more likely to be looking at how wrong they often get it and act accordingly - by doing the opposite, which is usually the right thing.
46 - Igor
#43-STM is SO right when he points out how ignorant Americans are of other countries.
"Unfortunately, Americans who've never been to other western civilised social democracies can only draw on their own skewed view of how all this works because they don't have the benefit of seeing the opposite working well somewhere else."
Foreigners see ALL the American entertainment and news information regularly and have a much more cosmopolitan view of affairs. By contrast, Americans live in a cocoon of ignorance. While Americans watch the latest stupid glossy episode of "CSI" the world is slipping by them.
But ignorance is re-enforced and enlightenment is suppressed by the MSM, as if with one voice, or one hand.
Even here in the relatively enlightened SF area I note with alarm that the college TV station, KCSM, is being sold, and it was the bulwark of foreign news and especially entertainment, with "Montalbano", "Wallender", etc. Heck, you could even get the top movie from Iceland, sometimes.
KCSM has a hard time raising the $1million or so annual budget. Which is chump change for a commercial station, but a lot for a Community College like College of San Mateo.
47 - Dr Dreadful
Bay Area denizens can always pay to upgrade their satellite or cable packages, Igor. Plenty of enlightening, outward-looking channels out there.
Then again, why would anyone want to watch TV programs showing examples of things that work well in other countries, when wrestling alligators bare-handed, stuffing dead pets and raiding abandoned storage units is CLEARLY the path to success?
48 - Igor
DD: I'm not aware of a cable channel that carries WorldView Megahertz, or even Classic Arts Showcase.
And I resent being forced into pay TV. If there is to be pay TV and Free TV then I insist that ALL commercial TV be taken off the broadcast channels and all commercial TV be confined to Cable or Satellite.
Every time I've taken a look at cable and satellite I've been greatly disappointed.
About 25 years ago some municipalities launched community cable systems that had a lot of promise but they were sued out of existence by greedy cable companies anxious to protect their monopolies.
Fortunately, the internet is content-neutral (unless the SOBs get their censorship laws passed). And most of what I like is below the radar commercially (nobody seems to care if I BT a 1938 print of "La Femme du Boulanger") so I guess that with the help of MVGroup and other public services I'll be OK.
All I'm missing is some of the casual serendipity of non-commercial broadcast TV.
49 - Dr Dreadful
I agree, Igor: it is pretty galling that I pay for cable and still have to put up with commercials.
50 - S.T.M
The real deal for America would be to up wages at the bottom tier of the wage structure, which results in more spending power everywhere. That in turn creates jobs. If you have enough money to buy lunch at your local diner instead of taking a cheese sandwich to work, you create work at the diner. The diner employs five more people on a reasonable wage. Two of them go out and buy new cars (and let's hope they're American-made), creating more work for auto industry workers, local mechanics, tyre manufacturers and fitters, etc etc etc.
Now, combine that with a tax rate that forces corporations and the wealthly to pay their fair share of taxes, and you have the beginnings of a recovery. I know I sound like a broken record on this one aspect, but America needs to get back to what it is very good at: making or producing or growing stuff that is of such good wuality, everyone else around the world wants it. To do that, you need the dollar at reasonable level so that people whose currencies are worth less can afford. "King Dollar" didn't benefit US manufacturing and farming, it only benefited the shysters on Wall St. "King Dollar" actually led to the demise of US jobs. I wonder when people who are smashing various political administrations in the US over taxes and job-creation ideas while bemoaning the fall in the value of the dollar actually have any real idea where to start when it comes to getting the US back on its feet.
1) Pay higher wages and increase spending power for Americans generally across all tiers of the wage structure except at the very top where million-dollar pay cuts wouldn't matter one iota, and have businesses take a small cut in profits so they can prosper in the long run.
2) Keep the value of the dollar down to a realistic level (the Aussie dollar is currently very high and is killing jobs in this country, even though the currency traders in New York and London are lining their pockets). Keeping the value of the US dollar at a realistic level enables American goods to be sold at realistic prices on export markets. Loss of US export markets was one of its biggest job killers in the past three decades. Those crying in the US about the sinking dollar should bear in mind that if they buy US-produced goods, it won't have much of an effect day to day, but it will create more jobs for Americans. One day, people might look back and see the slight fall in the US dollar as one of the triumphs of the Obama administration (and god knows he needs one triumph)
3) Make all Americans pay taxes that are equal. And yes, the more you earn, the more you pay. It makes no sense that a person earning $50,000 a year ends up paying more tax by percentage than, say, a CEO taking home a $10 million corporate pay packet.
4) Introduce prudential regulation to stop the banking sector and Wall Street cowboys engaging in the kind of practices that brought the US and global economies to the brink of collapse.
5) Allow the courts instead of employers to have the final say on wages and working conditions for workers, not employers. Prosecute employers who don't toe the line. To Americans who say this is socialism, I say: greed is not capitalism. Healthy profits can co-exist with decent wages and workers' rights. It has the effect of making for a better, happpier, more productive workforce and increases the standard of living across the board. Some measure of genuine egalitarianism doesn't mean loss of personal freedoms or national identity. It actually has the opposite effect.