FROM JASON’S CHECKBOOK — As recession’s grip persists, it’s no surprise I’ve been hearing less bourgeois bitching about the “evils” of Wal-Mart.
I’ve been arguing with friends for years about the merits of the world’s largest retailer. It seems they have many reasons for hating the big box stores: perceived “unfairness” toward employees, impact on local economies, a classist dislike of the organization’s clientele, and a schadenfreude-esque attitude about Wal-Mart’s success.
But it’s been my contention that Wal-Mart is heroic, that its everyday low prices have done more for the American poor than any welfare initiative. When you can buy a can of corn for $0.79 instead of $1.29 at the local grocery, it saves families an enormous amount.
Estimates show the company saves Americans $12 billion a year.
My wife and I shop there for groceries every week, and end up saving $40 or so each trip on standard groceries. I get savings of five to 10 percent on standard goods like deodorant, video games, and weed killer. Putting that kind of discretionary income back in my pocket is one hell of an economic stimulus plan.
Increasing purchasing power is a good thing. And if you can do it for the lower class, then it’s a doubly good deed.
If you want to talk about really evil corporations, let’s talk about ones like Hollister or Abercrombie & Fitch. Those are corporations that put a premium on peer pressure, and use it to reduce purchasing power by convincing young people that paying more for less is a good thing.
They prey on pre-teenagers, convincing them it’s ok to waste $80 on a single pair of jeans in order to attain social status. They create artificial class divide.
In my mind, creating low prices for toothpaste, bread, milk, underwear, paint, pencils, and plates is far more admirable. It provides inexpensive goods, reduces opportunity cost, and provides jobs. And it’s a hell of a lot better than handing someone a check and inducing a state of welfare dependency, because it creates wealth.
Wal-Mart has often been criticized for being too big for its own good, for “monopolizing too much of the retail industry. But clearly it hasn’t. There are Wal-Mart competitors who carry their own weight: Lowe’s and Home Depot have cornered the hardware industry by providing better selection and supply. Amazon destroys Wal-Mart in online sales by providing a better ‘Net store. Netflix, iTunes, et al are quickly moving to crush traditional on-the-shelf media sales. Target is eating away at Wal-Mart’s clothing sales margins by providing better-quality threads at competitive prices — and that’s an area where entrenched retailers like JCPenney and Macy’s still hold sway.
Wal-Mart might be the biggest, and often has the best deals, but it’s still just the biggest tuna in the economic ocean. It can’t eat all the other fish.
In fact, BusinessWeek reported in November that the great supplier’s advantage is already eroding as sleeker business models evolve.
Wal-Mart isn’t immune to shifting market trends. If consumers demand something better, then Wal-Mart has to change its strategy. Right now, though, the strategy seems to be working. Wal-Mart’s quarterly sales rose 1.7 percent in March while rivals struggled just not to lose cash (and while many retailers, such as Circuit City, close their doors altogether). At the same time, the company actually raised its first-quarter share guidance!
“Wal-Mart’s performance last year would be considered strong at any time and for any retailer, and certainly during one of the most difficult global economies in decades,” CEO Mike Duke wrote to shareholders last week.
“Our U.S. stores are delivering faster checkouts, a friendlier shopping experience and cleaner presentations,” he continued. “We are on the move internationally and today have more stores in more markets. People who have never shopped with us previously are now loyal customers.”
The company created 33,000 jobs in the U.S. last year.
Uber-critics of the Wal-Mart model always paint this weird vision of a future where we all wear gray jumpsuits issued by our local big-box masters, who have usurped the government and turned America into a corporatocracy. That’s just silly. As long as people want something, there will always be someone who can come up with a newer, better idea to provide it than the establishment.
The other complaint that seems most prevalent about Wal-Mart — and this one really gets me — is “how bad” the company is to its workers. This is usually presented in a twin argument: That Wal-Mart does not let its workers unionize, and that the workers are not paid enough to survive.
First: If you want to hurt the poorest of the poor, support unionization at Wal-Mart.
The problem is that pro-union activists don’t look at their track records. They see unskilled labor as a market that demands a living wage, but they don’t look at the failures of their efforts. Ford just posted a $1.7 billion loss because union labor has hijacked its profitability, and the unions can’t stop the plant closures and lay-offs.
Want another example? Just look at the U.S. steel industry. Or how about grocery stores? Prices at grocery stores that use unionized labor are much higher.
I’m not suggesting all unionization is bad. Look at what education unions have been able to do. The problem is that unions tend to work well inside a monopolized market, but elsewhere they only generate massive inflation by creating an artificial wage hike. Too many unions are busily pricing themselves out of jobs, and then wailing when industry fails and begging government for a bail-out.
Wal-Mart shouldn’t be unionized. Shelf-stockers and check-out operators were never intended to earn living wages in part-time, unskilled positions. Upping hourly wages and benefits for unskilled workers might seem like a humanitarian thing to do, but consider the ripple-effect it has on pricing; higher pay means higher prices means less purchasing power for the lowest earners. Lower purchasing power means less consumable utility, which means recession, which means lower purchasing power for everyone, not just the poor.
The average hourly pay at Wal-Mart is just under $10, and is always heads and shoulders above the minimum wage. That’s not bad for the hundreds of thousands of non-skilled workers they employ — who in many cases would not be elsewhere employed.
Wal-Mart has helped me. Wal-Mart has helped you. It has helped the poor, and has generally evened the playing field and slowed class divide. What more can you ask for?
I suppose you could ask for $250,000-a-year jobs for every man, woman, and teen in America, with a free convertible in every driveway and 55-cents-a-gallon gas at the pumps. But does anyone really think that’s realistic?
At some point, the “gimme-gimme” entitlement attitude here in America became the norm, and we all became complacent. We forgot that we became an economic superpower because we worked hard and were competitive.