The True Cost of Everyday Low Prices
A consensus has developed among activists on the left that Wal-Mart is bad for America, and particularly bad for the poor, not only in America (where wages are supposedly driven down) but also abroad (where suppliers allegedly abuse and exploit their workers). Check out this litany of social harms alleged to be caused by Wal-Mart. The organization that compiled that list - Wal-Mart Watch - even has a “faith resource guide” that pastors can use to whip up anti-Wal-Mart sentiment within their flocks.
Unfortunately, this appears to be yet another case of well-meaning activists pursuing a goal that will actually hurt those it is intended to help. Monday’s Washington Post notes that Wal-Mart is actually a progressive force in society:
The whole article is quite illuminating. The moral of the story? Make sure that your good intentions are connected to sound economics.
Via Q and O
Unfortunately, this appears to be yet another case of well-meaning activists pursuing a goal that will actually hurt those it is intended to help. Monday’s Washington Post notes that Wal-Mart is actually a progressive force in society:
Wal-Mart’s critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is “a progressive success story.” Furman advised John “Benedict Arnold” Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart’s discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart’s products.EVIL! Or not.
These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart’s “every day low prices” make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart’s $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.
Set against these savings for consumers, Wal-Mart’s alleged suppression of wages appears trivial. Arindrajit Dube of the University of California at Berkeley, a leading Wal-Mart critic, has calculated that the firm has caused a $4.7 billion annual loss of wages for workers in the retail sector. This number is disputed: Wal-Mart’s pay and benefits can be made to look good or bad depending on which other firms you compare them to. When Wal-Mart opened a store in Glendale, Ariz., last year, it received 8,000 applications for 525 jobs, suggesting that not everyone believes the pay and benefits are unattractive.
The whole article is quite illuminating. The moral of the story? Make sure that your good intentions are connected to sound economics.
Via Q and O
Comments
#1 2005-12-01 01:24 (Reply)
Thanks for the post. The issue is a frustrating one. My school screened the film “Wal-Mart: The High Cost of Low Price” and manipulated the theater into vowing never to shop at Wal-Mart again. As one viewer asked at the end during Q&A “What places are okay to shop at with good prices if I don’t want to hurt people? Is Target ok?”