Posts tagged with: Wal-Mart Stores Inc.

wmartIn light of the ongoing discussion over fast-food wages, I recently wrote that prices are not play things, urging that we reach beyond the type of minimum mindedness that orients our imaginations around artificial tweaking at the bottom instead of authentic value creation toward the top. Prices don’t equip us the whole story, but they do tell us something valuable about the needs of others and how we might maximize our service to society.

But though I have a hearty appreciation for the role that low-wage employers like McDonald’s play — due in large part to my 5-year stint working for The Ronald — I’m also grateful that other companies like Costco are able to provide higher wages to many low-skilled workers.

When we observe such differences — one prosperous company paying $7 per hour while another pays $12 — it can be easy to get worked up, pointing our fingers at greedy executives, idols of efficiency, unwise allocation of company funds, etc. Yet while any assortment of these drivers may indeed contribute to how wages are set, and though executives bear heavy moral responsibility on such matters, it’s helpful to remember that (1) we’re greatly limited in understanding the books of the companies we critique, and (2) executives aren’t the only ones influencing prices.

Over at Bloomberg, Megan McCardle does a marvelous deep-dive on this very sort of thing, starting with a comparison of Costco and Walmart wherein she ponders why the former offers higher wages than the latter.

A summary:

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Blog author: jcarter
posted by on Monday, November 26, 2012

Every year Black Friday marks the official beginning of two modern American traditions: Christmas shopping and criticizing Walmart.

Critics on both the left and the right have found a common enemy in Walmart. Those on the left hate the company because it isn’t unionized while conservatives complain because it undercuts mom-and-pop retailers. Some researchers even claim that people are prone to gain weight after a Walmart Supercenter opens nearby.

I suspect if the researchers were to conduct a follow-up study they’d also find that there is about a 99 percent chance you will not be starving to death if you live near a Walmart store. But we live in a strange period in history when the idea of affordable food is considered a lamentable condition.

Walmart’s very business model—maintain a large and innovative supply chain that keeps prices low—offends the sensibility of those who think that prices should be raised in order to pay employees a higher wage. The idea that the higher cost should be passed on to consumers is typically made by those who would never actually shop at Walmart. A prime example is The American Prospect‘s Harold Meyerson:

Walmart replaced General Motors as America’s largest private-sector employer. Instead of paying its workers enough to buy new cars, Walmart paid its workers so little they had to shop at discount stores like Walmart.

The reason why Walmart employees—and others on the lower end of the income scale—shop at the stores is because they are, by necessity, price conscience shopper. Meyerson and other elites that spend only about 3.5 percent of their income on food at home can afford to shop at Whole Foods. But households in the bottom quintile, which spend 26 percent of their income on food, are eager to keep food prices as low as possible. (During this holiday season Walmart employees receive an additional 10 percent off most food items.) If Walmart didn’t exist they the company’s employees wouldn’t have higher paying jobs; they’d just be paying more for food and consumer goods.

Growing up in a family that lived below the poverty line,  I can appreciate the value of inexpensive food. That is one of the primary reasons I appreciate the company—and the reason I think other conservatives should appreciate it too. There is admittedly a lot to dislike about the company, but as former low-income rural resident I think there are a number of reasons why conservatives should be more supportive of Walmart (and similar poverty-alleviating corporations).
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Bread for the World CEO David Beckmann once said, “We can’t food-bank our way to the end of hunger.” As I said then, if “changing the politics of hunger” means that more people are getting food assistance from the government rather than food banks and community efforts, count me out.

But on a more hopeful note, this story from NPR tracking how Walmart has partnered with Feeding America, the largest food bank network in the nation, to get food that would otherwise be wasted into the hands of those that need it most. Last year Walmart announced a plan to contribute $2 billion to food banks in the form of direct cash assistance as well as material donations. You can see more at Walmart’s “Fighting Hunger Together” page.

And be sure to check out Feeding America to find out what food banks really can do.