Wal-Mart is one of the few common features of every small town in the States. There are hundreds of them on I-80 alone (having used their immense parking lots to turn around a 17ft Uhaul towing a car last year). Over and over again, i heard locals defend the Wal-Marts as a cheap option for getting access to needed goods. There was often slippage in their arguments, as they would tell me that it’s now the only option since the introduction of the Wal-Mart meant the closing of every possible competitor.
Wal-Mart makes billions of dollars every year. But at such an aweful expense. Check out these statistics (thanks Chloe!!).
Here’s a sample (but read the full list):
$420,750: Annual cost to U.S. taxpayers of a single 200-employee Wal-Mart store, because of support required for underpaid workers — including subsidized school lunches, food stamps, housing credits, tax credits, energy assistance, and health care
45%: Proportion of her entire annual wage that a single Wal-Mart employee might have to pay out-of-pocket before collecting any benefits from the company-sponsored health plan
With the tax subsidy I am contributing to, I better go buy some nice cheap socks to make up for it!
i’m still boycotting walmart.
society problems caused by Wal-Mart .
I will pay devil’s advocate to the general one-sided argument presented within this website (we are at Berkeley right? Of course….) (Note: In real life I am opposed to Wal-Marts, but I went to the University of Chicago, so here’s some Econ 101)……many of these people in small towns may have had multiple choices for their shopping, consumable goods, etc. in the “before the deluge” period of Wal-Mart. Of course (as a geographer, here we go)most of these stores were centrally located, and as urban land rent theory (and practice!) dictates these small businesses were playing a premium on their site/locations, whatever, and as such, had to pass these associated costs along to their patrons. Well, Wal-Mart (unfairly or not) passes along its ECONOMIES OF SCALE and its not-always-so subtle locational decisions in order to pass along the savings to the consumers. Who benefits? Obviously to a certain degree the family with few options for shopping benefits immensely, but is something lost in the process? Of course….sense of place (which is very, very nebulous…but something that figures in the so-called “real world” where I do most of my own research), community, and so on. This is thoroughly lamentable, and of course so is Wal-Mart’s shoddy treatment of its workers. Of course well-intentioned liberals (I’m one, believe it or not) (or pomo scholars, which I’m most decidedly not…) are without exception ALWAYS opposed to Wal-Mart…give poor people more value for their money…oh god! Let’s keep all the chi-chi boutiques in the center of town, and only allow expensive coops to sell their well-intentioned, but damn expensive free-range chickens, pumpkins, and so on. I’ve got a social conscience, and I’m a firm believer in social justice, but bashing the Wal-Mart business doesn’t really get us to far….but then again, why not?
Chomsky foreva,
The Unknown Websurfer
It’s interesting that I heard the same arguments about economies of scale (The Unknown Websurfer)here in Sweden recently regarding the monopoly on alcohol sales which is in the hands of the (supposedly) socialist government at the moment. It is currently under deep threat from the encrouching free market of the EU.
A former resident of a tiny tundra outpost told me that if it wasn’t for the sole liquer shop in town (government store) they would not have access to the huge (I think moderate) range of alcohol products they have at the moment as a free market situation would only cater to the most popular brands in relation to such a small consumer base. Of course home made spirit is rife throughout Sweden.
In a sense the Wal-Mart reliance on employee welfare recipiancy and the control of wages reminds me of a centralised state run economy….In reply to Ross; I am knitting my own socks:)
The problem that i have with structures like WalMart is that it is not operating on a fair marketplace. The public is taxed for its poor practices. This is quite similar to my gripe with McDs (read Fast Food Nation). When the hidden costs are removed from the origin of production, the company can make major bank on the shoulders of those it taxes. What does a hamburger cost when you take into consideration all of the social ills involved? It is this kind of logic that makes many economists balk at the success of certain kinds of corporations, such as WalMart.
I read the statistics, and I’m not impressed. Nothing in them shows that Wal-Mart is “causing society problems.” Let’s take the first statistic you quoted. It is meant to suggest that Wal-Mart pays its employees so little that taxpayers must make up the balance for them to survive. You characterize this as taxing the public for Wal-Mart’s “poor practices.”
But where is the evidence that these rural populations were supporting themselves before Wal-Mart opened? Has Wal-Mart increased the burden of supporting rural America that urbanites bear? This statistic is really an argument against “subsidized school lunches, food stamps, housing credits, tax credits, energy assistance, and health care.” The Republicans would be proud…
As for the idea that “a free market situation would only cater to the most popular brands,” this is clearly not the case. Look at the insane diversity of brands available to consumers even in small towns in America. Now compare this to the much smaller number of brands available in more socialized countries.
I have yet to hear anyone make a convincing case for Wal-Mart’s supposed evil. I do know from firsthand experience that Wal-Marts are generally beloved in the rural communities in which they open.
Sorry if I sound a little peeved. I just get irritated by these tired, flawed arguments against Wal-Mart, McDonald’s, Starbucks, Nike, and IKEA…
“When the hidden costs are removed from the origin of production”
I’ve been hearing this argument a lot lately. It brings up a good point about the number of hidden subsidies that exist in the market. The only thing is, I can’t imagine a clear definition of such subsidies. How are they different from those things that we value and that we want to support? The government spends a lot of money on education, so can’t it be said that the cost of educating workers is subsidized, and if corporations had to pay the real cost of educating 300 million citizens, then they wouldn’t be making nearly the same profits as they are now. Perhaps that is an extreme example, but I’ve yet to hear a clear definition of “hidden subsidy” that wouldn’t, simply, include everything the government does. Where does basic infrastructure end and “hidden subsidy” begin? Hospitals, courts, prisons, fire fighters, police, roads, snow plows, all of these could be said to represent a “hidden subsidy” to corporations that allows them to make profits. After all, providing a stable, law-abiding, reasonably well-run country for corporations to live is clearly a huge hidden subsidy to them. If they had to live in an unstable, poorly run country then there profits would be much less.
Personally I think after-tax equity is the real issue and a lot of very smart people are, for some reason I can’t figure, mistaking the after-tax equity issue for an after-tax spending issue. Or, to say it differently, who the hell cares how many Wal-Mart’s there are? Let’s just raise their taxes so they contribute more to the nation’s schools, roads, ports, hospitals, fire fighters, police, farms, courts, sewers, utilities, etc.
Is there any reason to believe these statistics? I’m no fan of Wal-Mart, but the statistics sound at best misleading (and probably dishonestly so).
One clear case is the comparison of the “nationwide average hourly wage for Wal-Mart employees” to the “average hourly living wage as defined by 22 of the U.S. cities and towns that passed living wage ordinances between 2000 and 2004”. The problem is of course that most places just don’t pass living wage ordinances, and I’m sure the ones that do are almost all urban areas with unusually high costs of living (plus a few rural college campuses, perhaps). It makes no sense to compare this with the average Wal-Mart wage.
It’s not as clear from the phrasing, but I’m also suspicious of the proportion that the Wal-Maty employee “might have to pay out-of-pocket”. To me, that sounds like a worst case scenario: under some bizarre circumstances, perhaps involving many different types of medical problems each of which requires some initial payment before insurance kicks in, you might pay 45% of your wages before the insurance pays anything. However, that says nothing about what typically happens.
I’m equally suspicious of the “annual cost to U.S. taxpayers of a single 200-employee Wal-Mart store”. It’s clearly meant to sound typical, but I bet that’s another worst case. They found one single store leading to this cost, presumably a store in a seriously depressed area, and publicized the figure.
In any case, it’s not clear to me that these statistics actually mean anything. If interpreted literally they certainly don’t, and I see no indication that a literal interpretation is in any way unfair. (If anything, it’s probably letting the author off the hook for trying to mislead people.)
Ryan – in every small town i’ve been in, they are both loved and hated. No one really wants to work in them (although folks are happy to have their children work in them to learn how to work). They are loved because they provide cheap access to goods. They are hated because they almost always eliminate the other grocers and drug stores, as well as other stores. From what i’ve seen, out of all the stores that are displaced, people are most upset about losing their grocers.
Well,as an economist,I have one simple thing to question: raise the wages and benefits of wal-mart workers. Wal-mart will just shift their resources in less labor-intensive techn.(self-checkout equipment for ex.) and need less number of workers. You now have less workers w/ jobs-is it a benefit? Wal-mart will adjust,even if one limits the number of stores(they will get larger and deliver or some adjustment).
Wal-mart already is aware of the growing anti-wal-mart feelings-it is attempting to expand(vertically) into other areas(gasoline stations).If its success in retail means anything just wait and see how it fairs in new markets.
“Wal-mart will just shift their resources in less labor-intensive techn.(self-checkout equipment for ex.) and need less number of workers. You now have less workers w/ jobs-is it a benefit?”
Obviously it’s a benefit. What kind of economist questions the benefit of productivity gains? Are you suggesting the productivity gains won’t lead to additional hiring in another sector? What do you base that on?