Sunday, July 13, 2008

Wal-Mart: Powerhouse for the Poor, Greatest Thing That Ever Happened to Low-Income Americans

For years, people have beaten down the doors to work at Wal-Mart. Wal-Mart's more than 1.3 million American employees aren't stupid. The company's wages and fringe benefits -- including health care coverage and retirement benefits -- are comparable to those of other retailers.

Wal-Mart pays as well as Target, according to Chuck Denny, who analyzed the company in an April study for the University of Minnesota's Humphrey Institute of Public Affairs. The average wage for regular, full-time hourly Wal-Mart associates in Minnesota is $11.30, according to Wal-Mart's website, and employees are eligible for performance-based bonuses.


And forget that tired line about dead-end jobs. Two-thirds of store managers were once hourly workers, according to the company.

Wal-Mart is the world's largest nongovernment employer, because it's the world's most popular retailer. A mind-boggling more than 100 million Americans shop there every week.

But Wal-Mart may also be the most demonized company in our country's history. For years, it has been the target of a sophisticated, orchestrated public relations campaign. That's odd, because the giant retailer has arguably done more for low-income Americans than a shopping cart full of government welfare programs.

Wal-Mart's combination of rock-bottom prices, quality and convenience -- it offers a dizzying array of household staples under one roof -- appeals strongly to shoppers who need to stretch their dollars. Estimates of the average family's annual savings from shopping at Wal-Mart range from $900 to $2,300, depending on the study you consult.

W. Michael Cox, chief economist at the Federal Reserve Bank of Dallas, summed it up this way speaking to the New York Times: "Wal-Mart is the greatest thing that ever happened to low-income Americans."

Interestingly, the folks who hate Wal-Mart are often the sort who usually make a big deal about how much they care for low-income people. They make a mistake when they turn a blind eye on the achievements of this powerhouse for the poor.

Katherine Kersten in today's Star Tribune.

26 Comments:

At 7/13/2008 11:54 PM, Blogger bobble said...

"The average wage for regular, full-time hourly Wal-Mart associates in Minnesota is $11.30"

at least 30% of walmart workers are part-time. i wonder how much they are paid.

the average costco worker makes $17 an hour.

wal-mart employee turnover: 40%
costco employee turnover 6%

 
At 7/14/2008 12:35 AM, Blogger fboness said...

Never heard of costco.

 
At 7/14/2008 7:10 AM, Blogger Matt said...

bobble: What's the point of comparing Wal-Mart to Costco? Costco is more of an up-market store that doesn't serve rural areas anywhere near as much as Wal-Mart. I wouldn't be surprised if Nordstrom's employees make more and have lower turnover, but that wouldn't be relevant either.

What's relevant is that people still want to work at Wal-Mart under the present conditions. That can only mean Wal-Mart is their best option. If it went away, they, and to a much greater extent, the store's customers, would be worse off.

 
At 7/14/2008 9:23 AM, Blogger juandos said...

Yes bobble, what was the point of comparing Costco to WalMart?

How Big Government Makes America Poorer

WalMart has done more for the American poor than the massive transfer of wealth that was the result of LBJ's Great Society program...

 
At 7/14/2008 9:51 AM, Anonymous The Masked Millionaire said...

You are able to purchase a $1.00 Hebrew National hotdog at the concession stand at Costco.

You can't do that at Wal-Mart.

So comparing the two, is like comparing pure beef with filler.

The Masked Millionaire

 
At 7/14/2008 10:13 AM, Anonymous Anonymous said...

If consumers don't have enough choices and workers are exploited, Wallmart would not exist.

The bottomline is that success is something that we resent or condemn. The U.S., China, McDonalds, Microsoft, the dandelion...all are consistently attacked for success.

Doesn't that say more about human nature than the nature of Wallmart?

 
At 7/14/2008 11:13 AM, Blogger Matt S said...

To provide contrast, I'd like to give basic ideas as to why many oppose wal mart:
- many workers are prevented from getting full time wages, and as with other employers will fire and re-hire workers rights before their wages go up
- Wal mart drives a lot of other stores out of business by selling stuff at cut-rate prices, and then (this is what I've heard from here and there) later raise their prices a bit once people no longer know the actual price of anything.
-Wal Mart sells a lot of low-quality stuff, and therefore the argument is, why not help American workers do better so they got to Wal Mart to buy relatively inexpensive quality products and foods rather than lead tainted toys and foodstuffs with the ingredients "corn syrup, corn syrup, gelatin, obesity, and sprinkled on artificial vitamins."
-Wal Mart is anti-union, and apparently has done more than say "we'd rather you not start a union," but rather ventured into union-busting tactics.
-Wal Mart probably buys stuff from sweatshops or sketchy regimes (I'm not a big anti-walmart guy so I"m assuming this might be an argument)

I'm sure there are others, but as someone who isn't huge anti-Walmart guy (though rather anti-corporation - I like capitalism, but corporations are often a bit too governmentally influential for my liking), I'm just kind of trying to get people thinking about it.

 
At 7/14/2008 12:11 PM, Blogger juandos said...

"- many workers are prevented from getting full time wages, and as with other employers will fire and re-hire workers rights before their wages go up"...

Hmmm, are people forced to work at Walmart?

"Wal mart drives a lot of other stores out of business by selling stuff at cut-rate prices, and then (this is what I've heard from here and there) later raise their prices a bit once people no longer know the actual price of anything."...

Well now I'm guessing you have something credible to back that up, right?

I guess that explains Walmart's 3+ percent net profits, right?

BTW didn't shoppers vote with their wallets on where they wanted to shop?

"Wal Mart sells a lot of low-quality stuff"...

Hmmm, compared to whom? Penny's? Sears? Costco?

"Wal Mart is anti-union, and apparently has done more than say "we'd rather you not start a union," but rather ventured into union-busting tactics"...

Again you must have something credible back this up, right?

Maybe learned something from what happened to the domestic auto industry...

Unions Continue to Kill U.S. Manufacturing

"Wal Mart probably buys stuff from sweatshops or sketchy regimes"...

Are you saying that the other national retailers supposedly don't?

Are these retailers who supposedly unlike WalMart are selling Non-Sweatshop Labor product?

 
At 7/14/2008 12:25 PM, Blogger bobble said...

Matt:"what was the point of comparing Costco to WalMart?"

just to show you don't have to treat people like crap to have a succesful business.

they aren't dissimilar. both have an extreme low price philosophy. both sell cheap crap, food, and gasoline.

and, give me a break, costco is *a lot* closer to walmart than nordstroms.

 
At 7/14/2008 1:09 PM, Anonymous alex said...

Bobble, two huge differences between Costco and Wal-Mart that affect your argument:
1)Costco charges a membership fee, Wal-Mart does not.
2)Costco forces most products to be purchased in bulk, which, while saving in the long run, tends to require a good bit of money up front. Wal-Mart does have bulk items, but most items are the same as one would find in a grocery store or pharmacy.

A more apt comparison would be Wal-Mart vs a large grocery store chain, not Wal-Mart vs a membership warehouse.

 
At 7/14/2008 2:17 PM, Blogger juandos said...

If one was investing in chains like WalMart or Costco wouldn't WalMart look like a better investment with its 3+ percent net profit margin or Costco with its less than 2 percent net profit margin?

 
At 7/14/2008 3:25 PM, Anonymous Anonymous said...

bobble, have you compared the sales per employee of Costco vs. Wal-Mart? As I recall Costco generates more than 2.5 times sales per employee than Wal-Mart. (It might be more closer to three times as much, you can goggle their annual reports, I suppose.) Wal-Mart could, I assume, follow Costco's business plan as they are execellent business men and in the process pay $17.00 a hour. Of course they would also have to fire over 50% of their employees. Is that a better result in your way of thinking? You do realize this would have to be, don't you? If they did this without unions would they still be evil?

As for some of the other stupid remarks made here when I shop at Kmart and Target they have pretty much the same products as does Wal-Mart. When I buy adhesive tape at Target does it still come from China and is it still junk? Or does it stop being junk if it if is purchased at Costco from a union employee?

One other point. The local Wal-Mart where I live, deep in South Louisiana, pays more than the local Kmart. I guess Kmart is more evil than Wal-Mart? Yes, no?

 
At 7/14/2008 3:35 PM, Blogger bobble said...

juandos:"If one was investing in chains like WalMart or Costco wouldn't WalMart look like a better investment . . "

not really. check it out here.

in the last 5 years, costco stock has doubled. walmart stock has not appreciated at all.

 
At 7/14/2008 3:46 PM, Blogger datsro said...

"Wal-Mart is the greatest thing that ever happened to low-income Americans."

No schools are where the greatest thing to ever happen to low-income america... its just they may have forgotten Economics 101!

 
At 7/14/2008 3:49 PM, Blogger bobble said...

anon:"Wal-Mart could, I assume, follow Costco's business plan as they are execellent business men and in the process pay $17.00 a hour. Of course they would also have to fire over 50% of their employees."

LOL,well, WMT has a yearly employee turnover of 40% as it is.

but that's not really answering your question.

i would rather WMT fired half their employees and gave the rest the deal that costco employees get [union or not, i don't care]. i'd rather have a country with businesses that don't rely on paying the absolute minimum to be viable.

maybe if we got rid of the WMT's their would be room, and investment in, more Costco-like businesses.

 
At 7/14/2008 4:42 PM, Anonymous Anonymous said...

Bobble your kind of economic reasoning gives us the economic power house of West Virgina. As I recall John L. Lewis was Okay with ever increasing wages for his miners; the trade off was fewer and fewer miners. Eventually you hit a celing in wages and gobs of people are unemployed.

I guess you would just tax the holy Hell out of those $17.00 hour people to pay the unemployment and welfare benefits for the unemployed. That is alright with you again, I suppose.

One other thing, Costco is really more like Sam's Club as others have pointed out. There are way fewer Sam's Clubs than Wal-Mart's so I guess you would have to be Okay with closing almost all the Wal-Marts and leaving both the customers and employees out in the cold. Poor people need to pay more for their food & every day products so a handful of employees can make $17.00 hour, right?

One final thought, maybe the reason there are no Costcos around me for hundreds of miles could be their business model doesn't work as well as Wal-Mart's? I am surrounded by Wal-Marts and there is a Sam's club about 25 miles away. (Small town South Louisiana guy here.)

 
At 7/14/2008 5:25 PM, Blogger bobble said...

anon"Bobble your kind of economic reasoning gives us the economic power house of West Virgina . . ."

apparently you'd rather give us the business model of china.

the economists promised that globalization was going to bring us all better, higher paying jobs.

yet, what we have instead is, the largest employer in united states has a business model that is only viable by paying the majority of its employees an extremely low wage. that is the same business model china has.

i offered as an alternative a somewhat similar business that is very successful with a business model that pays a decent wage by using labor more efficiently.

i opined that if there were fewer walmarts, there might be many more costco-like business and perhaps no differance in employment.

" I am surrounded by Wal-Marts "

LOL, i'm very happy for you. i'm surrounded by Costco's. we should both just stay where we are.

 
At 7/14/2008 10:04 PM, Blogger Matt said...

bobble: I don't think the economists promised globalization would give us all better, higher paying jobs, at least not right away. What they promised instead is that it would raise Americans' overall standard of living. Wal-Mart probably does more of that for the poor than any other company.

Economists' goal (well, the good economists anyway) is to maximize quality of life, not wages or employment.

If Wal-Mart can attract the people it needs at current wages, why should it pay any more? That wouldn't be fair to people on the outside looking in, who would be glad to step in and do the job for $11.30/hour.

More importantly, they have an obligation to the stockholders to make as much money as possible. Spending $17/hour on people worth only $11.30 would be dereliction of duty.

In addition to all that, $17/hour wouldn't be better for all of Wal-Mart's employees, because a lot of them would lose their jobs.
Is it your preference that people who aren't skilled enough to produce $17 worth of labor every hour be locked out of employment?

 
At 7/15/2008 12:58 PM, Anonymous alex said...

Besides the fact that Wal-Mart offers low prices to low-income and value-seeking shoppers, the fact that they have a 40% turnover rate shouldn't even be a cause for concern. To me, that says that alot of people are gaining needed, general work experience, and then heading on to something better. That kind of opportunity is invaluable for so many younger workers who do not yet have much working experience, and desperately need it to move ahead.

When you propose to "fire half the employees" to pay the rest Costco wages, aren't you in effect killing the available opportunity for lower skilled workers?

 
At 7/15/2008 7:08 PM, Blogger juandos said...

"not really. check it out here."

Yes bobble do check it out:

WalMart Balance Sheet

Costco Balance Sheet

"LOL,well, WMT has a yearly employee turnover of 40% as it is"...

Let me guess, you got this from PBS or some equally socialist outfit, right?

 
At 7/15/2008 8:46 PM, Blogger bobble said...

juandos:"Yes bobble do check it out:
WalMart Balance Sheet
Costco Balance Sheet"

ok, i give up. what's your point?

fact is, WMT stock is exactly where it was five years ago. COST has doubled in the last five years. you tell me which one was better for the stockholders.

 
At 7/16/2008 2:15 PM, Blogger juandos said...

"fact is, WMT stock is exactly where it was five years ago. COST has doubled in the last five years. you tell me which one was better for the stockholders"...

Why its simple bobble its the outfit that contiously pays the dividends...

 
At 7/18/2008 5:06 PM, Blogger Darvin said...

Hi. I like your blog. I also like Walmart. There is everything there. Everything I need. The prices are moderate. The customer service is also perfect. Personally I consider it to be one of the greatest. People on www.pissedconsumer.com express their dissatisfactions with the company and if you have something in common to say then rush there and do that!!!!!!

 
At 7/19/2008 6:41 PM, Blogger bobble said...

juandos"Why its simple bobble its the outfit that contiously pays the dividends..."

poor juandos. wrong again.

TOTAL RETURN combines stock appreciation and dividends paid:

WAL MART
Total return to investors %
2007 ________________ 4.7
1997-2007 annual rate _ 10.1

COSTCO
Total return to investors %
2007 ________________33.2
1997-2007 annual rate _ 12.5

 
At 8/05/2008 8:29 AM, Blogger Denni Bonn said...

Hello. I find your blog very interesting. Since you have mentioned Walmart here I would like to tell that I do not find it that great as the others may. The thing is that the customer service is far from being perfect. I was going to return the purchase in two days after I bought it and the manager told me I could not do that. What is worse he did not give me the serious grounds for that. I was disappointed and went to this great site www.pissedconsumer.com to post a complaint.

 
At 6/06/2009 7:53 PM, Anonymous Anonymous said...

I worked in a Wal-Mart Dist Center. I went into this for more money and had no problem working hard. I was there for 3 years. Everything is not roses as it would seem from the outside. There is something to be said for having a safe working environment in a warehouse. I believed in Wal-Mart and backed them all the way and had no opinion before. Wal-Mart managers as a whole do not treat their employees with respect and yes I dealt with alot of mgrs not just one or two. Yes the pay was good. The benefits were ok. I have not worked in retail before and hope not to again. I now have a much worse opinion of Wal-Mart than before I worked there I had none and shopeed there. I liked the fact that they gave back to the community, the new sustainibilty and all that. It is alot different once your inside. You go yeah my Wal-mart and then day after day the way you are treated and the things you see get to you that is for sure. A store I do not know but if you had worked in a distribution center you would understand and no I will not explain. I am keeping my mouth shut I would not want them to change their mind on my elgible to re-hire status affecting my future. Oh and try your best to keep your mouth shut and not use the open door policy if you see violations of company policy if you do work at one it will hurt you in the long run no matter how good your elvaulations are. They do retaliate no matter what they say. There are alot of double standards and almost everyone one is connected by marriage or dating or family that you work around and more nepatism not sure if I spelled that right than I have ever seen. I will leave it at that. Unless you have worked at a dist. center then how would you know.

 

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