Does Wal-Mart Destroy Communities?

In a recent poll on the CNN website, viewers were asked the "poll" question of whether or not they believed that Wal-Mart stores were "good" for the "community." Perhaps it is not surprising that a large majority answered "no."

Now, this by itself does not mean much, since these online "polls" are not scientific and reflect only the views of the moment by people who choose to participate. What is more significant, however, was the anti-Wal-Mart content of a speech recently given by Teresa Heinz Kerry, John Kerry's wife and an influential person in her own right. Speaking at a Democratic Party rally, Mrs. Kerry declared that "Wal-Mart destroys communities."

Indeed, Wal-Mart bashing is in vogue. Whether one journeys to the sight of Sojourners Magazine or reads even mainstream news publications, the charges against Wal-Mart abound. According to the consensus of the critics, Wal-Mart is guilty of the following:

Intimidating shoppers by having them "greeted" by an elderly person at the door. (As one writer said, the real purpose of that greeter is to let shoppers know that they are being watched.)

Putting small stores out of business, as shoppers stop patronizing the little "mom-and-pop" boutiques for the big box, thus "destroying" the look of "Main Street" in small towns and cities.

Purchasing low-priced goods from abroad, which puts American workers out of jobs.

Contributing to that allegedly harmful disease known as "consumerism," in which Americans are constantly purchasing goods that the Wal-Mart critics insist that they really don't need. As the bumper sticker of one of my faculty colleagues proclaims: "Mal-Wart: The Source of Cheap Crap."

Of course, what really bugs the critics is that people choose to shop at Wal-Mart instead of the places where they would want people to spend their money. (Activists on both left and right often will invoke the name of the "people" when their real goal is to restrict the choices of those "people.") Yet, while up front I question the real motives of the Wal-Mart haters, it still behooves us to answer the charges using economic logic, since many of the arguments against this chain store also appeal to economics.

In a recent article, "Always Low Wages," Brian Bolton declares that Jesus would not shop at Wal-Mart, since the company's employee pay scale is not up to Sojourners' standards. Furthermore, he all but declares it a "sin" for Christians to patronize the store because it imports cheap goods made by people who make even less money than Wal-Mart employees. As Bolton writes, "lower prices equal lower wages."

Nearly all of us would accept higher payment for our services, and Wal-Mart employees are no exception. Yet, that condition alone hardly makes a company's pay scales illegitimate, as Bolton and other critics contend. If my employer were to double my pay tomorrow (which is highly doubtful), I doubt I would object, although I'm sure that most of my colleagues would see the event in a different light. That Frostburg State University does not make that offer to me does not make my current salary illicit, nor does it make my employer the second coming of Silas Marner.

The point is this: payment for services involves mutually agreeable exchanges. They are not manifestations of power, as some would say. No one is forced to work at Wal-Mart; people who choose to work there do so because they prefer employment there to other circumstances.

At the local Wal-Mart where I shop (contrary to Bolton, I do not believe that shopping at Wal-Mart violates the Holy Scriptures), I have noticed that many employees have stayed with that company for a long time, and there does not seem to be much turnover there. Furthermore, from what I can tell, they seem like normal people, not the oppressed slaves that the critics claim fill the ranks of Wal-Mart workers.

Now, my personal observations hardly constitute proof that Bolton and the other Wal-Mart critics are wrong, but unless they can repudiate the opportunity cost argument, they have ground upon which to stand. Wal-Mart is not engaged in a grand conspiracy to push down wages in any given market, and twisted logic cannot prove otherwise.

For example, Bolton writes that part of the problem faced by recent striking union grocery store workers in Southern California was that Wal-Mart super centers in the area paid lower wages, which placed pressure on the other grocery stores. Thus, he reasons, it was Wal-Mart that ultimately kept workers from receiving "just wages" for their work.

No doubt, Bolton can appeal to the anti-capitalist mentality of many people, but his work stands economic logic upon its head. By paying lower wages, Wal-Mart makes grocery stores like Vons and other places that pay union scale more attractive to workers (although labor unions do not exactly welcome some potential employees with open arms). The success of Wal-Mart does not have to do with the pay scale of its employees, but rather with the perception by consumers that the store will have the goods they want at an affordable price.

Bolton claims that Wal-Mart can charge lower prices and still be profitable because it pays its employees less than do other companies. As anyone with even cursory training in Austrian Economics knows, such an argument is false. As Murray Rothbard points out in Man, Economy, and State, economic profit exists because of temporarily underpriced factors of production. Over time, as the owners recognize their position, they will either refuse to sell their factors at current prices and look to other options, or accept the current price because the opportunity costs of selling to other buyers may be higher than they wish to incur. If it is the latter, then one cannot say that these particular factors are even underpriced, as their owners are not able or willing to do what is necessary to gain higher prices for their employment.

In places like Southern California, where there are numerous employment opportunities, to say that workers are "forced" to work at Wal-Mart for "slave wages" is ridiculous. As noted before, the fact that workers there would be willing to accept higher pay is not evidence that they are enslaved. That they would prefer more to less simply means that they are normal, purposeful human beings.

One can easily dismiss the charge about the "greeter" at the door—unless one truly is intimidated by the presence of a diminutive 60-year-old grandmother. (What I have found is that if I select merchandise and actually pay for it, then no one there bothers me at all. If activists are upset that Wal-Mart does not like individuals to steal goods from their shelves, then they are advocating theft, and one does not have to pay attention to their arguments at all.)

The "Wal-Mart destroys the community" charge, however, needs more attention. It goes as such: Wal-Mart enters a geographical area, and people stop shopping at little stores in order to patronize Wal-Mart. The mom-and-pop stores go out of business, the community is left with boarded-up buildings, and people must leave the small businesses and accept lower wages at Wal-Mart. Thus, while a shiny new store full of inexpensive goods is in the locality, in real terms, most everyone actually is poorer.

Again, these kinds of arguments appeal to many people. For example, all of us have heard of the theoretical owner of the small, independent hardware store who had to close his shop when Wal-Mart or Home Depot moved into his community, then suffer the indignity of having to go to work at the very place that put him on the streets. The former owner has a lower income than before, which is held up as proof that the "big boys" create and expand poverty.

A few items need to be put in order. First, no one forced the hardware owner to close his shop; he closed it because it was not profitable enough for him to keep it open. If the new chain store meant that many of his former customers had abandoned him, that is not the fault of the new store. Instead, consumers faced with choices and lower prices that they had not previously enjoyed freely chose to patronize the new store.

Second, while the owner of the smaller store has suffered a loss of income, everyone else has gained. Third, if the employees of the smaller store go to work at the new chain store, it is almost guaranteed that their pay will be higher than before and they will enjoy new benefits that most likely had not been available to them previously.

Third, the presence of Wal-Mart means local consumers will pay lower prices for goods than before, and also will benefit by having a wider array of available items than they had previously. (And they save on time by being able to stay under one roof while shopping for different items.) Whatever the reason, we can safely assume that consumers in that particular locality are exercising their free choices, choices that they perceive will make them better off than they were before the store existed. Activists may not like their reasoning, but that is irrelevant to our analysis.

Having dealt with the "Wal-Mart" creates poverty argument, we now turn to the more nebulous claim that the chain store "destroys" communities. Now, I have never seen a place that has been severely damaged or "destroyed" by Wal-Mart. (I have seen places that have had their quality of life spoiled by rent controls, "urban renewal," and other statist interventions that so-called activists have championed, but that is another story for another time. Suffice it to say that activists are unhappy that individuals freely choose to shop at Wal-Mart, and they want to restrict their choices in the name of "community.")

In fact, I would like to make a reverse argument; Wal-Mart and stores like it add to the quality of life in large and small communities because they provide consumer choices that otherwise would not be available. Take the area near Cumberland, Maryland, where I live, for example.

Cumberland is something of a time warp, a place that 50 years ago was a manufacturing center and was the second-largest city in Maryland. Today, most of the large factories are long shut down and the population is less than half of Cumberland's heyday numbers. Furthermore, the area has a relatively high unemployment rate and many jobs do not pay very well.

The presence of Wal-Mart and Lowe's (a large hardware store), along with some large grocery chains, however, means that people here can stretch their incomes farther than we would if those stores did not exist. If they suddenly were to pull out, one can be assured that our quality of life here would not improve in their absence. Furthermore, the fact that Wal-Mart and other large stores are willing to locate in smaller and poorer communities also makes these areas more attractive for people who wish to live here but do not want to have to give up all of the amenities of living in a larger city.

Others on this page and elsewhere have dealt with the charge that Wal-Mart destroys American jobs by purchasing goods from abroad, where the goods often are manufactured in what activists call "oppressive" conditions. (In fact, Sojourners elsewhere has openly stated that Third World peoples should simply be supported by American aid, and that the West should do all it can to make sure that the economies of these poor nations do not grow, all in the name of environmentalism. In other words, none of us are poor enough to satisfy the anti-Wal-Mart activists whose real goal is to eviscerate our own standards of living and "turn back the clock" to an era when life expectancy was lower and people generally were more deprived.)

The last objection—that Wal-Mart helps create "mindless" consumerism—is easily refuted by Austrian economics. The very basis of human action is purposeful behavior; to call human action "mindless" is absurd. Consumers at Wal-Mart and other chain stores are not zombies walking aimlessly through the building with glassy stares. They are human beings with needs and desires who perceive that at least some of those desires can be fulfilled through the use of goods purchased at Wal-Mart.

In a free society, activists would have to try to convince other individuals to change their buying habits via persuasion and voluntary action. Yet, the very history of "progressivist" activism in this country tells us a story of people who use the state to force others to do what they would not do given free choices. Yesterday, Microsoft was in their crosshairs; today, it is Wal-Mart, and tomorrow, some other hapless firm will be declared guilty of providing customers choices that they had not enjoyed before. A great sin, indeed.

But Levis considers that new line of clothes they made for Wal-Mart a life saver, they were a dieing company before then.

The question is whether this is really saving Levis or simply delaying the inevitable. Levis is trading on a name that people associated with quality and if their new line lacks quality, they will destroy their reputation and ultimately fail.

Using Levis as an example of the nasty things Wal-Mart does to suppliers doesn't work, they saved Levis.

I'm using Levis as an example of the quality issue. Vlasic, and some of the other cases in that article, are examples of doing nasty things to suppliers. And I'm sure there are also examples, like perhaps Huffy, where everything works out fine for everyone. But you can't keep demanding cheaper, cheaper, cheaper from suppliers in every sector forever without some quality suffering. And from the comments I see here, people are noticing that it is suffering. So the issue is probably self-correcting. Every few years, retail seems to have a shake-out. Perhaps one of these years, Wal-Mart's number will also come up.

Vlasic, and some of the other cases in that article, are examples of doing nasty things to suppliers

You continue to base your argument on that biased article. Vlasic was a very mismanaged company before Walmart. The brand is still the dominating brand in every supermarket, check the shelf space the next time you're in the grocery store. They are a classic case of going into a situation totally unprepared. Vlasic did it to themselves.

Walmart is not a monopoly. Walmart is an unintentional beast eating small town America. I don't shop Walmart because locally they stay full of customers because you can not buy and get out. I don't stand in lines since I got out of the military in the 70's. A&P was more regionally a threat and hardly ever put a corner store out of business. The other chains did that and put A&P out of business too with predatory pricing.

My feelings are when you buy the lowest price for the same product, fine. When you buy the cheap product ??????

Not everyone has local retail choices. Most of the people who don't are in Red States. If those people start voting "Blue", we are all going to have a problem.

GWB is blamed for almost everything by the left, but only you have thought to blame him for the "evils of Walmart". Go back to reading pseudo business magazines written by hacks.

Myself being from what once one could classify as STA, I agree the automobile had a huge impact upon areas like mine; however I have seen another area that has been largely ignored as a possible cause... higher education.

In my local, when a person leaves for college, they rarely return to STA, not because not because it lacks opportunity, but because after 4 years of college, it isn't their home anymore.

The friends they may have had in STA most likely will not return, and themselves returning to STA means isolating themselves from current contacts. Throw in an age gap difference between the much older population that has made a living and raised a family in STA, and the very small population in the returning person's age group, potential mates are very reduced.

STA has career opportunities, it just however does not have social opportunities. Few people want to live and work in an area where they have little opportunity to find love, or to raise children who will attend a consolidated school located half a county away.

While it is true STA has a hard time competing with discount stores and major retailers, the true driving factor in STA's decline is a shrinking customer and worker base. Fewer college bound kids returning to start families and businesses means STA's battle isn't with discount stores... it is attrition.

He would be unemployable in a mom and pop shop.

In your area of the country perhaps.. in mine totally untrue. Local businesses work with ARC to provide meaningful employment such as secretary work, bagging groceries, to cooking foods.

While I applaud Walmart for providing a community service, mom and pop stores can and do provide the same services.

"China's military is preparing to hold large-scale war games intended as a "political message" to Taiwan, amid heightened tensions between the island and mainland, according to U.S. intelligence officials. The military exercises are part of China's annual maneuvers involving large numbers of troops, ships, aircraft and missiles, and will take place on Dongshan Island. The island is located off the coast of Fujian province along the southern Chinese coast near Taiwan. A U.S. intelligence official said the exercises will begin later this month. "It isn't just a training exercise. It's also intended to send a political message "

Thanks, fool.

No that's not the question at all. Levis would have been gone if it wasn't for Wal-Mart, that bought them time to fix the other parts of their business, what they do with that time is up to Levis, not Wal-Mart. Levi's clothes had a reputation for quality, meanwhile Levi's business had a reputation for late delivery of product and delivery of incorrect product, this made many businesses not want ot carry their stuff anymore. The reputation they were getting among the buying public because of that was that they were an impossible to find brand. Wal-Mart forced them to fix that, now you can find Levis everywhere, if they still go under that's their problem for squandering the time and profit the Wal-Mart deal gave them.

But Levis was smart, they made a low end label for Wal-Mart, I doubt it's impacting their margin any. People don't judge the Toyota Avalon based on quality issues with the Corolla because everybody knows the Corolla is their low end car and isn't supposed to be as reliable as the Avalon which costs almost twice as much. People that buy $20 jeans don't expect them to be as good as $40 jeans. If it's hurting Levis at all it's because they didn't do a good enough job of advertising the differences between the labels, once again their fault not Wal-Mart.

As for Vlassic, screw em, their pickles suck anyway. They spent too many years over complicating the pickle market with too many cuts and flavors and none of them actually any good. If they think the huge jar is that bad for business they're free to pull out of the deal.

Word from the new VPs at Wal-Mart is that they think they've expanded horizontally about as much as they can and the next wave is to expand their margin on the market already captured. Which, oddly enough, would solve all these companies whines.

Read what others have also said in the thread. It's not just that one article.

One of the lessons of history that you are missing is that most people are unprepared to handle things like contracts, competition, debt, and unemployment. If you let too many of them sink to the bottom, it is only a matter of time before they reach a critical mass and start dragging everyone down. Clinton wasn't elected by space aliens in 1992. FDR didn't seize power through force of arms like a Ceasar. Heck, neither did Hitler in Germany. A critical mass of people gave those people power because they feared for their future and followed the demagogue that made them feel like they had a future.

I'm not saying that America is on the verge of a Hitler or even a new FDR, but a repeat of 1992 is certainly a possibility if enough people feel economically insecure. I'm not claiming that socialism and/or authoritarian control of business is the answer. What I'm claiming is that economic pain and insecurity can cause people to turn in the direction of socialism and authoritarianism for safety (even if we both agree that's a foolish idea), and indifference to the economic insecurity of others is, to me, indifference to the threat to freedom that such insecurity poses. You don't need to worry about me voting for Kerry but you should consider why Kerry is so close to Bush in the polls and why Bush 41 lost his job despite his Gulf War I victory and popularity.

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