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.

****I bought my Lawnmower at a mom and pop hardware and small engine repair store two blocks from WalMart.***

Woopie do for you. I bought a $600.00 tiller at Wal-Mart (made in USA) and it would not even tear up the soil for my garden. I took it back the next day dirty and dusty and they gave me my money back. Try that with a Mom and Pop store!

IGA cat food, .48 cents a can. Same brand at WM .32 cents.

How does that apply to Walmart? How many Target and Kmart stores are there? How many Costco stores are there? There is plenty of competition out there and none pay more than Walmart, none are unionized. They are indentical in the purchasing , employment and pricing policies. Why is it that ONLY Walmart gets singled out and the others get a pass for operating the same way?

With Walmart many of us realize those smaller shops were making a ridiculous profit before competition came in and spoiled their little monopoly.

Rediculous profit.. would that be like the rediculous profit of those who are now outsourcing. Oh, wait, no - it's only rediculous profit if you don't get a stock percentage or your company isn't making enough to pay it's execs 230 million dollars in bonuses while the workers are making subpoverty wages, right. Almost forgot the crowd we're talking to..

What many people don't seem to understand is that the primary factor in the demise of small-town America wasn't Safeway, Sears, Wal-Mart, etc. -- it was the growth of the automobile. . .

You said a mouthful there. No one wants to walk anymore. It used to be common in our small town to see ladies walking to the local grocery wheeling their little 2-wheel grocery totes. Now everyone wants to drive everywhere; Americans love their cars.

What has happened here in our very rural small town is that the Wal-Mart and Tops were built on the best farmland, and their bulk buying power undercut the local businesses who do not have that advantage. One small example was their horse-equipment department; after the local feed & equipment store went out of business, Wal-Mart dropped that department, so now instead of two choices for buyers there are none. The big store management-level employees were all from out of town, and most of the rest are part-time. While many people love the lower prices and easy parking, their taxes have gone up since Wal-Mart eroded the tax base by putting downtown retailers out of business and by employing out-of-towners.

The presence of Wal-Mart and (foreign owned)Tops is a double-edged sword, and while things are certainly different, I can't honestly say that there is an improved the quality of life or of economics here.

I dont know, Maybe we were paying for their larger overhead expenses.

And what were those overhead expenses? Some are waste (e.g., your rent and electricity below). Others help the local economy (e.g., employment, profits spent locally, etc.).

Even better than Walmart I like to shop online when possible because the overhead is so small and taxes can sometimes be avoided. (I pay enough taxes as it is)

In theory, if your state has a sales tax, you probably owe a use tax. In practice, almost nobody pays it but states do sometimes go after it for big-ticket items that they find out about (and they have ways to find out about some big ticket purchases).

As a consumer I prefer not pay a premium on goods for their rent and electric at a pyhsical location.

I think the bigger problem is paying for loss -- theft and goods damaged by gorilla shoppers. My biggest concern over the loss of local retailers is the loss of the ability to look at what you are buying before you buy it. Retailers definitely offer a showroom capability that mail order businesses cannot match. And while some people browse at retailers and then buy mail order to save money, that's only maintainable if the retailers stay in business.

People have the right to compete and people have the right to choose where to shop.

Please point out where I've proposed passing a law to ban Wal-Mart or stop you from shopping there. In fact, I don't think anyone has here.

I am sick of all the do gooders telling me what to do and where to spend my money.

That's nice. Remember freedom of speech? You've got a right to choose where to shop and others have got a right to comment on it, especially in an open forum like this.

If you don't like Walmart, it's simple, don't shop there.

And if you like Wal-Mart, it's simple. Keep shopping there and ignore the people telling you not to.

But let those who do want to shop there do so, stop trying to restrict everyone's freedom to choose.

And let those who think that shopping at Wal-Mart is a problem say so and stop trying to restrict everyone's freedom of speech. See how freedom works? It's a two-way street. People are trying to persuade you not to shop at Wal-Mart. Feel free to try to persuade them they are wrong or should stop complaining. But please spare me the righteous indignation about how your freedom and rights are being infringed upon.

Any journalist who would write the words "Jesus would not shop at Wal-Mart" deserves to be immediately relieved from duty. Perhaps our friend, the Journalistic Genius, would like to offer us a scripture-laden explanation of why he would shop at Target or K-Mart instead.

My impression is that the journalist is a Wal-Mart apologist who utilized that quote to mock Wal-Mart critics. But in doing so, he also inadvertantly expands the discussion as to how the chain retailers have denigrated American society far beyond undermining Main Street Mom & Pop merchants and the livelihoods of small-town factory workers who used to supply our manufactured goods.

Over the course of decades, it has indeed been the evil retail chain stores who have systematicly obliterated state's rights and "blue laws". ("Remember the Sabbath day, to keep it holy" (Exo.20:8).)

In defiling this Commandment, the national chain retailers are guilty of undermining family values and the moral fabric of American society. It is in the name of their unrelenting worship of commercialism that we now suffer exposure to Janet Jackson's boob in the guise of "entertainment". Or Roseanne Barf grabbing her crotch while singing the national anthem.

Chain store apologists will, of course, deny any direct responsiblity for this shift in American society.
But the answer is "NO".
Jesus would NOT shop at WalMart. Nor at Target, nor at K-Mart, nor at J.C. Penney, nor at May's, nor at Sears, nor at Marshall Field's, nor at etc. etc. etc.

Jesus wouldn't shop at ANY of 'em on the Sabbath.

There certainly is value in being able to touch and inspect the actual product, not to mention ease of return if its defective, compared to mail order.

As a Walmart shopper I also use some mom and pop shops. A jeweler , Army /navy, local BBQ, and other restaurants ect..

When possible I spend money in town, such as insurance and car repairs.

It sure is nice to buy bread and milk at the same place, while also buying spray paint,a tree,a toy for the kids,some 3" wood screws and a new fishing lure...all cheaper than elsewhere.

Convienience and better prices are strong selling points.

Now that you seem to have all the answers, please answer the most important question that you ignored-what about Target, Kmart and Costco? They fit the same mold and yet you have nothing to say about them. Why? Please use your freedom to explain to me why they are different?

Not exactly the same model, though Home Depot might. The difference is how Wal-Mart treats its suppliers and competators. For example, see:

http://www.fastcompany.com/magazine/77/walmart.html

(The bit you need to consider is the impact that this strategy ultimately has on quality. A supplier can't keep making the same goods for less, especially when their own raw material costs go up. They've got to cut something. At first, it may be waste but, ultimately, they'll start to cut quality -- and I think that's already happening.)

If you've got evidence of Target, K-Mart, or Costco doing the same thing, I'd be more than happy to look at it.

Great thinking there. Lets have one hundred $10 workers sell sweat shop items made overseas so that 1000+ skilled American workers can lose their jobs. Super strategy.

The purpose of buying clothes is to be clothed, not to employ Americans in South Carolina doing "skilled" work. I am as interested in what they do for a living as they are in my career. If the shirt fits, looks good, is decent quality, at a good price, I'll buy it. That's my clothing strategy, which works fine. As for world economics and the retail and textile industries as a whole, it's not for me to say. I have no expertise and nothing to do with it.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.