Is Wal-Mart Bad For America?

The widespread success of retail giant Wal-Mart has generated criticism of its business practices. In the past several years many around the country have begun to attack Wal-Mart as a greedy corporation that pays its employees minuscule wages and forces smaller competitors out of business. However, these criticisms are a product of the lack of understanding (or extreme dislike) of basic capitalist principles that have allowed the United States to become the greatest economic force on the planet. Wal-Mart's successful history as one of the biggest American corporations and its place as the most influential company in the U.S. retail sector has made it an easy target for those in America and around the world that loathe capitalism..

The biggest criticism of Wal-Mart is that it pays its employees low wages. While on the surface this would seem to be true, the argument is shallow at best. For instance, a critical article of Wal-Mart had this to say: “The average pay of a sales clerk at Wal-Mart was $8.50 an hour or about $14,000 a year, $1,000 below the government's definition of the poverty level for a family of three.” Despite the fact that Wal-Mart often offers jobs in places where not enough are available, what is missing from this analysis is that sales clerks at Wal-Mart tend to be uneducated 20-somethings without a complete family who are often working part-time. Also unmentioned in this analysis is that $8.50 an hour is $3.35 an hour higher than the federal minimum wage of $5.15.

Wal-Mart’s wages and benefits are competitive in the retail industry. If they were not, the company would not be able to maintain a workforce of 1.2 million people, fill 100,000 new positions a year, or routinely attract thousands of applicants for hundreds of positions when new stores open. For instance, when Wal-Mart opened a store in Glendale, AZ., last year, it received 8,000 applications for 525 jobs. Obviously not everyone finds the opportunities at Wal-Mart unattractive.

Wal-Mart has also been labeled as a destroyer of small-town business. It is claimed that when Wal-Mart moves into small communities it wipes out the smaller mom-and-pop retailers that can no longer compete with Wal-Mart’s discounted prices and everyone ends up worse off for it. This kind of argument appeals to many people, but the "Wal-Mart destroys the community" argument is, again, superficial. Consumers faced with more choices and lower prices that they had not previously enjoyed, freely choose to patronize the new Wal-Mart. No one is forcing them to take their business elsewhere and those consumers save real money that they can use on other expenditures. While the owner of the smaller store has suffered a loss of income, everyone else has gained by saving money. Furthermore, if the employees of the smaller store go to work at Wal-Mart, more likely than not they will be offered better wages and benefits than they previously enjoyed working for the smaller retailer, who would not have been able to offer the raises or promotion opportunities available at Wal-Mart.

So what are the good things that Wal-Mart does for America? First off, Wal-Mart directly employs 1.2 million people and supports 3 million American supplier jobs by buying goods direct from manufacturing firms. In addition, Wal-Mart paid $5.5 billion in taxes to federal, state, and local governments in 2004 and is the largest corporate donor to charitable causes in the United States, giving away more than $170 million last year.

However, the biggest benefit that Wal-Mart brings to the American economy is low prices. With its innovative worldwide distribution system, Wal-Mart is able to buy vast quantities of goods from a multitude of suppliers for low prices and pass on those savings onto the American consumer. A 2005 Global Insight study found that the direct and indirect cumulative downward pressure on pricing exerted by Wal-Mart is now saving U.S. consumers $263 billion a year, or $2,329 per household. A UBS Walberg study found that a cart of groceries was 17 to 40 percent cheaper at Wal-Mart than it was elsewhere. Wal-Mart’s discounting on food alone saves American shoppers at least $50 billion dollars a year and the overwhelming beneficiaries of those savings are poor Americans. For comparison, the American Food Stamp Program cost $27.2 billion dollars in 2004. As a force for poverty relief, it is hard to argue Wal-Mart’s success in allowing millions of low income Americans to buy cheap food.

Is Wal-Mart bad for America? Hardly, but you wouldn’t know it from amount of noise emanating from the American left on the subject. Wal-Mart’s critics may be loud, but people tend to vote with their feet as evidenced by the fact that, worldwide, 100 million people a week shop at Wal-Mart. That is capitalism at work and Wal-Mart’s success is evidence of the phenomenal potential of free-market competition. Wal-Mart’s continued growth helps to ensure that capitalism will continue to reign and that is unacceptable to the liberal establishment here in America and around the world. So don’t feel guilty about shopping at Wal-Mart. In fact, be thankful that you live in a country whose economic system has produced such a dynamic company that, in turn, gives you the ability to save thousands of dollars on a multitude of necessity and luxury goods.

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~ The Conservative Guy