Thursday, December 15

Wal-Mart is Not Evil

Now for the Left's turn.

Lately, it seems that I cannot turn around without some do-gooder telling me why I shouldn't shop at Wal-Mart. In response, I usually ask what laws the company has broken or how they are cheating their customers or employees.

I never get much of a response to that question. Oh, I know that several Wal-Mart's were guilty of immigration hiring violations. To my knowledge, the company has been punished for the violations and is now in compliance with the law.

The reason that I don't get much of an answer is that the company, for the most part, follows the law. Where it does not, it should be punished to the fullest amount allowed by the law, but that is not the point.

The biggest complaint that the Left levees against Wal-Mart is low wages earned by its employees. Personally, I wonder how we can castigate a company for following the rules? We tell a company to pay at least a certain minimum wage and Wal-Mart does. In fact, its average starting wage is almost double the national minimum. For this we should boycott the company?

Another study I have recently heard debunks that myth, as well. I can't remember where I read it (perhaps someone here can point us in the right direction), but I have seen studies that argue that an average family can expect to save over $1,000 a year in their grocery and clothing bill by shopping at Wal-Mart as opposed to other retailers. That works out to about a $1/hour in increased purchasing power, and can be considered a raise that Wal-Mart gives to all of us, including their employees.

I have also heard criticism that Wal-Mart doesn't allow its workers to work enough hours to earn overtime. What responsible company does? The wage rules in this country strongly incentivize employers to arrange their staffing so no employee has to work that many hours. We are going to criticize the company for good management?

Then I usually hear about how Wal-Mart has put local retailers out of business. Being someone who was in the hard good retail business, and was driven out of it by the way the marketplace changed, I know something about this argument as well.

As I have argued before, local retails are less a victim of Wal-Mart then they are a victim of industry wide changes, mostly spurred by the development of information technology that allows large corporations to control small amounts of inventory. With such IT tools at their disposal, large retailers like Wal-Mart, Home Depot, Lowes, etc. (and to a smaller extent commercial suppliers like Grainger) are able to exercise purchasing power to drive down the cost of their supplies. In addition, the same technology frees them from being saddled with dead inventory, as their forecasts kept them from buying it in the first place.

Local retailers only have one option in the face of these kind of changes -- to get in the niche business. The big boxes will only stock the 80% of a merchandise line that will sell quickly. People still want the other 20%, and will usually pay more for it since they can't get it from the big guys. But I digress.

If Wal-Mart had not done it, some other company would have used this new technology to do the same thing. Blaming Wal-Mart for the collapse of the downtown is just another Luddite meme.

Wal-Mart employs 1.3 million people. It pays Billions in income and property taxes. However, it is not a monopoly that gouges customers; its blended markup is only 30% and it only has net income of 3.5% of gross sales. In other words, its success is due to buying items at the best possible price and passing those savings along to customers.

I am not going to go as far as the Wall Street Journal and argue that Wal-Mart is good for the Country. (Subscription Required). It is just a retailer, and it succeeds because it understands that price is the driving factor behind most consumer's purchasing decisions.

However, as long as it follows the law it should not be anyone's bogeyman.


GeeGuy said...

I'm with you, Aaron. We cannot single out a legal business just because we decide there is some aspect of their legal operations we do not care for.
I think Wal-Mart is bad for the local economy, but so what. It's not up to me. If they did not give people what they want, they would be broke.
Planned economies do not work, folks.

Treasure State Jew said...

GeeGuy; I am hoping to equally piss off both sides with those two posts. I think I probably succeeded.

I will even go farther than you. I don't think that Wal-Mart is bad for our local economy. They employ hundreds of people in the Great Falls area and provide most working people a real savings on their grocery dollar.

We are never going to get back to local downtown grocery stores or clothing stores. We are in a world economy with IT allowing economies of scale. If we didn't shop at Wal-Mart, we would be shopping at Target or Albertsons, and paying more money. In either case, the money would not be going to a local proprietor. In this case, we get to keep more of it.

As for "low" wages, they are a perfect example of government programs going awry. By creating a system like the EITC, which pays (mostly) single mothers about $3 thousand to take a low paying job, our government provides businesses an incentive to pay these workers less. After all, the business knows that they are already making a buck and a half per hour for just showing up.

ZenPanda said...

My biggest problem with WM... I don't do well in crowds. (Not their fault by any means)

I find what I like, want & use 99% of the time at Kmart, Target & Old Navy.

I read somewhere that they hire more f/t than p/t workers- saving themselves $ by not providing benifits. The purpose of business is to make money. WM does that.

Treasure State Jew said...

Panda; Thank you for helping to prove my point. K-Mart, Old Navy, Albertsons, Target, etc. are not local companies. The backbone of retail for most people is no longer the local retailer. It never will be again.

Think about it. How often do you go to a local retailer to buy your groceries? Not often.

I go to 2Js, which is local, but not for most of the staples. Like any local retailer, they thrive by carrying the niche products that the big boys don't carry. The 20% that doesn't move.

How about clothing? Same story. While there are local clothing retailers, they thrive by carrying niche products. Want ski gear? Wal-Mart's stuff is crap. A serious skiier shops at Skier's Edge, which carries the stuff the big boys will not carry.

The same can be said for any local retailer, in just about any city or town in the US. That isn't Wal-Mart's fault. If you are going to blame anyone, blame John Bardeen, Walter Brattain & Wiliam Shockley, the inventors of the transistor. Big Box retailers are a result of computer (and database) technology.

Justin said...

While I agree that if the market didn't obviously want Wal-Mart, there wouldn't be a Wal-Mart, I have to dispute a few things. Yes, they do pay more than minimum wage, but not as much as a lot of people think, they do go to great lengths to avoid overtime, they try to push any employee that wants to work overtime into management positions, which are basically scapegoats that are paid salary so that they can work them 80 hours a week without paying OT and blame them for anything that goes wrong since a regular employee would just quit but someone dim enough to accept one of their management positions is also probably dim enough to think that they have something to lose so they'll stay and take it. They do offer benefits, too bad that their health insurance is too expensive for most of their employees to afford, and they most definately attempt to brainwash all of their employees into giving their entire paycheck back to the company not only by shopping there but by buying stock. My wife worked at Wal-Mart, for a very short time. If someone wants to starve to death while being treated like a child and brainwashed with little cheers and songs and dances, then yep, Wally World is a great place to work. As far as the economy is concerned, Wal-Mart and their buyer driven purchasing methods have driven producers to cut their costs so much that the last remaining manufacturers that still make things in the United States have cut their wages to a fraction of what they once were. Most of the good American manufacturing jobs have gone overseas, and the ones that are still here won't be for long. This is in large part because of Wal-Mart's business practices, forcing suppliers to meet a certain price or have their products dropped.

As I said, the market has spoken, people obviously think that the cheapest price is more important than supporting American manufacturers, but I wonder if they'll still say that when Wal-Mart is the only thing left and they're stuck working there.

Treasure State Jew said...


I won't take issue with your observations about what it is like to work for Wal-Mart. No one with any sense would argue that they pay high wages. They don't. However, no responsible employer authorizes overtime.

Nevertheless, I do take some issue with your observation that Wal-Mart's purchasing power is causing manufacturers to go out of business. Many major manufacturers give Wal-Mart the same end column price that they give any other major distributor or reseller. I don't believe for a moment that Wal-Mart gets better terms or prices from, say, 3M than it offers to any other company.

The same can be said for many grocery products.

While many manufacturers are moving their production overseas, they would be doing so whether or not Wal-Mart is buying their products. We live in a global economy, and we are all in competition with one another.

Blaming Wal-Mart for that is like blaming your sneeze for your cold.

a-fire-fly said...

My 2 cents. They are a legal business, and as such have a right to pursue that business anywhere they can make a profit. They do save people money. I agree with Aaron we will never get our small local retailers back. That is why I think it is so important to remember to support the ones we have. I pay extra, and go out of my way to do it, when I can. I believe our city leaders have, in many cases, made it easier for large retailers/franchises to pursue opening stores than it is for small local guys to start a business.
Justin, to address your statement about working 80 hours per week - on salary - when you become a salaried worker you have the right to address how many hours are considered your average week. I know, I have done it. I agree with you about the manufacturing jobs, but I choose not to blame the companies as much as the governments who allow trade regulations to undercut our local producers.

WolfPack said...

If we are speaking specifically about Great Falls, I don't see how you couldn't agree Wal-Mart has been good for the local economy. With the Christmas buying season here just go survey retail parking lots. The Wal-Mart parking lot is the fullest, packed with out of town shoppers. These same shoppers are utilizing other local businesses during their visit (restaurants, mall, other box stores, hardware, etc…). If not for Wal-Mart many of these traveling shoppers could easily decide to pass GF and shop elsewhere. How much worse would Holiday malls stagnation be without Wal-Mart supplementing GF’s offerings?

I also don’t understand the belief that Wal-Mart sets wages and benefits. Anyone who runs a business that has employees soon realizes that wages are set by workers not by the employer. You can offer a prospective quality employee a low wage but they won’t take the job. It would be impossible for Wal-Mart or any other business to thrive only hiring the worst of employees. Wal-Mart pays what it must to lure workers of acceptable quality away from other opportunities. The employees at Wal-Mart are not there because they are stupid or have been tricked. They are there because they feel it is their best option, if they could do better they would. As someone who employs low wage workers I kind of wish Wal-Mart was not competing with me for employees so I could pay less or get a better crop of applicants. The more sensible part of me knows that the extra money Wal-Mart brings to town out ways the staffing headaches. Because of our unique geographical location in the state anything that adds to our shopping attractiveness is good for the GF economy.

It seems like a lot of the anti Wal-Mart arguments are rooted in jealousy and devoid of any economic theory.

Justin said...

The employees set the wages? Is that why Wal-Mart has an official policy to close any store that chooses to go union?

Wal-Mart doesn't get a better deal from suppliers than other companies? Is that why when a rep from a supplier goes to talk to the purchasing department at Wally World HQ down home in good 'ol Bentonville he's placed in a little glass room like the ones at car dealerships along with two or three other reps from other companies selling similar goods and then subjected to a backwards auction sort of atmosphere? Either give us the best price or one of these other companies will, then we'll buy from them and you're ass out, never mind if your stuff is higher quality or employs more American workers.

You may be right, 3M might not sell their products to Wal-Mart any cheaper than they would to anybody else, but if they don't Wal-Mart just buys their stuff from say BASF or another supplier of the same goods and 3M gets to take their chances with the rest.

I'm all for free enterprise, and I have to admit that Wal-Mart has really got their shit together when it comes to making money, but money for who? Anytime a company makes the kind of profits that Wal-Mart does and pays their employees squat, I have to call BS. A few people are getting EXTREMELY rich on the backs of the entire American working class. Wal-Mart could afford to pay well more than they do. I would never be in favor of a law forcing them to, but as a member of the aforementioned working class I would definitely applaud them if they decided to do it willingly.

People can say what they want about Henry Ford, I know all the anti-semite nazi sympathizer stories so I don't need a rehash, while I may not approve of his politics Ford operated his business under the principle that if you don't pay your workers enough to buy the product that you're making, then you're doomed from the start. He payed his workers far more than everyone else of the time did, they called him crazy, he showed them that he was crazy, crazy like a fox. He had an extremely dedicated work force and an almost nonexistent turnover rate, because he treated his people right.

And Wolfpack, if you wish that Wal-Mart wasn't there so you could get away with paying your employees less you should be ashamed of yourself and there's no wonder why you support their less than scrupulous business practices, you went to the same school they did. You're objective should be to find a way to make your business more profitable so that you can keep enough money to make yourself happy and afford to pay your employees more. If I knew who your employees were I'd send them a copy of what you just said, if any of them have any balls I doubt you'd have any problem cutting them their next check, because if I worked for you and you said that to me it would be the last check. I hope you sleep well at night, your employees probably don't but I doubt that you care.

Treasure State Jew said...

Justin; The way around Wal-Mart's purchasing power is the perceived quality of a manufacturer's goods.

Go back to my example of 3M. I mention that company because it is such a well known manufacturer, with such quality products. As I said, I don't believe that they give any reseller or distributor a better end column than any other. (Of course, you must meet their end column requirements, which might be tens, if not hundreds, of thousands in annual purchasing).

If you ever do any housepainting, you are probably familiar with 3Ms blue tape. It is well regarded as the best painting tape available.

Go to Wal-Mart and look through their painting department. I promise you that you will find blue 3M painting tape. That is because, price be damned, the stuff is so good that most people wouldn't dream of doing a painting project without it.

Now, there is no doubt that Wal-Mart (and any other large retailer or distributor) does everything that they can to exercise every bit of buying power at their disposal. Some manufacturers may decrease their price to get Wal-Mart's business. However, many do not. And in any case, the decision to price a product is ultimately the decision of the seller. If they don't feel that they can live with a certain price for their product, they are under no obligation to sell it.

Company's like 3M (and others, like Starrett, etc.) have such perceived quality that Wal-Mart has no choice but to buy their products, and stock them in their stores.

Justin said...

Tell that to Rubbermaid, and a host of other companies that have had to scale back operations because Wal-Mart either wouldn't carry their products due to the prices they had to have in order to stay in business, or moved their products to low priority status due to these companies falling out of favor.

I'm sure Wal-Mart does sell 3M blue tape, but do they have other brands too? First time Wal-Mart doesn't like their price they'll move the other brand to the front and there'll be a whole rack of it and 3 rolls of 3M somewhere on a little peg for twice the price. How much tape will 3M sell at Wal-Mart then? How will they keep the new factory they built to supply the increased demand working when all of a sudden they lose a major portion of their sales?

Most people that shop at Wal-Mart could give a rat's hiney about quality, they want cheap or they'd buy their tape at the paint store.

You have some good points Aaron, but just because something is legal, and the way things are done, doesn't make it right. As I said, I wouldn't favor any law to make them change, but I'd love to see them do it willingly. They could provide good jobs if they wanted, they have the money, and they will continue to have the money, year after year. They could promote American products if they wanted to, they have the market cornered, people would pay a little more if that's what was available. That's how Wal-Mart built their business in the first place when Sam Walton was still alive, their stuff was a little more expensive than K Mart but it was of much higher quality so people would pay for it, that isn't the case anymore but they're still coasting on that image.

The whole thing boils down to a modern day business environment built around the concept of making as much money as possible, as quickly as possible, and to hell with ethics and morals in the process. I like saving money as much as the next guy, but not if it ruins the country and puts people out of work in the process. I've been the employee for too long to sympathize with these corporations, I'm sure that if I was a businessman I might see things differently.

Anyway Aaron, you do a wonderful job of defending something that is so hard to defend if nothing else, my hat is off to your efforts. Go check out my most recent post, disregard the center section since that is most definately not aimed at you, and check out the links near the end, especially the 5 part video series, watch the whole thing and then tell me what you think. I'm not saying that it's unbiased, but it does make one wonder . . .

WolfPack said...


What the hell is wrong with you? This is an intellectual discussion about a retail store. From this discussion you have taken license to threaten my business, threaten to beat me up, accuse me of sexual harassment of my employees and accuse me of cheating on my wife (ref. Caution contains foul language). All this because I don’t agree with you that Wal-Mart is the great Satan. You don’t seem as uneducated as your debate techniques suggest but a little maturity would go along way toward making your points. Name calling, threats and insults are not an effective way to sway others to your side of an argument. As for why I don’t put any personal information on my profile, I’m waiting for you to put up your full name, phone number, home address and picture of your wife and kids. With some of the nuts on the web, I don’t think it would be the smart thing for either of us to do. But don’t let that stop you if you truly believe what you say and your statements were not just part of your bullying tactics. No need to respond. We can agree to disagree on this topic and probably most others. I’ll refrain from addressing any of your posts in the future so we won’t have to repeat this exchange.


Sorry for my contribution to any nastiness. Good topic, although a little more controversial than I would have expected.

Anonymous said...

Like most of us I have a family to support. I shop at WM alot. Who can resist saving 10+ % on their grocery bill vs the other stores! I sure can't!

Justin said...

wolfpack, I did not threaten you or accuse you of anything, if you read the whole thing you will see that I included several statements, including the most recent post, saying that who exactly I was responding to was a conglomeration of several people that I've worked for, you just provided the catalyst. Your statement that you employ low wage workers and would love to be able to get away with paying them less speaks volumes about your character. My rant:

1-was not part of THIS discussion, you may have noticed that I posted it on my own blog, not Aaron's. I have more respect for him than that and while I may go over the top when something gets me stirred up I would never be so presumptuous as to think that it would be right of me to call such a tirade a "discussion". As far as swaying anyone to my side, did you happen to notice the list of links at the end of the post, or were you fuming too much by the time you got that far? If you were, good, now direct your anger in the proper direction, and tell your employees "thank you" for all they do for you.

2-had nothing to do with whether or not Wal-Mart is the "great satan", it had only to do with the fact that you obviously do not appreciate the fact that without your employees, your business is nothing. Everyone else here made good points, you sir, are a Scrooge.

As far as your statement about not posting my full name or pictures of my wife and kids, I've said before to the last person that took issue with my pointing out of their shortcomings, I am not hard to find. The information needed is all there, but you're right, I don't throw it out there for any nutcase to follow the trail of breadcrumbs, that would indeed be imprudent. But if you want to do some homework . . .

Justin said...

Oh, and one more thing and then I'm gone. Wolfpack, you did not contribute to the nastyness, I will accept full responsibility for that, the nastyness was mine and mine alone. And feel free to respond to anything that I say, If I feel that any nastyness is in order I won't leave it here. That's a big part of what's wrong with this country, too many people are afraid to rock the boat, my objective is to tip it over. I've said my piece regarding unscrupulous employers, it's out of my system, don't let me stop you from saying what you think. I mean, who the heck am I? Nobody important I assure you.

I, however also posess the humility to admit it if I think that you're right. Do you even reallize the inflamatory nature of your statement when perceived from a different viewpoint? Namely mine or that of your employees? Say it with me now it really isn't that hard: "I'm Sorry". Unless of course you can't see things from a different perspective, in that case I wish you Happy Holidays and a profitable business in the new year. Oh, and may you not suffer too much with the boils on your butt.

Anonymous said...

When it becomes too expensive to get to "Wally World" to shop, then we might see the return of the neighborhood grocery store. Think! How much do you really save by buying and maintaining and operating and licensing and insuring and garaging a privately owned motor vehicle so you can drive to Wally World to "save money?" Think!