Selling Wal*Mart

Ha! Don't look so smug, Dear Reader. You're thinking, "The Vega will read John Tierney's most recent blatherings so I don't have to. Tee. Hee."

Well, you're not getting off so easy, as I take you behind the curtain that is TimesSelect...

First off, let us just note that Tierney has wised up and had a new photo taken, so he now looks a little less like a young Regis Philbin or the local dinner theater's lead in The Fantastics.

But he remains the Times' senior contrarian and maker-up of things (man, makes you long for the days of William Safire, who could at least, write).

November 29, 2005
Op-Ed Columnist

The Good Goliath
By JOHN TIERNEY

Once upon a time, social activists decried the plight of workers in company towns whose paychecks vanished each week because they were being gouged by the local stores. Urban politicians, angered by the high prices charged at grocery stores in the inner city, offered subsidies to attract chain stores that would make food more affordable for the poor.

Then Wal-Mart came along, giving small-town workers an alternative to the local oligopoly and offering urbanites food at the same low prices charged in the suburbs. Now the activists and politicians have a new cause: Say No to Wal-Mart! Stop it before it discounts again!

Nasty old hypcritical activists; you want affordable prices for the poor, but not from Wal-Mart 'cause it...discounts.

Gee, Tierney sounds so reasonable. And he's got the facts, after all. Right?

This new crusade is especially puzzling in light of the current consensus among poverty experts. I recently moderated what I expected to be a liberal-conservative debate on the topic that was sponsored by The New York Times Neediest Cases Fund. It was a fascinating discussion - but as hard as I tried to provoke controversy, there wasn't much of a fight.

I see. When we talk about the "current consensus among poverty experts," we're talking about a handful of guys he happened to meet in a Times' sponsored debate. Nevermind, though, let's hear what they have to say about Wal-Mart.

Both sides praised welfare reform and said the government should keep pushing people off the rolls and into jobs. And because many of these people are unskilled workers who command less than $10 per hour, both sides agreed that the government should make work worthwhile by supplementing their income through more income tax credits and other programs.

Wait. They didn't say anything about Wal-Mart. Oh, he's gonna be doing some extrapolatin'.

From that perspective, Wal-Mart has been one of the most successful antipoverty programs in America. It provides entry-level jobs that unskilled workers badly want - there are often 5 or 10 applicants for each position at a new store.

And there those workers remain, being paid at entry-level wages. And if they don't like it, well there's the door.

Critics say Wal-Mart's pay, $9.68 per hour on average, is too low and depresses local retail wages when a new store opens. That effect is debatable, but even if wages do go down slightly, these workers still end up with more disposable income, as Jason Furman, a visiting professor at New York University, concludes in a paper titled "Wal-Mart: A Progressive Success Story."

Furman, a former economic adviser in the Clinton administration and the Kerry presidential campaign, notes that the possible decline in wages is minuscule compared with what the typical family saves by shopping at Wal-Mart: nearly $800 per year on groceries alone, a savings that's especially valuable to the many low-income shoppers at Wal-Mart.

I was unaware that the "typical family" was "low-income." Welcome to George W. Bush's new America! But, um, how does that $800 per year match up with the cut in real income that a job in Wal-Mart means for most people? Tierney doesn't say. Nor does he say what the average cost a Wal-Mart employee must pay for say, dental care, not covered by the company. How much does the average tax payer pay for Wal-Mart employees encouraged to use Medicaid instead of employer supported healthcare.

And how does Wal-Mart stack up against other big box retailers?

The average income of shoppers at Wal-Mart is $35,000, compared with $50,000 at Target and $74,000 at Costco. Costco is touted as the virtuous alternative to Wal-Mart because it pays better wages, but it needs to because it requires higher-skilled workers to sell higher-end products to its more affluent customers.

Oh? Really? Has he ever shopped in a Costco? Not exactly buzzing with people with degrees on the fine points of choosing a $74 DVD/tape player. My guess is that Costco has better benefits in order to do business in more affluent communities and to attract a more affluent shopper.

I'm not really an enemy of Wal-Mart. From what I can tell, it treats employees abhorrently, but the company does provide jobs in parts of the country where jobs are especially scarce. They're awful places to shop in, but the stores do provide much needed cheap goods for a lot of families. The stuff Wal-Mart sells is cheap because it's made in lovely, worker-friendly places like China, but truth be told, it wasn't Wal-Mart that killed the U.S. textile industry.

But, see, Wal-Mart's gotta problem. The retailer isn't growing fast enough any more to satisfy stock holders (and they've got a greedy Walton royal family that's beginning to look like the House of Saud, but I digress). Unfortunately for Wal-Mart, its tapped out rural America and so the retailer must now make a push from the Red States to the Blue. And Blue State America, Wal-Mart knows, is a little less forgiving of a retailer that locks its overnight workers in the store all night.

And when Wal-Mart tries to move into cities like New York, Chicago, and Los Angeles, that "average $9.68/hour" does seriously depress wages.

So that's where guys like Tierney come in, to make the company look less evil. Of course, Tierney can't restrain himself...

It's easy to understand the motives of some of Wal-Mart's enemies. Local merchants don't want to match its prices. Labor leaders know that they'll lose members and dues if unionized stores suffer. But why would anyone who claims to be fighting for social justice be so determined to take money out of the pockets of the poor?

Forest? Trees? Wal-Mart isn't just about local merchants and a unionized Piggly Wiggly. Wal-Mart's relentless demand for cheaper and cheaper prices has a sagging effect on the entire economy. First textile mills move out of the country. Then electronics manufacturers. Then the non-unionized administrative staffs of those companies. Meat packers must hold wages to the minimum -- or worse -- in order to keep their prices low enough to please Wal-Mart. On and on. Meanwhile our balance of trade is more out of whack every year as Americans have become addicted to the lower prices. Addicted to the point where they ignore the real costs of those cheap goods.

I'm not saying any of this is, by itself, a bad thing. Nor am I blaming Wal-Mart for the trade deficit. But no single company has benefited more from the elimination of trade barriers, and no other company is as big a drag on our health care system then Wal-Mart. Wal-Mart lowers our standard of living like no other company headquartered in the ol' USofA. So, one might be expected to take exception when, in response to demands that Wal-Mart's size and power should compel it to clean up its act if it wants to continue to grow, we're accused of taking money from the poor.

John Tierney. Wanker.