Somebody tried to guilt trip me about shopping at Wal-Mart. Did I know that Wal-Mart employees are so ill-paid that five percent are on Medicaid?
Well, it did sound like the rankest exploitation. But it’s not.
“To the anti-corporate Left,” writes IWF’s Carrie Lukas, author of one of them, “Wal-Mart represents everything wrong with America.” Lukas notes that Wal-Mart has replaced Starbucks as the corporate bete noir:
“The latest shot across Wal-Mart’s bow is a documentary called Wal-Mart: The High Cost of Low Price. The film makes a familiar case: That the big box retailer ruins communities by driving out mom-and-pop stores and good jobs and replacing them with a heartless corporation that mistreats and underpays its workers.
“This plotline may set heads nodding in the East Village, but it’s woefully disconnected from the facts. Global Insights, an economic analysis firm, released a report earlier this month that details Wal-Mart’s impact on local communities and the wider economy. It will be difficult for anti-corporate fanatics to dismiss the report as Wal-Mart propaganda because it was reviewed by an independent panel of economists, including a scholar at the liberal – oh sorry, ‘centrist’ – Brookings Institution.
“Global Insights found that Wal-Mart’s expansion between 1985 and 2004 was associated with a 9.1 percent drop in the price of food at home, a 4.2 percent decline in the price of other commodities and goods, and a 3.1 percent decline in consumer prices overall, as measured by the consumer price index. As a result, Wal-Mart saves the average working family about $2,329 per year.”
The second piece is “Progressive Wal-Mart. Really.” In it, Sebastian Mallaby, an editorial writer at the Washington Post, also makes a strong case for Wal-Mart:
“Wal-Mart’s critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is ‘a progressive success story.’ Furman advised John ‘Benedict Arnold’ Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart’s discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart’s products.
“These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart’s ‘every day low prices’ make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart’s $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.”
But what about all those Wal-Mart employees on Medicaid?
“Wal-Mart’s critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid,” writes Mallaby. “Actually that’s a typical level for large retail firms, and the national average for all firms is 4 percent. Moreover, it’s ironic that Wal-Mart’s enemies, who are mainly progressives, should even raise this issue. In the 1990s progressives argued loudly for the reform that allowed poor Americans to keep Medicaid benefits even if they had a job. Now that this policy is helping workers at Wal-Mart, progressives shouldn’t blame the company. Besides, many progressives favor a national health system. In other words, they attack Wal-Mart for having 5 percent of its workers receive health care courtesy of taxpayers when the policy that they support would increase that share to 100 percent.
“Companies like Wal-Mart are not run by saints. They can treat workers and competitors roughly. They may be poor stewards of the environment. When they break the law they must be punished. Wal-Mart is at the center of the globalized, technology-driven economy that’s radically increased American inequality, so it’s not surprising that it has critics. But globalization and business innovation are nonetheless the engines of progress; and if that sounds too abstract, think of the $200 billion-plus that Wal-Mart consumers gain annually. If critics prevent the firm from opening new branches, they will prevent ordinary families from sharing in those gains. Poor Americans will be chief among the casualties.”