Always Low Common Denominators

shecky | August 17, 2006, 2:00pm | #

I guess you try to get votes wherever you can, but I don't see how this will really gain much traction for the Dems. People seem to have continually voted with their dollars, and the result is Walmart wins every time.

Lamar | August 17, 2006, 2:05pm | #

Perhaps it's a populist issue because Walmart sucks cities dry, destroys communities and pays its workers absolute shit. There are plenty of big box and discount stores in the US and Europe, why is Walmart singled out? Is it an unfair hazing of the market leader, or is Walmart the best because it's the worst?

kohlrabi | August 17, 2006, 2:23pm | #

Lamar,

"Walmart sucks cities dry, destroys communities and pays its workers absolute shit"

Oh, stop it.

Is gross hyperbole a valid argument? I'd like to see some substantiation of any of that. Sucks cities dry?? Destroys communities? Pays shit?? (for stocking shelves??)

Get serious.

joe | August 17, 2006, 2:28pm | #

"People seem to have continually voted with their dollars, and the result is Walmart wins every time."

So you think that if you told people in a Wal Mart parking lot what Wal Mart pays, how it doesn't provide health care, and how it busts unions, you'd get majority approval among shoppers?

I rather think not. In fact, I know for a fact that you are wrong, because such things have been done. "Voting with their dollars" tells you about people's economic preference, shecky, not their political preference.

kristen | August 17, 2006, 2:43pm | #

To find out more on Wal-Marts health care crisis, gender discrimination, voter education, and low wages, please visit www.wakeupwalmart.com.

Lamar | August 17, 2006, 2:44pm | #

Talking points? Is that how you turkeys argue, in lieu of counterpoint, you say "talking points" and that means you win? I find it insufferably pompous for you folks to make such pissant, and incorrect, assertions. Do you want me to list every study done on the topic? Silly me, I thought you turkeys knew about the topic before getting lathered up. How about the 1995 Iowa study that showed that out of 7000 business closings, most were supermarkets, hardware stores, and pharmacies? Oh, you didn't think there were actual instances? Sucks to be you and/or ignorant. How about Orlando, FL, where there aren't many locally owned stores outside of the service sector? I don't have statistics, that town going to hell is anectdotal and subjective. How about the study that shows how locally owned businesses spend 1/2 of their income locally, whereas Walmart spends around 15% locally? You would concede that such a statistic could represent "sucking a city dry"?
How about changing the landscape of a city? In Florida and Vermont this kind of thing matters for tourism industry reasons. Studies also show that a Walmart will take over about 75% of the sales from competing stores (well, hardly competing since small business owners can't strong-arm their suppliers).

Kohlrabi: sweet argument: I can't prove that Walmart pays shit, but stocking shelves is worth nothing, so its OK. Why acknowledge my point while simultaneously challenging it? Sweet.

JF, Are you happy with the examples, or are you the type that never admits that you have no idea what you're talking about? Perhaps you've heard of the latest teenage craze called "GOOOGLE"?

http://laplaza.org/~totem/econ.html

Lamar | August 17, 2006, 2:48pm | #

JF, just saw your illogical response wondering how Walmart can survive if it destroys the community. That's a terrible argument, and either you know it and don't care, or the zero credit I've given you is too much.

Destroying the community doesn't mean that people are suddenly without money. It means that it destroys the things that used to bond us together, like a local market or butcher, like the old Main Street, USA. I'm sorry if my responses are harsh, but I can't handle bumper-sticker arguments.

Isaac Bartram | August 17, 2006, 2:50pm | #

So you think that if you told people in a Wal Mart parking lot what Wal Mart pays, how it doesn't provide health care, and how it busts unions, you'd get majority approval among shoppers?

So people are pretty much saying "Stop me before I shop at WalMart again", eh, joe? :)

Josh | August 17, 2006, 2:52pm | #

Joe is right, guys. If only the anti-Wal Mart forces had a way of getting their voices heard, nobody would shop there anymore. If only there were some way for them to get someone to pay attention to them.

R C Dean | August 17, 2006, 3:03pm | #

How about the 1995 Iowa study that showed that out of 7000 business closings, most were supermarkets, hardware stores, and pharmacies?

Howabout something that isn't 11 years old?

But really, Lamar, you are missing the point of a consumer economy.

We don't have car companies in order to provide jobs to auto workers. We have them to sell cars to everyone. We don't have grocery stores/pharmacies/hardware stores to provide jobs for grocers/pharmacists/tool guys, we have them to sell consumer goods to people. From what I can tell, groceries, drugs and tools are still being sold to folks.

Why exactly should I care who does the selling?

kohlrabi | August 17, 2006, 3:07pm | #

Lamar,

Bumper sticker arguments? Beat it. I like how uncompetive businesses that overcharge for their products at the expense of locals constitutes 'that which bonds us together'.

Jack ass.

Intersting definition of 'strongarm' by the way. Formerly known as 'business'.

Sorry for being harsh, but sweet argument, turkey. (???)

Scott | August 17, 2006, 3:55pm | #

Do any of the Wal Mart bashers have any evidence that all of the sweet, generous Mom & Pop business owners that were sucked dry by Wal Mart were paying these same workers more or providing better benefits than Wal Mart? Anyone that has actually worked these kinds of jobs can tell you that the evil corporate giants actually provide a better wage, better benefits and many more opportunities for promotion than the beloved Mom & Pop grocer or hardware stores where they used to work.

What do you think the results of a parking lot poll asking Wal Mart shoppers whether they would be willing to pay extra for all of the items in their cart in order to allow Wal Mart to pay their newly unionized workers a higher wage and provide health care benefits at low or no cost.

My prediction:

Yes 1%
No 20%
Hell No 25%
Are you serious? 40%
Hysterical laughter 14%

Margin of error +/- 3%

John | August 17, 2006, 3:55pm | #

If I were Wall-Mart, I would only hire illegal immigrants. When questioned why, I would just say that we can only afford to pay so much and it is a job that Americans just won't do. How could Democrats and liberal activists ever argue to take jobs away from illegals? It would be fool proof.

kebko | August 17, 2006, 4:00pm | #

If it wasn't damaging to lower class people, the irony of these Democratic positions would be humorous.

1) Wal-Mart gives poor people a huge cost of living improvement because it sells the same stuff they used to buy at other stores for significantly less than those things would be sold for if it didn't exist.

2) It is an excellent source for jobs. If it is replacing locally owned retailers, then the before/after picture is thus:
Before: a job with absolutely no advancement potential, at very low wages (maybe $6 - $8) with a local retailer.
After: a job at Wal-Mart with more advancement potential for unskilled workers than you can find just about anywhere, starting at $8 or more. Believe it or not, before the recent PR problems, Wal-Mart was known because so many of the early unskilled workers retired as millionaires through profit sharing & stock ownership. And the company is filled with uneducated workers who worked their way up the ladder after starting as floor associates. Department heads, store asst. managers & managers, district supervisors. You will find a lot of folks in those positions who started at the ground level. My father sent a complaint letter to a Wal-Mart store recently. The reply from the store manager was semi-literate. Anybody hiring for new positions who saw that letter would not believe this person to be "leadership material". Yet, Wal-Mart gave him the chance to manage a store with dozens of employees & millions in sales.

We can all make fun of Wal-Mart for living in the real world, where there are people who don't share our educated, sophisticated talents & ideals, but if we can divert our eyes so that our Victorian sensibilities won't be offended by the sight of it, maybe we can allow them to continue sharing the benefits of their market power & organizational innovations with the lower economic classes which they largely exist for.

Pro Libertate | August 17, 2006, 4:56pm | #

Huh. Wal-Mart's success comes from providing low-cost goods and for having so much stuff in one place that one can go there and finish all of one's shopping (esp. in the so-called Super Wal-Marts, which sell groceries).

Wal-Mart alone has hardly destroyed "mom and pop" stores. Those have been fading for quite some time. Why? Because they couldn't compete on price with national chains. It's that simple. All of the talk about political and economic muscle fails to deal with the fact that the decline in mom and pops began long ago. Economies of scale allow Home Depot to provide more for less. Ditto Wal-Mart, Target, etc., etc. The principal "miracle" at Wal-Mart was the revolution in inventory controls--something not previously available to smaller retailers.

Here's the kicker. Just because it's so much more efficient today to do things big, that doesn't mean that that model will hold true into the future. There are definite trends to smaller scale manufacture and more localized production. If those trends continue, then, perhaps, the large retail business model will decline somewhat. In addition, the wealthier we become (and we are becoming wealthier--who is buying all this stuff, if we aren't? Five guys wearing top hats?), the more we will demand something that is very difficult to do well at the mega-retailer level--quality personal service. Service that people will and do pay a premium for.

Let me suggest here, on the record, that the domination of Wal-Mart has already begun to fail, and, in the not-so-distant future, some other boogeyman will take over. Just like the infinite power of Sears, A&P, IBM, etc. faded as times changed.

Kent | August 17, 2006, 5:08pm | #

I wonder if Wal-Mart will retaliate by no longer selling Biden's autobiography. He titled it "Iacocca."

Kent | August 17, 2006, 5:23pm | #

I wonder if Wal-Mart will retaliate by no longer selling Biden's autobiography. The autobiography is titled "Iacocca."

joe | August 17, 2006, 5:34pm | #

"Like how they, almost by themselves, have dramatically expanded the buying power of the middle class."

Had the buying power of the middle class increased, or even remained constant, this would be a very good thing. Unfortunately, the buying power of the middle class has been declining for a period that correlates very closely to rise of the economic phenomena that Wal Mart is such a leader in, such as the decline of unions and the rise of off-shore outsourcing.

I know, let's pick out one phenomenon out of a collection of closely related ones, look at its impact in isolation, and declare that the be the outcome of the entire class. That's a great idea, Sage+P.

"We cannot let the middle class think they are entitled to something like a huge selection of products at ridiculously low prices." Oh, grow up. Why do you want retail workers to have less money to feed their families, Sage? Why?

"The implicit argument of the Walmart-bashers is that everyone is entitled to $25/hr plus all the benefits, regardless of their abilities." Uh, no. "Implicit" does not mean "most deliberately idiotic reading I can impose to make them look stupid." People who complain about Wal Mart lowballing the industry standard, and thereby driving down that industry standard, are not saying that Wal Mart needs to pay exhorbitant wages.

kebko | August 17, 2006, 6:04pm | #

"People who complain about Wal Mart lowballing the industry standard, and thereby driving down that industry standard, are not saying that Wal Mart needs to pay exhorbitant wages."

Now, REALLY. Exactly WHICH discount retailer was starting people out at $10 - $12/hr to stock shelves before Wal-Mart came along? Maybe you should go down to the next store opening where thousands of people are lined up to apply for jobs in an economy that is at "full employment" levels and inform everyone that those Wal-Mart jobs are sucking down the standard. They clearly need some of your wisdom.

15 years ago when Wal-Mart was still fairly regional, and I was living in the area (and briefly working there), before they were large enough to be a whipping boy, most of the press on them were stories of working class stiffs who were sitting on nice retirement nest eggs after working for Wal-Mart for many years.

Lamar | August 17, 2006, 6:17pm | #

Brian Courts:

Lamar made the bumper sticker argument that Walmart sucks cities dry, and Brian Courts jumped all over it. Of course, Lamar went on to say:

How about the 1995 Iowa study that showed that out of 7000 business closings, most were supermarkets, hardware stores, and pharmacies? Oh, you didn't think there were actual instances? ... How about Orlando, FL, where there aren't many locally owned stores outside of the service sector? I don't have statistics, that town going to hell is anectdotal and subjective. How about the study that shows how locally owned businesses spend 1/2 of their income locally, whereas Walmart spends around 15% locally? You would concede that such a statistic could represent "sucking a city dry"?

BrianCourts, when you accuse somebody of something, it helps if, every once in awhile, you aren't totally and completely wrong. Have you had this condition for a long time?

Xmas | August 17, 2006, 6:40pm | #

Actually, I wonder if Orlando is loosing all of its local businesses because, well, they've got several of the most popular theme parks in the world in their midst.

I'm sure property prices have gone through the roof, forcing low-profitability local businesses out. I'm not surprised that service sector businesses are the only one's that are thriving. Low-skilled labor management would definitely have a produce the dollars per square foot of office space needed to actually have an survive in Orlando.

Or should I just blame Wal-Mart for all of Orlando's "problems".

Ron Hardin | August 17, 2006, 7:01pm | #

I've never understood the inclination to say ``lowest common denominator.''

The lowest common denominator isn't particularly low. The lowest common denominator of 6 and 9 is 18, bigger than either.

Not a particularly apt figure for the dumbest or the poorest or the shoddiest etc. in a population.

Wild Pegasus | August 17, 2006, 7:30pm | #

Wal-Mart is a creature of corporate welfare and subsidised transportation costs. So they get no free-market defence from me.

My question is: has there ever been a study done to compare the wages of Wal-Mart workers to the mom-and-pop shops? Wal-Mart is attacked for low wages and poor benefits, but how do those compare to, say, the local hardware store?

- Josh

Ammonium | August 17, 2006, 7:44pm | #

Whenever I've been at the local discount grocery store (usually to make small purchases in between going to Walmart) I try to compare their prices to Walmart's. It's simply amazing how many basic items, like milk, are at least 50% more expensive at the discount grocery store.

My wife and I make about as much as we'd make if we were working full time at Walmart and getting average pay. Groceries are a big part of our budget, and getting huge savings at Walmart makes us a lot better off. I would hate to see what grocery prices would be like without the presence of Walmart.

sage +P | August 17, 2006, 8:27pm | #

"Unfortunately, the buying power of the middle class has been declining for a period that correlates very closely to rise of the economic phenomena that Wal Mart is such a leader in, such as the decline of unions and the rise of off-shore outsourcing."

I apologize, joe. Perhaps I was extrapolating a bit, and using a bit of anecdotal evidence to support my claim. Maybe if I can get about $5k together, I can get one of those computer thingies to help me out.

I could also go here, select 1986 for the first year and 2006 for the last year, and see that personal income has increased from $3,659.1B to $10,812.9B, roughly a three-fold increase. I could then go here and calculate the rate of inflation for something to compare it to. If I enter 1986 to 2004 (the most recent year available), I see an inflation rate of about 72%.

But hey, I'm no economist. Where did you get your information. Keyword searching "buying power" really doesn't return much.

"Oh, grow up. Why do you want retail workers to have less money to feed their families, Sage? Why?"

Yes, what about the children. For crying out loud joe, it's a *service* job. They don't pay much when they ain't specialized. If anything, you should be thanking Wal-Mart for providing a powerful incentive to better one's self.

"People who complain about Wal Mart lowballing the industry standard, and thereby driving down that industry standard, are not saying that Wal Mart needs to pay exhorbitant wages."

True, they are attacking an easy target. These are probably the same people who are pleased with themselves when they can hit a cow at ten feet with a scoped rifle.

Ruthless | August 17, 2006, 8:59pm | #

"These benefits and costs need to be weighed carefully by community decisionmakers in deciding whether to provide public subsidies to the chain."

Public subsidies to the chain?
We can casually dismiss these "experts," eh?

grylliade | August 18, 2006, 12:05am | #

Kebko: my argument is that Walmart doesn't sell the same stuff we used to buy, it sells cheap crap, by and large.

Well, I'd rather have cheap crap than nothing at all. Consider: twenty years ago I'd have to pay for nice glasses if I wanted to have any glasses at all. Say for a set of twenty I'd pay at least forty dollars, but what I'd get would be really nice. Or I could go to Goodwill and get what I could find there, but they'd be mismatched or damaged.

Now I can go to Wal-Mart and get a set of twenty glasses for twenty dollars. I'm paying more than I would for the Goodwill glasses, but they're all matched and in new condition. Sure, they're not nearly as nice as what I'd have paid forty dollars for twenty years ago, but if I want to I can still spend more and get nicer glasses; it's not as if there's no market for luxury goods these days. Wal-Mart has made it possible for people who are lower-middle class at best to live better than they used to. Again, they're not buying the same quality of goods that they would have had to twenty years ago, but then, they'd have to pay more to do that.

Another example. I bought a 27" TV at Wal-Mart for about $200 earlier this year. It's a Sanyo, so it's not some completely off-brand piece of crap. A 27" TV at Best Buy or Circuit City would have run me at least $300, maybe more; the same for buying on-line. Sure, maybe my TV won't last as long as one I'd buy from an upmarket retailer, but I get more bang for the buck. Had it not been for Wal-Mart, I'd have had to settle for a 20" TV or so. Not a tragedy, but dammit, having a slightly nicer TV counts for something.

As for the argument that Wal-Mart pays substandard wages: Not that I can tell. Having worked in the retail industry for quite a while right out of high school, I can tell you that Wal-Mart had the best wages of any store in the area. Not that those wages were very good, mind you, but they were as good as or better than any other retail job I could've gotten at the time. Same with the benefits. The benefits Wal-Mart gives are crappy, but so are the benefits given at any crappy entry-level unskilled job. No vacation? Expensive health insurance? Par for the course. Not much to be done about it other than education, or at least a degree. :-)

Wal-Mart creates both benefits and costs to communities in which the chain locates.

Wow. They had to do a study to determine that? Cathy Young could do that off the top of her head. :-D I mean, seriously, of all the wishy-washy, meaning-free conclusions that I've seen in studies, that one takes the cake.

MainstreamMan | August 18, 2006, 1:55am | #

The Effects of Wal-Mart on Local Labor Markets

David Neumark, Junfu Zhang, and Stephen Ciccarella* November 2005

Abstract: We estimate the effects of Wal-Mart stores on county-level employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variable that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. In the retail sector, on average, Wal-Mart stores reduce employment by two to four percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust. Either way, though, retail earnings fall. Overall, there is some evidence that Wal-Mart stores increase total employment on the order of two percent, although not all of the evidence supports this conclusion. There is stronger evidence that total payrolls per person decline, by about five percent in the aggregate, implying that residents of local labor markets earn less following the opening of Wal-Mart stores. And in the South, where Wal-Mart stores are most prevalent and have been open the longest, the evidence indicates that Wal-Mart reduces retail employment, total employment, and total payrolls per person.


From the conclusions

On balance, the evidence is more consistent with the claims of Wal-Mart’s critics, although questions remain. In the retail sector, the representative Wal-Mart presence (about eight years) reduces employment by two to four percent. There is some evidence that payrolls per worker also decline, by about 3.5 percent, but this conclusion is less robust. Either way, though, retail earnings fall. Looking at total employment, some of the evidence points to employment increases, although the regional evidence for the South and perhaps the Midwest points to employment declines. At the same time, there is stronger evidence that total payrolls per worker and per person decline, by about two and five percent, respectively, implying that residents of a local labor market do indeed earn less following the opening of Wal-Mart stores. Finally, we find clear evidence of adverse effects of Wal-Mart stores on retail employment, total employment, and total payrolls per person in the South, where Wal-Mart stores are most numerous on a total and per capita basis, and where they have been open the longest. The earnings declines associated with Wal-Mart do not necessarily imply that Wal-Mart stores worsen the economic fortunes of residents of the markets that these stores enter. Wal-Mart entry may also result in lower prices that increase purchasing power, and if prices are lowered not just at Wal-Mart, but elsewhere as well, the gains to consumers may be widespread. Although this paper provides what we believe to be the best evidence to date on the effects of Wal-Mart on local labor markets, we do not address questions of changes in real earnings or purchasing power, and how these changes might vary for lower- and higher-income families. In addition, while not endorsing the findings of the studies cited in
31
the Introduction that estimate the taxpayer burden imposed by Wal-Mart (through, for example, increased use of Medicaid and Food Stamps), even if Wal-Mart lowers earnings as well as prices, the lower earnings will likely, in fact, increase this burden. Finally, as we noted earlier, we cannot with the data used in this paper pinpoint the mechanism leading to earnings declines, including factors such as changes in part-time work and shifts to less-skilled workers. There are, in short, numerous remaining questions of considerable interest regarding the effects of Wal-Mart on labor markets, consumption, and social program participation and expense. The identification strategy developed in this paper may prove helpful in estimating the effects of Wal-Mart stores on these other outcomes as well.

gaijin | August 18, 2006, 7:43am | #

MSMan pasted
Finally, as we noted earlier, we cannot with the data used in this paper pinpoint the mechanism leading to earnings declines, including factors such as changes in part-time work and shifts to less-skilled workers.

And in the squishy world of correlation studies, I'd say this last paragraph explains the value of the study in identifying cause and effect...another lightweight psuedo-academic farce...wrapped up like it's (invoke best Thomas Dolby voice) Science!

Lamar | August 18, 2006, 8:31am | #

"I'm so sick of hearing this retarded TALKING POINT parroted by the very people who support those programs in the first place."
Perhaps you should listen to what people are actually saying then. When someone hates Walmart, they are automatically a left winger? That's a load of crap. In fact, you quoted my post advocating for the end of these social programs. I'd be interested to see the parrot that says the opposite of what the person says!!!

Xmas claimed that I put all of Orlando's "problems" on Walmart. In fact, I was very careful to avoid that in my Orlando example, but y'all read what you want and disregard the rest. However, there are some good points about the theme parks in that post.

Pro Libertate | August 18, 2006, 9:22am | #

Lamar,

Shoot we could start a whole new thread on whether the Mouse is actually a greater evil than Wal-Mart :)

joe | August 18, 2006, 10:43am | #

Sage,

You forgot to correct for population growth.

You also cherry-picked a year, and used a very short time horizon.

And you took aggregate income data for the entire country, when my point specifically referenced the middle class.

That middle class wages have been stagnant since 1972 or so is broadly known amond people with enough familiarity with these questions not to make your multiple dumbass mistakes.

That you used such a bitchy tone while advertising your ignorance just makes this more fun for me.

Lamar | August 18, 2006, 11:25am | #

Pro Libertate:
Don't get me started. Read Team Rodent - How Disney Devours The World by Carl Hiaasen. It doesn't say Disney shouldn't be doing what it does. It simply says that Disney is evil incarnate. Great stuff.

If I could take a quick cheapshot: Walmart's PR guy apparently has some Mel Gibson-esque problems, and I don't mean the sauce.

MainstreamMan | August 18, 2006, 5:39pm | #

"another lightweight psuedo-academic farce"

Don't let the numbers get in the way of your belief, by all means. There is plenty of evidence on both sides of the argument. Some complained that critics of Walmart had no evidence... I was just providing some. TWBA provides some others. Look at the studies and decide which ones were conducted in a careful and rigorous manner, and use the data to form your opinion. Economics claims to be the most rigorous of social sciences... but due to the intractible nature of its subject, it is in many ways the softest. If you feel sure of your conclusions about a specific force's effect on the economy along any specific parameter, you are just not being skeptical enough.

"At the same time, there is stronger evidence that total payrolls per worker and per person decline, by about two and five percent, respectively, implying that residents of a local labor market do indeed earn less following the opening of Wal-Mart stores."

Kebko,
Whether you think it is good overall, the communities of people bringing home less money, probably don't. More efficient production isn't a bad thing... but reduced money within a community is not good for that community.


""We estimate the effects of Wal-Mart stores on county-level employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding ADVERSE effects of Wal-Mart stores."

Gosh, imagine that, they found what they were looking for."

This would be a common approach to asking any question about a highly complex data set. You would want to control for factors that are thought to influence your outcome that you CAN explain, to see if they operate independently of the process you are asking a question about. Ignoring those factors would be the more likely approach used to get the result that you want. So if you want to prove that Walmart doesn't have an adverse impact, you would not control for those factors that you know will work against that conclusion. Controlling for these factors helps get a clearer picture of the murky truth behind the numbers... which in economics will always remain very murky. But controlling for the known factor, doesn't get you the result you want, it just allows you to assess the picture without the known factor getting in the way.

Sage +P Econ 101 is not a good model of how economies work. Neither is Econ 601. Your lack of skepticism regarding your own position is, well, endearing, cute, luvable, but hardly furthers the conversation.

Joe.
In this particular case, the same can be said of your position. You claim lots, but haven't presented any evidence for your opposition to chew on.