In my ‘wealth and moral character’ post, the discussion quickly turned to the Walmart debate, and whether Walmart was bad or good for local economies, communities, etc. Let me first say that I understand the impulse to blame Walmart for many perceived ills in local communities. Walmart is not an attractive place. I am instinctively turned off by the aesthetic of the big box store. Nevertheless, I am aware also that my aesthetic concerns can cloud my judgment, and that perhaps we should think more in terms of basic human welfare rather than purely aesthetic (big box vs. small mom and pop). A few of the critiques of Walmart include:
- Walmart puts small businesses out of business.
- Walmart depresses wages. Walmart employees are treated badly and paid badly.
- Walmart and other big box stores have an averse impact on communities both aesthetically and because they are big corporations.
- Walmart receives unfair advantages from government in zoning and tax treatment.
Let’s address each.
#1)– there is an assumption that because a large, cheap retailer moves into a community it will drive all its small competitors out of business. First of all – this is quite possibly very true. That is why whenever one big-box retailer moves into an area, we should hope its followed by one or two more. These competitors will keep the costs of goods at the other big box retailers low. The reason that the mom and pop retailers are driven out of business by Walmart in the first place is that they can’t compete with both the lower cost of goods, but also the much wider availability of goods that Walmart (or Target, etc.) can provide. Typically these mom and pop retailers were local monopolies in the first place, and had poor selections and high prices. Walmart, Target, and other big businesses come in with a much better selection of goods and so consumers freely choose to shop there instead.
And voila! Consumers now have more money in their pockets. Poorer or working class people suddenly have cheaper clothing, furniture, medicine, and even groceries. This means they have more money left over at the end of the day to spend on other goods. Clever local business people can capitalize on this by starting up businesses that are not in direct competition with Walmart – like restaurants, bars, or novelty stores. Indeed, the leftover money from cheaper goods can quickly translate into a more robust local business climate than ever before. It results in a changed local economy, not in the death of a local economy altogether. The cheaper retail goods (and books, if you want to include Amazon in this critique) and so forth lead to new services being available to consumers because these consumers have more money to spend on leisure, on massages or movie tickets, or nights out on the town. In other words, this idea that Walmart destroys local business is simply not true. It changes local business, but it certainly doesn’t destroy it. Indeed, restaurant owners may find that they can purchase some of the food-goods cheaper from Walmart (or Sam’s Club, or Cosco) cheaper than ever before….
(As an example: Let’s say I have $50 to spend. I need to buy some things for the house. At the local retailer these items will cost me $35 leaving me with $15 to save or spend. At Walmart they will cost $20 leaving me with $30 to save or spend. If I buy the goods at Walmart I can then go spend $30 on other goods or services around town. I can spend twice as much on going out to eat. Hell I might even be able to do dinner and a movie. If I’d bought the goods at the local retailer, I would certainly have been limited to dinner or a movie.)
#2) The idea that Walmart depresses wages or pays their employees worse than local retailers or mom and pop shops do is completely unverifiable. Having worked and known plenty of people who have (or still do) work for local retailers, I can assure you that most of these companies pay their employees as badly or worse than Walmart does – and many (if not most of them) provide no benefits whatsoever. I recall a local book store I worked for whose owner would find reasons to fire any employee who started asking about those promised health benefits. This was not uncommon. Of course, many of these local businesses don’t have the resources to pay their employees that well or offer benefits. The tradition of small business has historically been one of family-owned and operated, with most of the wealth garnered from these businesses going straight into the family’s bank account.
This is not to say that small businesses are bad. They do create jobs, and good (savvy) small business owners are quite likely to reinvest in their community, something that big box stores often don’t do enough of. But to claim that the actual workers who are employed at Walmart are somehow treated or paid worse than by the local businesses is simply untrue. Workers who have more skills and more education are paid better, whether or not they work for a local firm or a national firm. That has always been the case, and will always remain the case. That may be an argument for investing more in education, but it’s not one against Walmart.
The notion that all the workers at Walmart are doomed to a life of low wages is also somewhat misguided. Many of these are students or part-time workers. Many go on to do other things later in life. Those that don’t wouldn’t necessarily have done anything better or more profitable had Walmart not started up shop in their town. I see no evidence to suggest that these life-long low-wage workers would benefit magically from the lack of a Walmart. They would simply be life-long low wage workers in some other retailer. If they were capable or motivated to become more skilled, they would do so with or without Walmarts presence. Indeed, the low cost of goods at Walmart might assist them in their efforts to get the education necessary to do something better in the future. Either way – where is the correlation?
#3) I hope that communities don’t let Walmart set up shop in their historic downtown. I hope that communities are savvy enough to think of themselves as brands that need to be cultivated. I’m all for mixed zoning, keeping big boxes out of the nice walkable areas of town. Let them set up shop on the outskirts. Let them set up shop where people can drive to shop. Cities should be sensible when they consider how they want their towns developed, and putting a Walmart at the heart of the city is bad business. But that again is no argument for keeping Walmart out altogether. If cheaper goods (and more goods) can help a town’s poorer population, and Walmart can provide this, then our sense of aesthetic or our own aversion to the Walmart shopping experience should take a back seat.
And that’s what most Walmart-hatred really is. It’s either because Walmart is the most visible and easily demonized target of people who despise capitalism (these same people often love capitalism if it’s a shiny new Apple or a Hybrid car) or for those who are devout localists and feel threatened by the presence of big corporations and big boxes. I am a localist. But I can say with conviction that Walmart has not harmed my home town in the least. Nor have any of the other big boxes here. Indeed, we are as vibrant and local a place as any I’ve ever been, and the diversity of places to eat and drink and entertain oneself is greater than ever. Walmart has not hampered this. Certainly it could have had they placed one in the center of downtown, but they were wise enough not to let this happen.
Are there problems with Walmart? Of course. Nothing is perfect, least of all a giant corporation. They do receive preferential treatment over small businesses (#4) – as do many outside firms looking to invest in a community, including research centers, etc. This is not necessarily a bad thing, especially if the result is more money floating around the community. Sometimes cities make shady zoning pacts with Walmart and other big boxes, and of course the cities in question should be condemned for this. Government at all levels can be corrupt and make bad decisions on behalf of powerful corporate interests. Is this an argument against Walmart, though, or an argument for greater transparency in government?
In any case, though I do not often shop at Walmart, I do not condemn them either. I am a localist, but I believe national corporations can still work with local economies and cultures – though it will largely be the responsibility of local communities to make sure that this is done well and wisely.