This morning I went to the Walmart shareholder meeting held in the University of Arkansas basketball stadium. The theme was the new marketing slogan, “Save money. Live better.” They presented impressive evidence and compelling anecdotes of how Walmart saves money for families of modest means and, in doing so, improves people’s lives.
The best example they provided was their $4 prescription drug program. Lee Scott, the CEO, emphasized that policymakers have been trying to get more people to switch to cheaper generics for years. But Walmart has been able to succeed where the government has failed, by bringing the price down. How did they do that when the government hasn’t? Walmart was able to squeeze the pharmaceutical companies in a way that the government won’t. Just think of the Medicare Drug Benefit program that has been a near-total flop, failing to make drugs more available while costing taxpayers dearly.
It struck me that if Walmart were a government program, designed to provide basic goods to low-income families at reduced prices, it would be lauded as a great success on the order of the New Deal or the Marshall Plan. Books would be written about how it worked so well. Conferences would be organized to sing its praises. But because someone is actually making a profit while serving low-income families, somehow the whole thing is ruined. It’s as if social progress can only be made if taxpayers lose money.
It’s not accurate to say that Walmart is only able to provide low prices because it underpays its workers, who are themselves often low-income. In fact, Walmart pays its workers above the industry average and offers health benefits rarely found in retail. The reality is that Walmart primarily reduces prices by squeezing its suppliers. Remember the prescription drug companies? Ironically, anti-Walmart activists are really pro-Procter & Gamble. Their chant should be “Charge poor people more for shampoo so that Procter & Gamble thrives!” I guess that wouldn’t be a very good chant at a rally (I’d make a bad activist), but you get my point.
Of course, the other groups that get squeezed are the unions. But even if you believed that unions provided significant benefits to workers, we should all recognize that it would have to come at the expense of low-income consumers. There is no free lunch. And keep in mind that Walmart workers already receive above-industry-average wages and health benefits, so the additional benefits of unionization are more dubious. Furthermore, outside of North America Walmart workers are mostly unionized (as are the workers of all of their major competitors in those markets) and the company still thrives.
I know. People will hold this post up as an example of how I’m somehow in the employ of Walmart. Just to set the facts straight — I’m an employee of the University of Arkansas and am primarily paid by the taxpayers of Arkansas. I’ve never heard anyone suggest that my (or anyone else’s) receipt of money from the government presents a conflict of interest that disqualifies them from evaluating government programs. I’m as free to criticize Arkansas policies as to criticize Walmart. (And I do have criticisms of Walmart. For example, the produce is lousy and the stores in Florida, when I lived there, looked dingy.)
It’s true that my department received a $20 million gift from which I draw some income. But that $20 million endowment was initiated by an anonymous foundation (not connected to the Waltons) with a $10 million gift that was then matched by the University’s matching grant program, which applied to all gifts that met certain criteria. It’s true that the matching grant money originally came from the estate of Sam Walton, but he passed away in 1992 and neither the Waltons nor Walmart control those dollars. So, my connection to Walmart exists, but it is tenuous. They certainly have no ability to control what I say or do.
But even if I were a corporate executive at Walmart, the issue is whether my argument is true, not with whom do I have a financial connection. Walmart executives could make an argument and be right. The intellectually honest way to exchange ideas is to address the merits of other people’s ideas, not analyze their motives for articulating those ideas.
My assessment of the evidence is that Walmart really does help people save money and live better. If you disagree, rebut the evidence.
Jay P. Greene's Blog 
Great post.
My Canadian wife doesn’t like Wal-Mart for all of the politically correct reasons among others (see below), but unfortunately for her, it’s the only place in town that sells Perogis, a Canadian delicacy that’s basically a giant ravioli stuffed with cheese flavored mash potatoes, so she has to suck it up everyone once in awhile and shop there.
Personally, I avoid the Wal-Mart closest to us not for some higher moral reasons but because it’s down right scary, the lines are always long, and like you mentioned, the produce is questionable.
I find the remarks about Walmart produce interesting.
Here (Omaha, NE.) and everywhere I go driving a truck Walmart is the place for pretty good and dependable produce (I don’t care for their “fresh” meats–too loaded with watr and “stuff”.)
Of the several stores in the area where we sometimes shop, WallyWorld has the best avocados.
There are things to not like but most of _them_ are related to keeping the costs down.
[…] Greene, denizen of the ultra-right on educational issues, is singing the praises of Wal-Mart on his blog. Greene attended Wal-Mart Week — what David Nassar described on the Huffington […]
Leo Casey has his made-with-a-union-label you-know-whats in a twist over at Ed Wize (see comment above for link). Notice that Casey never addresses my claims:
1) Walmart significantly reduces retail prices, especially for basic consumer goods.
2) Low-income consumers are the primary beneficiaries of these reduced prices.
3) Walmart’s reduced prices come primarily at the expense of other corporations.
4) Unionization would hinder the ability of Walmart to reduce prices, which would then come at the expense (at least partially) of low-income consumers.
5) But Walmart succeeds at reducing prices to some extent even in foreign markets where most of its workers and those of its major competitors are unionized. That is, squeezing unions and/or workers is not an essential part of Walmart success at keeping prices low and making good profits. Squeezing other corporations is the heart of their business model.
6) Walmart currently offers compensation (pay and benefits) that is above the industry average.
All that Casey does is present a list of alleged misdeeds by Walmart in the area of child labor, discrimination, etc… And he complains that their pay and health benefits are less generous than they should be. In other words, he judges Walmart against perfection, not against reasonable alternatives. Walmart has 2 million employees worldwide and one would expect that things would go wrong with any organization of that size, just as the teaching workforce of 3 million has at least its share of misdeeds.
One other point — I’m always struck by people’s faith in the government fixing their problems even when it repeatedly fails to do so. Their faith is founded on the belief that if only the government did the right thing, then all would be well. But they never ask themselves why the government finds it so hard to do the right thing and to do it well.
You’re right that you’d make a lousy activist, Jay. How about this for an anti-Wal-Mart chant:
Take our money! We don’t want riches!
We want to be Proctor and Gamble’s [victims]!
For the record: the produce at the Pike Township Wal-Mart here in Indy is lousy, too, and the lines are long, and the self-checkout machines keep malfunctioning. Worst of all, roughly 50% of the time the whole grocery section smells strongly of cleaning chemicals – and I’m not talking about the fine P&G products you use to wipe your countertops, I’m talking about the industrial stuff that turns you into a mutant supervillain if you drink it. You really don’t want to be smelling that when you’re shopping for food.
Thankfully, due to the beneficial effects of competition, I can shop at Wal-Mart’s competitors, who have ripped off all of Wal-Mart’s techniques for lowering prices but have also learned how to provide a better shopping experience.
[…] Leo Casey, Vice President of All That is Good and Holy, ripped/mocked Jay Greene over some praise for Wal-Mart. And really, this is a biggie – so big that Casey reached into his bag of rhetorical tricks […]
If you’ve seen Edwize’s broadside against Jay, click on that trackback link in the previous comment to the response at Education for the Aughts, and keep scrolling. It’s worth five minutes of your time, especially the parting shot.
[…] Jay P. Greene wrote: […]
Adam: Perogies are polish
Dr. Greene: Can you post a link to the study or studies that examine the pay/benefits of wal-mart?
Hi Corey,
Sorry I was out of town and missed your comment. According to the Bureau of Labor Statistics, the mean hourly earnings for sales and related occupations in the General Merchandise industry is $10.01. (See http://www.bls.gov/oes/current/naics3_452000.htm#b41-0000 ) According to Walmart their average full time associate makes $10.82. (See http://walmartstores.com/media/factsheets/fs_2322.pdf ) Also according to Walmart “More than 90 percent of Wal-Mart associates have
health insurance through one of our plans or through another source. Additionally, every child of a Wal-Mart associate can
become eligible for health benefits as soon as the parent is eligible.”
Muchas gracias por su explicaci?n, la escritura era muy super
En el ?nterin, he revisado su gercekler sitio muy bueno, le deseo ?xito.