April 29, 2005

Always low prices

I read a few articles today that made me want to talk about Walmart again. Sorry. You can find the articles here and here (you might need to register for free or use BugMeNot). The articles echo some of what I think about the company. Mainly, people like to pick on Walmart because it is the biggest company on the block. By market capitalization, Walmart is the 8th largest company in the United States, behind such giants as GE, Exxom, Microsoft, Citigroup, BP, Johnson and Johnson, and Pfizer. This makes it an easy target, as not only is it a gigantic company, it also has a very visible presence, as anyone can tell you where the nearest Walmart is, but not everyone knows that GE owns NBC.

Here a few reasons that I don't think Walmart is as evil as some would have you believe. First, Walmart is the largest non-government employer in the United States. Walmart has 1.2 million U.S. employees (this includes Sam's Club). That means that there are more Walmart employees than there are people in each of Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, and Wyoming. Each of those 1.2 million people has a job, and there is definitely value in that. Another reason Walmart isn't so bad is that they support the US economy in a number of ways. First, the myth that they get everything from China is just that, a myth. According the the Walmart, they purchased around 18 billion dollars of Chinese goods to resell last year. A high number, I know, but not in comparison to the 137.5 billion dollars of American goods they bought. That 137.5 billion is a significant amount of money to put into the American economy. They don't do business only with China probably because Walmart operates on such low margins and high efficiency that they can't be viable if everything they sell has to be shipped from the other side of the world. At a certain point, it is cheaper to buy your goods from this country because you can get them much more more quickly and avoid international tariffs and fees. OK, those are the independently verified reasons that they aren't so evil. Now I'll give some information from the Walmart website that you can put as much stock in as you like. The company claims to have a much higher rate of full time employees than most retailers (the biggest knock I hear against he company is that they won't let people work full time to get benefits. If Walmarts claim is true, critics should look elsewhere). They also claim to pay an average full time wage of $9.68/hr. I realize this doesn't include part time workers, who likely make less, but $9.68/hr is more than Janet made working at Barnes & Noble full time. Lastly, the store claims that over half a million employees received some health benefit from the company, another knock against those who claim they don't (or rarely) pay benefits.

In the above paragraph, I left out one of the biggest benefits of Walmart, and that's prices. Walmart does have the lowest prices on almost everything they sell, and that is a benefit to lower income families. If your dollar goes further, you can buy more of the things you need. For middle to low income families, price determines where they shop, and Walmart has the lowest prices.

If you add all of that up, it makes Walmart sound a lot more socially responsible than a lot of people like to claim. I think the reason Walmart gets somewhat of a bad rap, while Target, Kmart, Costco, and everyone else gets a free pass has to do with the company's portrayal in the media. Walmart was started in 1962 in Bentonville, Arkansas, by the fairly conservative Sam Walton. The conservatism has survived to this day to the point that Walmart will not carry certain music or movies, along with Jon Stewarts book featuring pictures of Supreme Court Jusices' heads pasted on naked bodies. This rankles the liberally leaning media as censorship of the worst kind, never stopping to mention that the store is completely within its rights to determine what they sell, and it's not like the things they don't carry aren't available elsewhere. The company has also fiercely resisted unions in all their stores, which is another point liberals like to harp on. I will admit to being somewhat anti-union, but I'm not saying there's absolutely nothing wrong with Walmart's anti-union stance, I'm just saying it helps explain the media's dislike of the company. When the media dislikes something like Walmart, you're going to hear about it, and they will focus on anecdotal stories rather than general facts and trends. You'll hear about the one mom-and-pop store that couldn't stay in business in Vermont, but you won't hear about the 1.2 million employees or low prices that increase the purchasing power of the average American.

Lest you think I'm just a Walmart shill, I'll agree that it's not all roses at Walmart, and there are legitimate concerns. The company has a lot of lawsuits to deal with on everything from its treatment of women workers to unpaid overtime. Some of the things I've heard concerning the suit put forth about the treatment of women by the company have given me pause. It is concerning to hear that women make up 65% of the hourly employees but only 33% of the managers. The numbers aren't the disturbing part, but if the disparity is due to discrimination due to sex, that is a problem that deserves to be investigated and made right. The 40 pending lawsuits related to unpaid overtime will be interesting to watch. Also, if the company is engaging in anticompetitive practices, that should also be stopped, though I think some of what a is commonly called anticompetitive by the average person is really just smart business. Walmart should pay their workers fairly and avoid discrimination no matter what. Of those two things I'm sure. As long as they do that going forward, I won't call the company bad for America.

The last thing I'll say is that Walmart go to where they are by being smarter than everyone else. They didn't start with 4,300 stores, they started with one, just like every small business owner that complains about the newest Super Walmart down the street. This is a company that had a vision and executed it with spectacular results both for its customers and for its investors, many of whom were made very wealthy due to the company's performance in the last 43 years. we would all do well to keep our eye on the company, but let's not be too hasty to call it evil.

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