December 8th, 2006

ozarque figure

Defending Wal-Mart; part two...

I still -- infuriatingly -- have not found the article I need. In spite of astonishingly generous people going out of their way to help me find it, I still haven't found it. [The minute I no longer need it, it will magically appear, just to spite me.(No, I cannot offer you any solid scientific research studies to support that claim.)]

However, a dogged Google search yesterday -- in between bouts of Christmas-present wrapping and housecleaning -- did yield up an article very similar to the one I can't find, and I'm going to quote, and talk about, just a few bits from it here.

The article is "Wal-Mart: A Progressive Success Story," by Jason Furman, from November 28, 2006; it's at http://www.americanprogress.org/kf/walmat_progressive.pdf -- which won't load for me, presumably because it's only available to subscribers -- but can be found in HTML format at http://tinyurl.com/yy8kce .

1. Furman begins by pointing out that even if we accept without question the claim that the "Wal-Mart effect" lowered retail wages by $4.7 billion in 2000, as claimed by one study, "Plausible estimates of the magnitude of the savings from Wal-Mart are enormous -- a total of $263 billion in 2004, or $2,329 per hoursehold." And "Because moderate-income families spend a higher percentage of their incomes on food than upper-income families, these benefits are distributed very progressively." This is followed by a table showing that the benefits are "equivalent to a 6.5 increase in income for the bottom quintile (average income of $8,201) and a 0.9 percent increase in income for the top quintile (average income $127,146)."

2. "Wal-Mart's health benefits are similar to or better than benefits at comparable employers. ... Wal-Mart is relatively unusual in that it offers health insurance both to full- and part-time employees. By comparison, only 60 percent of firms economywide offer health benefits and only 1 percent of firms offer health benefits to part-time workers. ... ...48 percent of Wal-Mart's workers have health insurance, compared to 46 percent in the retail industry as a whole. ... Finally, Wal-Mart... is in the minority of firms having no lifetime maximum for coverage."

3. One of the constant accusations made against Wal-Mart by the organizations attacking it is the number of its employees on the Medicaid rolls, which is used to support a claim that Wal-Mart dumps its responsibilities toward its workers onto the backs of the taxpayers. This is a great publicity-grabber, but it's a distortion of the facts. As Furman says, "The fact that Wal-Mart employees top the Medicaid rolls in a number of states is simply a reflection of Wal-Mart's enormous size, not the likelihood that its employees will be on Medicaid."

4. "The overall fiscal impact of Wal-Mart is overwhemingly positive. In its last fiscal year it set aside $5.6 billion for corporate tax payments. In addition, its employees pay taxes on their tens of billions of dollars of earnings. Together with indirect effects... their total tax bill is much larger than the claimed $1.5 billion in federal subsidies for its low-income employees."

5. It's common, in the flood of anti-Wal-Mart publicity, to see statements such as "Wal-Mart could easily afford to pay its workers $3.00 more an hour" or "could easily afford to improve its benefits package for its workers substantially." Furman doesn't consider "easily" appropriate. Because: "In the last fiscal year, Wal-Mart had... a razor-thin profit margin of 3.7 percent of revenues. Even a very small increase in its costs, without a corresponding increase in revenues, would wipe Wal-Mart's profits out entirely."

6. Finally, "At worst, to the degree the anti-Wal-Mart campaign slows or halts the spread of Wal-Mart to new areas, it will lead to higher prices that disproportionately harm lower-income families."


The point of attacking Wal-Mart is very simple: Anything you force Wal-Mart to do, whether by legislation or by lawsuits or by an endless barrage of negative publicity, will then be something that Wal-Mart's competitors will also have to do if they want to be able to stay in business. Suppose your goal is to make every one of the big-box stores and chain stores pay an hourly wage of at least $10.00: The easiest and most efficient way to accomplish that is to find a way to force Wal-Mart to do it. The question is whether, in the long run, that's a wise move.



Note: If that Tiny URL doesn't work, the horrendous unconverted URL is http://72.14.205.104/search?q=cache:BUeUFdKJvfkJ:www.america
nprogress.org/kf/walmart_progressive.pdf+Wal-Mart:+A+Progres
sive+Success+Story+Jason+Furman&hl=en&gl=us&ct=c
lnk&cd=1&ie=UTF-8 .
ozarque figure

Wal-Mart discussion side-note...

I've been reading all your comments carefully -- and storing them in a separate e-mailbox so that I'll be able to find them and re-read them conveniently and carefully. I thank you for them, and for your courtesy. I just want to comment on one thing.

Consider all the commotion over the way Wal-Mart tailors its business practices to avoid having to provide decent benefits to its employees; many of you are angry about that, and justifiably so. What surprises me is the lack of attention to the very common practice of even our most prestigious universities: hiring two or more part-time profs/instructors instead of one full-timer, for exactly the same reason, so that the classrooms will be staffed but the university won't be obligated to provide health insurance and other benefits.

I've been waiting for someone to mention that. Perhaps the practice is perceived differently when a university does it.