Do the Benefits of Wal-Mart Outweigh Its Drawbacks?
I have mixed feelings about Wal-Mart. On the one hand, I am horrified at the role it plays as China’s sales organization. Buy stuff at Walmart today; the money that Wal-Mart pays to a Chinese manufacturer might well fund a military confrontation with China fifteen years down the road. I am concerned that Wal-Mart’s aggressive approach to competition has driven many U.S. companies out of business — or at least forced them to move manufacturing to low wage countries.
I am also less than thrilled with Wal-Mart’s approach to wages. Retail is notorious for paying its workers badly. Still, when I hear complaints about how badly Wal-Mart treats its workers concerning hours, wages, and health insurance, what comes to my mind? Wal-Mart is probably still treating its workers better than the vast majority of regional and local retailers — the ones that we are supposed to feel sorry for when Wal-Mart opens a new Supercenter in East Nowhere, Ohio.
Still, don’t you wish that Wal-Mart could take some of that much touted efficiency and profit, and use it to pay its workers better? I was watching a CNBC special, The NEW Age of Walmart, recently. It was reasonably fair to Wal-Mart, but I was struck by the CEO’s response to one question. The reporter asked him why Wal-Mart couldn’t takes some of its $13 billion a year in profits and raise the wages of its workers a dollar or two an hour. (You know: to get them up to miserably low wages.)
I was not terribly impressed with CEO Mike Duke’s response. Essentially, he said it would not work with their business model. As I used the information that this special presented, I realized that there was a far better answer that he could have given. The special reported that Wal-Mart had $13 billion a year profit worldwide. Wal-Mart has one million U.S. employees (an absolutely astounding number). If Wal-Mart gave each of those employees a two-dollar an hour raise, and if every employee is full-time (which I know isn’t correct), that would be more than four billion dollars — almost one-third of the corporation’s worldwide profit. Duke could have pointed this out, and suddenly Wal-Mart doesn’t sound so incredibly Scrooge-like. Wal-Mart, like most retailers, is profitable, but it is based on volume and efficiency, not high profit margins.
Don’t blame Wal-Mart for small town retailers going out of business. It is the customers of those stores who have chosen to go to Wal-Mart instead. Apparently the “charm” isn’t enough to attract a sufficient number of customers. Also, employment is a voluntary arrangement. If the workers at Wal-Mart feel they are being underpaid, they are welcome to look elsewhere for employment.
Wal-Mart employs thousands of people and saves millions more billions of dollars. On balance, they are a net benefit to society. Their recent support of ObamaCare in order to thwart competition from smaller chains who cannot afford it is objectionable however and they deserve criticism for it. Wal-Mart is a good place for younger workers to get valuable experience, second income jobs, or elderly folks looking to supplement social security or their pensions.
Not every job is designed to be suitable for a primary breadwinner or head of household. In general, retail jobs left that category long ago, except for management.
I agree. My wife hates Wal-Mart. At least once a month she comes home furious because of something they have done or something that has happened there. In fact when she comes home with that frustrated angry look I ask her if she has had a “Wal-Mart experience” and surely enough she has.
But you know what? She keeps shopping there and she always will because of the prices. They are so low that they keep her coming back despite how much she hates the place.
Strange anedote. You didn’t even hint at the horific things that Wal-Mart did to PO your wife.
Maybe your wife has an attitude or maybe she simply is a whiner.
My wife hates Wal-Mart because everytime she goes in there, they turn on the screaming baby machine, and it drives her crazy. Or maybe it is that people with small children don’t generally have lots of money to spend, and have to shop there.
Geez, Clayton – do you think they import those parents and kids? Do you think maybe those parents are the same mentality (never figured out how to teach their kids proper behavior in public) as the employees?
So easy to spend someone else’s money, huh?
What a dolt!
I’ve never once been assualted by a screaming baby at a Wal-Mart store. Though I have at most other big-box retailers.
No my wife does not have an attitude and she is not a whiner. Trust me I know. She has survived latter third stage breast cancer and after months of chemo, 4 major operations, weeks of radiation (all before she was 30) and I never heard her complain. She has been through things that would bring a nerd like you DavidMac to your knees. My point was Wal-mart is a frustrating place to shop but she does it anyway because of the prices.
Alert: I survived laryngeal cancer and 3 tours of duty in Viet Nam. You make many assumptions about me and Wal-Mart, all of which are false.
I also noticed that you didn’t mention what Wal-Mart did to anger your wife. Instead, you attacked me. I can deduce from the ad hominem attack that both you and your wife are, in fact, whiners.
No mac. First, you attacked my wife implying that she was a whiner or had an attitude simply because she typically has bad experiences in Wal-Mart. I did not ask you to judge whether they really were bad experiences. Are you such a knee-jerk apologist for Wal-mart that you deny that people can have bad experiences there? Is that what you want to argue about?
Second, you have completely missed the point of my comment. Ken stated that what keeps people coming back to Wal-mart is the low prices. I agreed that it is the low prices that keep people coming back. It was a complement to wal-mart that they have low prices and that is good. To back this claim I gave the example of my wife, who shops there every week despite the bad experiences she constantly has there. The issue was not what her bad experiences were, I do not have to tell you that to make my point. It does not matter if in your judgment they were actually bad experiences, that is not the question. The question is do people keeping going back to Wal-mart because of the low prices and I say, yes they do and I give my wife as a prime example.
You really should learn how to read and think critically so you can follow an argument. Your cancer and service may have made you a tough guy but they have not taught you to think. I would recommend Nonsense by Robert J Gula. It has helped my 14 year old son immensely.
And another thing Mac, you introduce an ad-hominem argument that my wife has an attitude problem or is a whiner. I did not offer on. Yes, I called you a nerd but it was not relevant to my argument, it was just a comment. Your ad-hominem was relevant. You were in fact saying, “Your wife is a whiner and has an attitude problem, therefore she cannot have bad experiences at Wal-mart.” You said this with no objective evidence that she is a whiner or has an attitude problem. That, sir, is an ad-hominem attack.
Secondly how does me making a supposed ad-hominem attack allow you do deduce that we are whiners and complainers? It may show that we are not very logical, it may show that we cannot carry an argument or that we do not have any evidence, but from that you deduce that we are whiners and complainers? Very interesting line of reasoning. What can you also deduce from the fact that we use ad-hominem arguments? Are we also thieves? Do we drink to much? Are we overweight? I never realized ad-hominem arguments gave you so much light into a person’s soul.
A frustrating place to shop? Why? The only reason I’ve ever gotten frustrated is because of long lines at the checkout counters. But then, even though my wife and I both work, we usually manage to arrange our schedule so that we can shop in the off peak hours. Unlike some, we don’t expect other people to adjust their schedules just to make us happier.
Alert1201, That so called attack on your wife exists primarily in your own mind.
You can’t have a nation built on capitalism without having capitalists. While I would rather their production be done in the US for items that Wal-Mart produces you can’t fault a business for wanting to stay in business.
If you object to Chinese made goods, don’t buy them, tell your friends not to buy them, tell your Wal~Mart to carry American made counterparts to those items and pay the extra (usually 40% more), or go to another store that carries them. If the market for a Chinese made good disappears then Wal~Mart will be forced to stop.
As far as wages go, our local store pays equivalent to fast food or gas station attendant, yet nobody is up in arms about how poorly Wendy’s or McDonalds pays their workers. If you cant survive on a Wal~Mart wage then get a different or second job… if you have a Wal~Mart wage be happy, 20% of the population is unemployed (real numbers, not what is reported as collecting unemployment)
One thing the Wal-Mart haters forget is that the reason Wal-Mart has lower prices is that they purchase goods made in China. If they bought only American-made products to sell, they wouldn’t have low prices.
Another thing the haters don’t want to think about is that Wal-Mart pays comparable (or better) wages than other retailers. The local retailers want government to ban competition, but competition is essential to a market economy. If Obama would insist that every retailer pay the exact same wage and charge the exact same price as every other retailer, what would you have? In law, that’s called “price fixing” and it’s illegal. Of course, it IS the Obama administration which can apparently do anything it wants to do.
Wal-Mart’s low prices are partly because they have a very efficient distribution system. Buying cheap Chinese is probably the biggest part–but even some of their America-made products are very cheap because of volume purchases.
People sometimes act like Wal-mart is the only retailer that carries Chinese-made goods. But you can find the exact same Chinese made goods (for higher prices) at Target and K-mart and pretty much everywhere else, often because there ARE NO American-made equivalents.
And many ostensibly “American” brands are made in China as well.
One of the concerns about Wal-Mart is that their ruthless pursuit of low prices (good for consumers) often means that they don’t sell much except Chinese-made goods in particular market segments. To Target’s credit, when I go into the buy socks, I can find Made in China, Made in Bangladesh, Made in Honduras, and even, shockingly enough Made in USA.
I rather doubt that American-made goods will be 40% more expensive. I’ve been buying American-made socks at Target for some time now (ever since I was startled to find them there), and they are only about 20% more expensive than Chinese-made socks–and they seem to last longer, too.
Of course, <a href="http://www.scoperoller.com/"I manufacture here in America, and I know that it can be done.
If Wal-Mart raised their prices 20%, would that make the haters happy? I doubt it. The REAL point isn’t that Wal-Mart sells cheaper socks or that American socks last longer, it’s that the largest company in America is also the largest employer (except for government workers) and THAT is unacceptable to the haters. To the haters, the private sector must be discredited and that’s why the lawsuits abound. I seriously doubt that Wal-Mart (or ANY private-sector business) has a corporate policy of Title VII discrimination.
As I’ve said before, the civil court system has become a political tool to bash the private sector with and create a country where a majority of the people are dependent on the government, not on private enterprise, for a living.
Another point is why Chinese goods are less expensive. And that is primarily our fault. Ridiculous govt regulations. Absurd union wages and work rules. Lawyers gumming up the works and adding costs to everything.
Yes, there workers do get paid less than US workers, but their productivity is a lot less as well. Those things tend to balance out. The primary cost differences come from elsewhere.
Actually, Chinese goods are cheap because the yuan is priced below market. The Chinese government manipulates currency markets to maximize exports. This has been known for several years now, and it isn’t just the U.S. that is injured by this artificially cheap yuan.
The people most hurt by the artificially low yuan are the Chinese people.
This isn’t clear. It certainly hurts many Chinese, who labor long hours for little pay. On the other hand, if the net effect is to drive other companies out of the manufacturing business, it may be a major hurt to us as well.
What’s going to happen to all this when the Chinese (for whatever reason) can’t continue to manipulate the yuan? It seems to me that such a policy is in danger of getting hit hard by random life fluctuations!
(And when that time comes, it’s hard to imagine how it would be good for *anyone* involved.)
This where the Obama Revolution came from. This is where the next Obama will born.
This is what “Libertarianism” creates.
Millions of Americans working for $7 hour 35 hrs a week for a Multi National
company that sends its manufacturing contracts to China. How much “free choice”
does the Wal Mart greeter have about seeking employment elsewhere? How much
employment elsewhere is there? How many of those who work at Wal Mart are even US citizens? How much “competition” does
this system allow? And this has happened not only in retail stores but in
every industry in America. 40 years ago various members of my working class
family worked in a US shoe factory, a US candy factory , a US umbrella factory,
a US steel foundary, a US tire factory. When was the last time you saw a shoe,
an umbrella or a tire made by American workers? America was gutted of industries
and real job skills and we were told it would all work out in the end. Well the
end is here..and now the phrase is “jobless recovery”. Oxymoron anyone? There is
no recovery without jobs. There is only endless extensions of unemployment
benefits issued on borrowed money
Obama is a demagogue born out of misery of these people. After Obama is gone
they will create another Obama. SEIU enrollment expands steadily. Conservatives
can either snap out of the narcotic haze of “Global Economy” and see it for
what it is..a scam. Or brace for the final victory of a Socialist United States.
Really? I don’t recall Obama running on a platform of “living wage”. I looked at:
http://www.barackobama.com/issues/economy/index.php
and it doesn’t mention “living wage” or fighting Wal-Mart.
Check out the initials S.E.I.U. Then check out what S.E.I.U supports. Then check out this organizations relationship with Obama and the Far Left
The reason you don’t see factories in the US producing goods is UNIONS. Unions have priced themselves out of work, companies cant afford to pay union wages and benefits and turn a profit when the same goods are made overseas without union interference, yes, interference. When you strong-arm a company to provide unrealistic wages and benefits (like a retirement package that provides 100% income after you stop producing for the company – thank you government employee unions) the company will not be able to stay in business, at least while using U.S. union laborforce
Not just unions. It is all the rent-seeker alphabet agencies in and out the door looking for reasons to shut down the place, fine it in the millions, or haul off a shop manager in handcuffs because a handicap restroom has a grip bar 1/4″ out of spec.
What’s the difference between a Populist and a Liberal?
Trick question, there is no difference. They use different justifications to support the same programs.
It isn’t libertarianism that causes Wal-Mart to pay people as you claim, $7/hr, 35hr/wk.
It’s the free market that permits employers and employees to find mutually agreeable employment situations.
And a large supply of illegal immigrants, driving down wage scales, while relying on government services such as emergency rooms in hospitals.
Well, it’s the 180 degree turn around from what Sam Walton wanted that bothers me. He struggled to have a store dedicated to American products. He wasn’t even cold yet when it was handed over to the chinese (because of its distribution network) as their own company with distribution all ready to deliver sub quality products to every nook and cranny.
I understand that business is business and profits are what any company in in business for. Yet, in America there is a social contract of some liability for the sale of your products. Not so with products from china.
Also, companies in America, generally speaking, don’t get government subsidies or directly fund the military. While many chinese companies don’t directly fund the military there are many that are owned outright by the military.
Wal-Mart has some benefits if you are willing to disregard all strictly American business rules, regulations, liabilities etc. in favor of a clearly un level playing field of ‘international corporatism’.
Excuse me?
With all the anti-Wal-Mart fervor, if they had broken any “strictly American business rules [or] regulations,” it would be front-page news and attorneys general would be lining up to prosecute and/or sue them.
In short, your parting shot missed by a mile.
Maybe you missed those bits in the news about Chinese-made dairy products, Chinese-made children’s toys, Chinese-made pet food…
Point 1: Chinese laws are not American laws… for which you should be very thankful if you’re not the firstborn child in your family.
Point 2: Apparently you missed this story yourself. Read and learn.
Perhaps you missed the stories about contaminated vegetables from California? Killed several people.
Perhaps you missed the stories about all the Tylenol products that had to be pulled from the shelves because an inspection found that their quality control to be practically non-existant.
You seem to be of the belief that just because products are made overseas, they are by default unsafe, and products made here must be assumed to be safe.
The rate of quality issues with both US and non-US products is about the same.
You are confusing foreign-made with Chinese-made. China, in many respects, is crony capitalism: effectively no regulation but also a relatively weak tort law system, with a fair amount of protection for people with political influence. It is distinctly a more worrisome situation than most other places from which the U.S. imports products.
My 30 year old son works at Wal-Mart, full time, making a living wage, has health insurance, and he owns his own home (well, he’s paying the mortgage, insurance and taxes). Wal-Mart has been good to him.
Hate to say this, but I bet your daughter wouldn’t be treated the same way. A gigantic class-action suit from female employees who have been systematically passed over and otherwise mistreated by Wal-Mart didn’t come out of nowhere.
I’m not a feminazi. I loathe any and all kinds of employee mistreatment. I bet old Sam Walton is spinning in his grave.
BTW, I put my money where my mouth is. I haven’t shopped at Wal-Mart in over 20 years.
“BTW, I put my money where my mouth is. I haven’t shopped at Wal-Mart in over 20 years.”
Your loss.
Actually, not. As Clayton points out, the mere fact that WalMart exists forces down prices, so even if you don’t shop there you can benefit from WalMart’s cost cutting.
Nope. I can sleep at night. My gain.
I shop at Wal-Mart.
I sleep just fine.
And now, you’re going to try some silly moralizing about “how can you possibly sleep at night when…”
“I can sleep at night.”
So does Obama.
The suit against Wal-Mart reminds me of the EEOC v. Sears litigation (839 F.2d 302) years ago. The case dragged on from 1973 to 1988.
The EEOC claimed that Sears was discriminating against women in hiring practices but could produce not one witness who claimed they were discriminated against. The EEOC based its entire case on statistical data. Eventually, the 7th Circuit Court of Appeals denied the EEOC appeal.
Sears was the whipping boy for years, but now Wal-Mart is assuming that onerous mantle. The biggest corporations are always being sued. Some will remember the anti-trust suit against IBM many years ago which lasted more than a decade and eventually became moot because other computer companies came into existence and began to compete effectively with IBM.
It’s a sad thing to see courts used as political hammers. They reason for a lawsuit is to make a person who has been harmed whole again. Now, the civil courts simply force companies like Wal-Mart to defend frivolous litigation brought for political reasons.
The only difference is that there are plenty of Wal-Mart employees who have spoken up about the discrimination. The EEOC hasn’t had to search for anyone.
That workers are willing to claim they were discriminated against is meaningless, as such workers can always be found, especially when the price is right.
As I’ve written elsewhere, Wal-Mart (or any private-sector business) wouldn’t have a corporate policy of Title VII discrimination.
The largest employer in the USA (except for government) will naturally have some disgruntled employees or former employees who will claim to have been discriminated against. They will actually sit in a deposition, under oath, and lie (as a former POTUS once did). Simply because the allegation is raised doesn’t prove the case.
When one thinks about the fact that as an employer, Title VII discrimination actually hurts the company, why would Wal-Mart WANT to discriminate? They hate women? I really doubt that because the vast majority of people I see in Wal-Mart ARE WOMEN!!!
Critical thinking in these cases goes a long, long way.
99% of the time, these class action lawsuits are nothing more than attempt at extortion.
Similarly, my sister is still alive thanks to having a full time job at Wal-Mart with health insurance.
I think the unions have created a silly expectation that you can get a job there working four hours on Saturdays, and get full ride deluxe health insurance with no deductible that starts the first day you show up.
Because, after all “Health care is a right”.
Obama should have Walmart taken over like GM,BP… in the national interest.@ least tax them @ 99% rate for redistribution
Another socialist voice is raised. Do you really feel that government should completely control the private sector, or are you jsut trolling?
Did you miss the smiley face???
Another thing about the small-town stores. How many of those that went under kept their merchandise current? How many were willing to order things for their customers? How many of them promoted their stores? How many changed their merchandise mix to offer things Wal-mart/Target/K-Mart do not offer?
In too many cases, the stock of the mom-and-pops was outmoded, shop-soiled, or just not what folks were seeking.
It’s not just Wal-Mart sinking the local shops. There is this wonderful thing called the Web, and there are all manner of merchants there who cater to the discerning shopper. Or, like in my case, the shopper with special needs. In my case it is finding shirts in size XLT (that’s extra large, tall), or finding other stuff that is proving impossible to find, even at Wal-Mart. An example is regular old ordinary gym shorts that don’t carry the $10 surcharge for having a team logo or a signature on the label. Both of these examples are of things local stores just do not offer.
Walmart was the anwser for 100′s of thousands to get work when Clinton tightened up on lifetime welfare. Walmart by the way is growing in groceries which are not from China. Walmart is breaking down the incomes of middlemen. Independents deal with reps, wholesalers and distributors. Walmart deals direct. Saves me money.
the problem isnt walmart. People complain about how they are treated yet still work there. These jobs are for entry level kids and older people to supliment income. These jobs are usually jumpung points or stepping stones. All employers should be required to provide is a safe enviroment. It dosent mean they have to be nice to the employees. It would be nice, but the fact that people still work there shows that it is not beyond the relm. The people who complain about the competition are the same ones who shop there. It is hypocritical as hell. If you have joes hardware selling a hammer for $20 bucks and walmart selling it for $5, then thats the price. It is not a requirement for them to buy at walmart. If the small shops mean THAT much to people then they should be willing to pay the extra price. But they do not. they still shop at walmart, and moan about ‘unfair competition’ to make themselves feel less guilty. Does anyone complain about target?, K mart? or any other of the mega stores?
I used to like WalMart when it first started and carried “made in America” products. If I wanted to send my money to benefit China’s economy I would still find another way than shopping at this awful place. I keep hoping they’ll change their name to “Shafting American workers and producers alike” but not everyone believes in truth in advertising.
And you have the right not to shop there.
Just as I have the right to shop there if I choose to.
It’s called “freedom.”
If enough people come to your point of view, they’ll go out of business. It’s not like they have armed gangs dragging people into Wal-Mart and forcing people to spend money there.
Wal-Mart for all the warts attached by the “bleeding hearts” provides more real benefit for the entire nation than all the federal hand-out programs combined. They employ 1 million workers in the USA, that is more than the civilian federal workforce. We have learned that those stellar federal employees across the board have higher pay and better benefits than anyone in the private sector. In spite of those higher wages and benefits we are witness to the bungling and ineptitude of these federal agencies in their handling of the “oil gush” occuring the gulf. Wal-mart delivers quality goods at below market averages to people across the country, they force inefficient competitors to either improve or perish. There is no market-driven force to improve how the federal agencies function. One cannot go to a competitor of the State department to aquire a passport. One cannot go to a competitor to negotiate lower tax -rates. The list goes even deeper when state and local agencies join the mix. Would you rather have health-care managed by the folks at the EPA/MMS or would you rather have the efficiency of say Wal-mart in charge. I’d vote for Wal-Mart. It is always an education when Wal-Mart proposes to open a new super-center, you do no find “Joe six-pack” and his family out there picketing.
If anyone believes they can run Walmart better I suggest they buy it.
I don’t think anyone on the planet has that much money!
OK, if no one has enough to buy it, then start a new one from scratch, grow it like crazy, and put Wal-Mart under, just like it did to Sears. Sam started with one store; anyone else can too.
Can I use a post dated check?…if the govt can why can I ..hehe ;0)
Then get two or three friends and combine resources. You don’t have to buy the whole store, just enough of the stock to get a controlling interest. For really big stores whose stock is widely held, that can often be as little as 20%.
Clayton, the next time I come across an immigrant with few marketable skills and little English and desperate for work I’ll send him over to your house for a job. How would that be?
Right, Jarvis! I am astounded at the author’s naivety! He MUST be a pampered gov’t worker or educator! (Early in my career I had bottom line responsibility for forty 7-Eleven stores.) Workers are started at very low salaries because the majority of new workers are INCAPABLE of doing the work correctly! And a strong work ethic is hard to find. Large retailers are LOOKING FOR PEOPLE TO PROMOTE! When employees display the combination of capability and strong work ethic, they are noted & encouraged for advancement and higher salaries. Entry level “clerk” jobs & salaries are not…and never have been…intended as lifetime work.
Work hard…really hard…and promotions will follow! Large retailers WANT to promote outstanding employees!
I currently work for a state government in IT–and it is my lowest pay (adjusted for inflation) since 1980. There are governments that pay very well–Idaho isn’t one of them.
I’m a bit surprised at these responses. I made it clear that when you look at their profit margins, the low rate of pay for Wal-Mart employees isn’t because Wal-Mart’s executives are sitting on mountains of money; it’s because retail profit margins are very thin.
You were the one who claimed that Wal-Mart could afford to pay it’s workers more.
You might want to go back and re-read what I wrote. I pointed out that a $2/hour raise for every employee would wipe out all their worldwide profits.
Huh? I must have missed something that explains the connection of your comment to my article.
I now see the connection you are making. As my article points out, retail is not a high profit margin business sector, and it isn’t like Wal-Mart could hand out big raises to all their employees.
At least here in Idaho, the vast majority of Wal-Mart employees are Americans who speak perfect English. Limited job skills doubtless have a lot to do with why they start work for Wal-Mart. I can still feel sorry for their situation.
Would you prefer they were unemployed?
No, I would not prefer that they be unemployed. What I don’t understand is how you read what I wrote as an attack on Wal-Mart.
Their “situation” is due entirely to the fact that they have few job skills. Once their job skills improve, their “situation” will improve on it’s own. It’s entirely up to them if that ever happens.
WHAT? Did someone get lost on their way to HuffPo?
Not mentioned in the article is how Walmart treats its vendors. I owned a Pepperidge Farm distributorship. (Pepperidge Farm products are not distributed to stores by Pepperidge Farm, but by independent route owners who buy a territory from Pepperidge and distribute to retailers within that territory.) The Walmart on my route was systematically “losing” invoices from vendors and refusing to pay the invoices. In my case, it amounted to over $200,000 in products at cost. I presented them with duplicate invoices. They still refused to pay. In effect, they stole $200,000 of product from me, precipitating a bankruptcy of my business. As another example, Pepperidge paid Walmart $1,500 for display space for me to use in the store. Walmart signed a contract guaranteeing the space for one year. I filled that space with product. The next day, I came back to service the store. My product had been thrown into shopping carts and rolled outside, behind the store. Another vendor’s product was in the space Pepperidge had paid for. I confronted the store manager about it. He told me if I didn’t like it, I could take all of my product out of the store. These kinds of dealings with vendors are very common practice with Walmart. It will be a cold day in hell before I ever spend a penny at Walmart. I also had a Target on my route. Target is scrupulously honest in dealing with vendors, 180º opposite Walmart.
I recall reading a news story some years back about the way Wal-Mart strong-arms its vendors. One guy manufactured lawn mowers and proposed Wal-Mart buy some. Wal-Mart told him redo his manufacturing process to make a cheaper, inferior product at a pathetic profit margin. The guy said thanks but no thanks.
Sometimes it’s just not worth doing business with some companies. This guy refused to compromise his product and his company’s reputation to be a Wal-Mart ho.
You must have missed this: “I am concerned that Wal-Mart’s aggressive approach to competition has driven many U.S. companies out of business — or at least forced them to move manufacturing to low wage countries.”
If the case is as clear cut as you claim, there must be hundreds of lawyers eager to take your case on contingency.
Hmmmm. Wal-Mart’s legal team with very deep pockets vs. one individual lawyer paid by a small businessman. Yes, Wal-Mart could lose. I wouldn’t bet on it.
First off, would Wal-Mart use it’s whole legal team to defend itself against a lawsuit asking a few thousand in damages? Many of those guys get that much an hour.
Secondly, if such activity were wide spread, Wal-Mart couldn’t afford to use such massive resources on each case, for the reason stated above.
Thirdly, many states have small claims courts that limit the legal resources each side is permitted to use.
I shop Walmart or some similar discounter for all the basic stuff from motor oil to ammunition to fertilizer, because usually they have the best price, but their business model is also at the core of our problems. The semi-free world wide markets have gotten us to a point where we consume a lot and produce a little. Walmart (and almost everyone else, as well) gives us the best prices by using cheap labor abroad to give us affordable things that were considered luxuries not that long ago.
People question if our big government, big entitlement society is sustainable, and I wonder if our Walmart Society is sustainable.
People talk about shrinking government, but are you going to shrink corporations too? We have huge government and huge corporations and the two are not completely unrelated. In an ideal world, Americans could still produce something at decent wages in a relatively safe workplace.
I’ll throw out the fact that our addiction/common sense enjoyment of cheap oil is a major part of this equation as well. We enjoy driving, heating our homes, and buying products shipped here from abroad, all made possible by relatively cheap energy. We will stop, (despite all the moaning and groaning from the greens) doing this ONLY when we HAVE to. The solid majority of people who either love to consume, don’t want anyone telling them that they can’t, or both, is likely to hold for a long time, which is not to say that people will find a completely gummed up Gulf of Mexico as an acceptable trade-off. If we can get the well shut down or controlled and the Gulf back to an appearance of normality in five years, we will continue on our merry, if shaky way. If the Gulf really were to become a dead and greasy zone, the consuming majority mentioned above, might consider, reconsidering.
I love the way people whine about the “evils” of big companies, while they continue to shop there.
If big companies are so evil, then stop shopping there. Just suck it up, and admit to yourself that the price of being small, is being less efficient, so you have to charge more.
You want small companies, but don’t want to sacrifice your standard of living to get there.
What a flaming hypocrite.
Without a big govt to give away favors, we have nothing to fear from big companies.
I’ve lived in a ‘Wal-Mart town’ for 7 years now – since retiring. While I didn’t live here for all of those other years I am familiar with the town – having come to the area in search of recreation for many years – in one and two week vacations and long weekends. The contrast between shopping in a so called mom n pop store and Wal-Mart is striking. Wal-Mart is open 24/7 – the mom n pop store hours are/were usually 8-5 and maybe a few hours on Saturday – some opened Sundays a few hours as well – usually the grocery stores. Most were staffed by the owners with little help outside the family circle. The variety of stores covered the gamut from a milk/bread/beer stop to clothing stores – fishing/hunting shops – and the obligatory Radio Shack which still hangs on today – selling appliances to help make ends meet.
A walk through the downtown core – such as it is – it seems apparent what Wal-Mart has done. Many of the store-fronts are closed up – no business going on now.
But who’s fault is that really? Wal-Mart? Maybe not.
The upside of Wal-Mart locating here isn’t apparent to anyone that hasn’t lived here or visited many times like I have. I suspect this is repeated nearly as many times as there is a Wal-Mart location. The owners/operators of those small stores and shops set their prices high and made a good living doing so – and if you didn’t like it – tough. There was little or no competition for their inventory. If you didn’t buy from them you didn’t get what you wanted. I got that message more than a few times in the 30 years I visited these small shops and stores over the years. Didn’t have what you were looking for – also tough. Granted not all of them had that attitude but enough of them did that I quickly learned to make sure I had what I needed before each trip to the area. I lived in an area where stores and shops were well stocked – but those shop/store owners had enough competition to keep their prices in check.
To be sure Wal-Mart has introduced change on every town they’ve come into. that change for shop/store owners has been an end of their way of life – one I’m sure they could never envision happening to them until it did. Change also came to the working and retired people of each of these towns – where a new shirt was either bought from a catalog – or if you needed it now at the local clothing store for twice the price – now you can drive to the local Wal-Mart store and find pretty much what you were looking for and the price is lower than what is in the J.C.Penney or Sears catalog.
Net results? You get what you want/need and save money to boot.
The rub? Much of what Wal-Mart sells is made in China. Thats a biggie with me. I make every effort not to buy Chinese goods. Trouble is a huge number of grocery items are made in China.
Shop carefully America!
Wal-Mart’s success is difficult to argue with, and maybe its net benefits outweigh its net drawbacks. Doesn’t mean we should blithely dismiss the drawbacks, or jump all over anyone who considers them a problem. The “invisible hand” is smart, but not omniscient and not free of inefficiencies; when Wal-Mart eventually goes the way of all business concerns, one fears a pretty miserable interregnum before smaller, more agile successors can get going … not to mention the dozen-acre “Wal-Mart ghost towns” (now THERE’s a lousy job for future archaeologists).
And Wal-Mart’s suppliers have NEVER been less than a morally frought issue for some of us. I have no wish to reward the purveyors of Chinese slave labor, but the “Made in U.S.A.” label isn’t much better. “Buying American” is cant; usually, it’s more precise to say that you’re “buying American union-made goods.” And my desire to starve with my dollars the proprietors of the laogai slaveworks is only marginally greater than my desire to starve the thugs and thieves of the American unions, and their parasitical families. So buy German! Buy Japanese! Buy Taiwanese! (Their unions are THEIR problem, not ours.)
““Buying American” is cant; usually, it’s more precise to say that you’re “buying American union-made goods.””
It depends what you are buying. There’s still a lot of stuff we make in America that isn’t union-made.
It is particularly spurious to state that Walmart makes $15 billion a year worldwide and not tell us what percentage of Walmart’s sales that profit represents. My guess is that Walmart’s profit margin is knife-edge thin. It’s the volume that creates the $15 billion, not gouging. But let’s not get into any details that would spoil an evil capitalist storyline.
Hence my sentence: “Wal-Mart, like most retailers, is profitable, but it is based on volume and efficiency, not high profit margins.”
Hearing the flack about Walmart buying Chinese made goods confuses me at times. Being in the technology sector for over a decade, do most Americans realize that the vast majority of the world’s technology goods are made in China? Most American computer and technology brands have their goods fabricated, and sometimes even designed, in China.
I don’t have figures on how much China makes on technology manufacturing, but it is probably staggering and I’d bet it surpasses Walmart.
You can include tvs – cell phones – home audio equipment etc, etc. China has it’s hand in just about every sector of consumer and industrial manufacturing.
Look for cheap Chinese and Indian auto imports in the very near future – and jet airliners in the next 10-20 years.
The only thing that might slow or stop these juggernauts (China/India) will be the poisons spewed by their industrial activity – and combine that with 1 more coal fired (no pollution controls) coming on line for the next 10 years or more. And that’ll only be when the citizens start dropping like flies from the pollution.
Wages for Wal-Mart employees? Most of ‘em could be replaced by 8th graders with a weekend of training. They being paid what they’re worth. Those who ‘demand’ a living wage for a job virtually anyone with an 85 IQ can be trained to do well, are naive beyond help.
How many 8th graders will show up for work regularly? And actually do their jobs without getting distracted by the toys in the electronics department? I will agree that Wal-Mart jobs aren’t high skill–but I think you fail to recognize the maturity required to show up for work regularly.
Sorry Clayton, I can’t let that statement stand! “Showing up regularly for work” doesn’t warrant a living wage. And I found your Wal-Mart $2/hr entry level wage increase suggestion silly.
Low entry level wages are designed to allow mgmt to give many applicants a CHANCE to demonstrate skills & attitude. For ex, how does the employee react to having to work an occasional 21 days straight w/o a day off? Is his work attitude still admirable? (It better be, if he expects to be successful in non-gov’t careers). I’m convinced that gov’t workers have zero understanding of the Real World Work Requirements necessary for a living wage with Opportunity for deserved advancement!
The problem is that I made it clear that Wal-Mart doesn’t have the money to give $2/hour raises to their employees.
Actually you did not make it clear that they could not afford $2 raises. You may be right but the information you put in article is just to simple to make that arguement. You most likely would not be giving the raises to all one million employees as a portion of those are in salaried positions. Also does the CEO fall under those one million people as I am sure since he makes tens of millions of year in salary he can pass on the $2. Plus something I see over and over again with businesses is not mentioning the turnover costs. How much does Wal-Mart spend hiring new employees every year? Maybe if the pay was a little higher then those costs will go down. The company I work for pays a higher wage for my industry and there is almost no turnover. Overall it is good article and with any company there is good and bad. Wal-Mart is just so big anything they do is amplified.
Can someone explain why so many commenters seem to have missed this sentence in my essay? “If Wal-Mart gave each of those employees a two-dollar an hour raise, and if every employee is full-time (which I know isn’t correct), that would be more than four billion dollars — almost one-third of the corporation’s worldwide profit. Duke could have pointed this out, and suddenly Wal-Mart doesn’t sound so incredibly Scrooge-like.”
I think most people understood your point. My issue is that is too simple of way of looking at it. You could throw out all kinds of numbers to make your point. The thing is no one is saying that Wal-Mart should give all one million people a raise. You even say that you know that all those people are not full-time so basically you are just making up a number to show one side of an arguement. The reason Duke probably did not give the answer you proposed is because executives do not like to discuss this issue because it can not be put so simply.
Having worked in retail, I can assure that many so called adults also have significant problems showing up on time on a regular basis and not getting distracted by the “toys”.
In the age of globalism, Wal-Mart is inevitable. So is online shopping and Home Depot (at least until the rest of the world degenerates into chaos and we have to depend on ourselves again for a while). I don’t blame Wal-Mart for the decline in mom-and-pop stores; it was a consequence of our world growing smaller owing to advances in travel and communications technology. That’s not to say I like it, but I’m not going to sit around complaining about it either, especially when I can get my underwear at reduced prices.
That said, post-retirement, I spent five weeks helping to convert a regular Wal-Mart store into a Wal-Mart Superstore. I only wanted a part-time job sans benefits for spending money, and instead they gave me a full-time job sans benefits, which eventually might have morphed into the part-time job, except that their idea of part-time is only a couple of hours short of 40 a week, which I did not want or need. Also, I resented the Japanese corporate-style morning rah-rah exercises (wiggle your butt while chanting the company slogans and shouting “Woo-Hoo” in the morning, and see how you feel about your status as an adult). See why I only lasted five weeks? But that’s just me, because plenty of my coworkers who needed the job to live on, were quite content to do it, all respect to them.
Still and all, Wal-Mart is resolutely non-union, which makes it a target in this brave new Obamaworld. They’ve remained so through incentives for their workers beyond a higher hourly salary. To be a Wal-Mart worker, even a part time one, you have to go through a number of self-improvement computer courses which teach the ethics of worker responsibility, economics, salesmanship, comportment, etc., all taught on company time in the company store offices. Failure to pass these courses means termination. I took nearly all the courses in my five weeks, and I can say they are lessons that can be taken to other employment down the road.
So I can say through experience that overall, Wal-Mart is a positive good in a lot of important ways. Remember that, next time you see that union-funded anti-Wal-Mart ad on TV.
As a disclaimer, I don’t work for them (five weeks was enough), don’t have any relatives working for them, and in fact, am subsiding into non-working, death-panel-territory, retirement.
Costco somehow manages to provide product at good prices AND pay its employees a decent wage, decent benefits, and even bonuses. It can be done.
Costco also charges annual membership fees.
Wal-Mart does not.
Wal-Mart subsidiary Sam’s Club does, but you’ll note that they’re not the ones being demonized.
I’ve lived in towns with Walmarts, and I’ve lived in towns that have blocked Walmart out.
The towns with Walmarts have generally been growing business friendly places, where you could buy just about anything you could want whenever you wanted to. The towns that blocked Walmart out have been shrinking pits where all the shops closed a 5pm, and are never open on weekends.
The only outlier was a little town that the only reason it had a Walmart was because Walmart got in before the city council slammed the gates to new development and Walmart was to big for it to evict. That Walmart was the only decent thing about that place too.
What a boutique enterprise it is to focus on the “very real problems Wal-Mart brings to the marketplace.” Who that doesn’t have utterly secure, high-paying employment even has the urge to?
Wal-Mart is a big reason millions of us are able to hang on right now. You know, there was a time when I had a lot more money coming in. A whole lot more. I shopped at the closest grocery store, paid a good 30% more for things, never bought in bulk, and threw stuff away because my time was too valuable to spend it sorting, stacking, toting, repackaging, and otherwise arranging to use stuff up, keep stuff, and keep using it, through a very peripatetic life.
Now? Now I shop at Wal-Mart. Interestingly, when the two Wal-Marts near me opened in the last 5 years, each one opened to a crowd of applicants who stood in the parking lot for days hoping to get work. Yeah, they treat their employees miserably. The ones who know my face — the early morning greeters, the checkers on aisle 16 (the only one open at 6:00 AM) — are always cheerful, professional, and welcoming, but I suppose that’s what you get when you whip the workers and break their legs just for good measure in the stock room.
The other thing our Wal-Marts opened to was a very big shakedown. Wal-Mart not only improved the streets for a mile or more in every direction, it laid utilities for big chunks of residential-zoned land, contributed to water/sewer infrastructure improvement, built parks, and subsidized community services like transportation for the elderly and children’s recreational programs. Hey, that’s all great. Lowe’s did similar things when it showed up in town. With the second Wal-Mart, though, the veneer of fraternal amity thinned a little when the city held the store’s opening day hostage to the completion of ADDITIONAL “contributions.” The store opened 5 months after it was originally scheduled to — because the city kept adding to Wal-Mart’s to-do list.
Wal-Mart pays at least minimum wage and (with a few exceptions, properly prosecuted) obeys the laws wherever it has stores. Let it stand or fall on its appeal to customers. Trying to wave the wand of distaste over Wal-Mart to make it stop offending YOUR sensibilities only hurts the working poor who depend on it to remain viable — and to have a hope of a better future. Every additional cent they have to spend on food and household items, to assuage your aesthetic yearnings, is a cent they can’t save and invest.
I’m not rich, but I don’t feel “forced” to shop at Wal-Mart. I shop at a chain grocer and get plenty of good food choices for a reasonable price. I buy store brands, which are just as good (and sometimes better) than name brands. The store buys a lot of produce and dairy locally, so I’m supporting local family farms, and the price is not much different because the produce isn’t hauled cross-country.
My city has a Home Depot and a Lowe’s and an Ace Hardware. When I need something unique, I go to Ace. When I need a bargain, I go to the other two. Sears, Target, and KMart also have hard goods at reasonable prices.
I frequently patronize second-hand stores and recycling shops like “Re-Store”. Freecycle.com is a great place to find free anything from furniture and electronics to building supplies.
So no, Wal-Mart is not the only game in town for the cash-strapped. I’ve managed to avoid the place for 20 years and haven’t missed it one iota.
Your experience was very different that what I saw when Wal-Mart tried to build a store right behind my house. A nice 350,000 sq. ft 24hr store directly behind a neighborhood that has only two lane roads around it. Wal-Mart’s proposal was that they would pay for the turn lanes into the store and plant some trees that would take 5-7 years to grow tall enough to block the lights from the store. They made alot of misrepresentatiions to the local media but lucky for us we have the internet now and could access the plans the company had giving to the county. It was going to cost the county several million dollars to make the upgrades to handle having a Wal-Mart there without any real gain. Why is that? Because there is a super Wal-Mart less than 5 miles from where they wanted to build the new store. Do not know why Wal-Mart really does this(it must work they are making plenty of money) but they already did this once before. They claimed that an area would support two stores but guess what. In a couple of years one of the stores was closed down. Any way I could ramble on forever. Amazing how Wal-Mart can do that. For the record not a Wal-Mart hater, I actually shop there occassionally.
Thanks for a lot of good info, Clayton. Our small town of Bandon, OR, keeps big companies out. We have to pay whatever the mOm and Pops want to charge or drive many miles to find a big chain like WAL-Mart or Bi-Mart. Bi- Mart couldn’t make it into our town on a recent try.
At one time I didn’t have a problem with them. Then their CEO issued a letter, countersigned by the president of the SEIU endorsing the government health care power grab. I sent them and email, cut up my Sam’s card, and have not spent one cent with them since, I think that happened late last summer, I’m sure they don’t miss me, but I sure don’t miss them either.
This is not a surprise; Big Business prefers Big Government programs that wipe out their smaller competition. Read Gabriel Kolko’s The Triumph of Conservatism: A Radical Reinterpretation of the Progressive Era, where he demonstrates that Progressive Era government regulation was driven by the large trusts who wanted their smaller competition driven out.
Lefties have been very busy working behind the scene buying up huge stock portfolios so that they can use their influence on the Boards of companies they do not like to do damage. Their game plan is to create the problem they pre-port to solve. Wal-Mart is one of their targets. This is one use of union dues that all of the big unions collect. There are also firms that specialise in this sort of subversive practice. Check out Harrington Investments for an example. You can thank Bill Clinton for opening up the flood gates. For every so called failure of free-market capitalism, you can find a socialist as the real cause … without exception.
While being somewhat sympathetic to some of the anti-Walmart arguments, I am on the whole a supporter, and I’ll tell you why.
I grew up in a small town. No doubt that Walmart killed local businesses in some towns, but here is a simple fact that many people ignore: A whole lot of small towns had no local businesses to kill.
When I was young, you couldn’t buy a pair of socks without driving an hour. The arrival of Walmart has made things much easier.
Ironically enough, I am now living in the land where all those Walmart products come from in the first place. A year ago, a Walmart opened just down the street. It has made our lives so much easier than when we had to run from small shop to small shop. And the Walmart is better organized and cleaner then the other Western supermarkets here in China.
I know several people who work at Wal*Mart. They all love their jobs.
Being on a fixed income, I am delighted that there are 3 Wal*Marts within 10 miles of my house.
We’re shopping a lot more at Aldi and Kroger and other grocery stores, whereas we used to do more grocery shopping at Walmart. Recently, I’ve noticed that Walmart is out of something (and usually several items) that we are looking for when we visit — they just have empty holes on the shelves. (One Walmart that we frequent, which was the largest that they had ever built when it opened several years ago, has taken out quite a few aisles, too.) We asked one of the workers whether the shortages were due to the much-touted new policy of only sending out fully-loaded trucks, but she didn’t know.
I still buy undies and socks at Walmart occasionally, and have been able to find both socks and underwear NOT made in China recently (albeit made in other countries, not the USA).
I used to buy shoes there, but I’ve bought very few since they reorganized the shoe department and have things by “style” not size. (I wear 10 1/2 or 11, which is very hard to find. Almost every time I would visit when they had shoes organized by size, I would take a look at the limited selection of 11s and see if there was anything that would work. Now, though, it is just too frustrating and time-consuming to have to go through every style of shoe looking for my size, so I usually order from Amazon’s Endless — which lets you search for shoes by size AND lists the country of origin for the shoes, so I can avoid Chinese items if I wish. But, boy, is it hard to find cheap-ish shoes not made in China!)
I’m wondering if Walmart is going to put themselves out of business or severely diminish their business with their plans to post the carbon footprint of every item in the stores (supposedly by 2013) and all their other “green” initiatives?
I’ve not seen the problems that you describe at the Wal-Mart in our area.
What drawbacks? I don’t see any legitimate drawbacks mentioned in the article.
Like most publicly owned companies, most of Wal-Mart’s profits go directly into dividend payments. Why does Mr. Cramer want all those retirees to suffer and starve?
Look, I wrote something of a defense of Wal-Mart–pointing out that the big problem with how Wal-Mart’s employees get paid is that retail–all sorts of retail–operates on very thin margins. Yes, there are some losses that come from giantism in business, much of which is going to be nostalgia in a few years, but I also pointed out the gains for consumers that comes from it.
I don’t see why you are so antagonistic, reading something into what I wrote that isn’t there.
The only thing Wal Mart is responsible for is making a profit. That’s #1.
#2 – Wal Mart isn’t paying people to be nice, they’re paying them to perform a task. The tasks are worth so much an hour, not a bit more. Simply paying everyone two dollars more per hour would be insanity. Again, refer to #1.
#3 – In my ‘hood, Wal Mart employs people who likely would not get a job anyplace else, even at another retail store. Many of the people they hire seem to me to be an act of kindness, rather than finding the most efficient, competitive, hard working people.
They get a bad rap, and I don’t think they deserve it.
Though I would prefer all their goods to be made in America, we’re doing the Chinese one heck of a lot of good buying their stuff. Maybe they’ll get so prosperous they’ll revolt and throw the totalitarian bums out on their behinds.
I’ve seen the problems with lack of stock in three different states (SC, NC, and VA), but maybe it is just an East Coast/Southern thing.
The February 2010 issue of Fast Company has an article on how Walmart’s 100,000-plus suppliers are trying to figure out “how to rate the sustainability of every consumer product” sold in the stores. Walmart wants the information for every item posted in the store by 2013. (It seems to me that this will raise prices, if every company honestly tries to do all the reporting, calculating, etc. necessary — they will have to hire employees or redirect other resources to do this.)
BTW, I can see how arranging shoes by style rather than size would save a lot of time for the stock clerks, but if costumers don’t buy as many shoes, it seems counter-productive. Maybe I’m the only one not patient enough to search for shoes.
“Buy stuff at Walmart today; the money that Wal-Mart pays to a Chinese manufacturer might well fund a military confrontation with China fifteen years down the road. I am concerned that Wal-Mart’s aggressive approach to competition has driven many U.S. companies out of business — or at least forced them to move manufacturing to low wage countries.”
Wal*Mart has literally sold the American economy, manufacturing and technology to the Chinese:
http://cadcam3d.blogspot.com/2010/06/how-oursourcing-to-china-will-bring-it.html
I saw a CNBC story on Sears. They were the giant retailer for decades. They believed they would always be king. Then along came ,believe it or not , KMART ,who gave them a run for their money! Walmart came next and took the whole game. If I were the Chinese , I would watch out because Walmart treats suppliers pretty tough and if their is a way to beat them they will. I wouldn’t hate Walmart and I don’t think they won’t have to fight for their top dog role. J.C. Penney told Sam Walton he would never make it in retail and look what happened.
Interesting the Wal-Mart apologists that came out of the woodwork. One wonders if they are employed by Wal-Mart, not that I care overmuch.
I shop at Wal-Mart very rarely, and the even more detestable Sam’s Club not at all. FWIW I don’t shop a lot of stores I don’t have much use for; Wal-Mart just heads the list, although K-Mart/Sears is close behind.
That said – no-one is holding a gun to Wal-Mart employees’ heads. Wal-Mart is perfectly within their rights to pay their employees whatever they will accept.
The problem is NOT that #Chinese #WALMART is providing low wage jobs (average employee makes $13K a year.. Its that 90% of their product comes from Chinese manufactures.. Walmart broke all sales records in 2010.. GROSS $405,000,000,000.00 BILLION dollars in sales.. Think about that in proportion to 90% chinese product.. As you said WALMARTS profit was 13BILLION.. If you add those ONE MILLION employees “average wage up”.. thats about 130,000,000.00 MILLION dollars they paid.. Give or take another 40 or 50 Million for sake of argument. Add operating cost.. Put the numbers together.. How much of that NON-MANUFACTURING 405 BILLION dollars went STRAIGHT TO CHINA.. How many PRODUCTION jobs did THAT kill in the USA? So.. if you put all the numbers together, based on their 90% chinese product sales rate.. PROBABLY AT LEAST 200-300 BILLION bucks RIGHT TO THE CHINESE..I wonder how many US factories,jobs, PRODUCT SALES MONEY that took away from our American economy. Those low wage jobs in NO WAY make up for the loss of jobs and sales they take away from our economy.. I think of Walmart as the #1 RETAIL economic terrorist in this nation!
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