Archive for the 'Wal-Mart' Category

The Economics Of Wal-Mart Wages

A quote from Jason Brennan’s latest book, Libertarianism: What Everyone Needs to Know:

If Wal-Mart started to pay high wages, Wal-Mart jobs would become attractive to skilled workers. People who currently work as medical assistants or car mechanics would want Wal-Mart jobs. Since they are more productive and have more skills – since their labor is worth more – they will outcompete the kind of people who currently work at Wal-Mart. So, raising wages above market levels is unlikely to help unskilled workers. Instead, it causes job gentrification. (Imagine if Wal-Mart offered to pay its workers $100/hr. Then many of my colleagues would consider becoming Wal-Mart cashiers).

More here.

How Wal-Mart Helps The Poor

David Henderson gives an overview of a comprehensive study on Wal-Mart:

Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.

Then there is this:

Phone surveys suggest that 84% of households in the U.S. shop at Walmart in a given year with 42% of households reporting to be regular Walmart shoppers (Pew Research Center, 2005). These surveys also show that lower-income households are more likely to shop at Walmart than upper-income households. In fact, Basker, (2005b), Hausman and Leibtag (2007), and Basker and Noel (2009) have shown that Walmart “Supercenters” that sell groceries offer many identical food items as other grocers at an average price that is substantially lower than their competitors. Hausman and Leibtag (2007) also find that these lower prices translate into a significant increase in consumer surplus.

More can be found here.

Quote Of The Day

” Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.” — Economists Devin G. Pope and Jaren C. Pope

Quote Of The Day

The Walmart effect. The giant retailer sets sustainability requirements for suppliers and manufacturers. “We find that Walmart is the most powerful environmental regulator in the market,” says Arnold.” — Sharon Begley, writing in Newsweek on the forces that continue to help cut carbon

A Wal-Mart Job Is Better Than No Job

That is the lesson Chicago politicians need to learn:

Chicago needs new jobs. Wal-Mart wants to provide jobs to Chicago. Alderman Howard Brookins wants Wal-Mart in his 21st Ward. Yet the company and the alderman face huge resistance from the City Council to a proposal for a Wal-Mart Supercenter on the South Side, at 83rd Street and Stewart Avenue just west of the Dan Ryan.

What’s there now? A vacant lot. A vacant lot where no one is working. The construction of that store on that vacant site would put hundreds of Chicagoans to work. Once the store was opened, at least 500 people would get jobs.

What’s the holdup? For Chicago politicians, Wal-Mart jobs are the wrong kind of jobs. They’re not union jobs.

The Chicago Tribune has more.

Why Would Wal-Mart Support Obama’s Healthcare Reform?

Megan McArdle explains the basic economics behind the decision:

…Wal-Mart is in favor of this because it raises the barriers to entry in the retail market, and hammers Wal-Mart’s competition.

… even in liberal academic literature, it is a commonplace that regulations disproportionately benefit several types of firms:

a)  Incumbents
b)  Market leaders
c)  Firms with the most employees

Regulation has a very high fixed cost for compliance; the larger the firm, the more dollars/employees over which to amortize the fixed cost.  Meanwhile, market leaders have disproportionate bargaining power, and tend to get better rates from suppliers than smaller competitors.  Finally, a high fixed cost means either that it’s harder to initially enter the market, or (if there are exemptions for the smallest firms) harder to grow.

On the other side, there is regulatory capture.  Wal-Mart is always going to have a seat at the table when employer mandates are discussed, because Wal-Mart is the nation’s largest private employer.  Target and Macy’s probably won’t have a seat at the table.  So Wal-Mart can influence the rules in ways that benefit Wal-Mart at the expense of the competition.  This is partly because the regulators often cycle into jobs at the firms they regulate, but also simply because the regulator’s attention is finite, so being consistently at the table allows you to shape their views over time.   Again, this isn’t some kind of crazy right-wing analysis; regulatory capture was first diagnosed by a Marxist historian named Gabriel Kolko.

All of which is to say, Bootleggers and Baptists should be required reading in all schools.  When you find strange bedfellows in politics, don’t look for a surprising outbreak of spontaneous virtue:  looking for the hidden conspiracy.

The full article can be found here.

Wal-Mart Fact Of The Day

According to Forbes, Wal-Mart was the most generous corporation in America in 2007 (probably the world too), giving away $301 million in cash gifts to the Children’s Miracle Network, Feeding America, The Salvation Army, the American Red Cross, the United Way of America, National Fish and Wildlife Foundation.” — Quote via Mark Perry, who has much more here

Another Reason To Like Wal-Mart: Weight

A new research paper:

We estimate the impacts of Wal-Mart and warehouse club retailers on height-adjusted body weight and overweight and obesity status, finding robust evidence that non-grocery selling Wal-Marts reduce weight while grocery-selling Wal-Marts and warehouse clubs either reduce weight or have no effect. The effects appear strongest for women, minorities, urban residents, and the poor. We then examine the effects of these retailers on exercise, food and alcohol consumption, smoking, and eating out at restaurants in order to explain the results for weight. Most notably, the evidence suggests that all three types of stores increase consumption of fruits and vegetables while reducing consumption of foods high in fat. This is consistent with the thesis that Wal-Mart increases real incomes through its policy of “Every Day Low Prices,” making healthy food more affordable, as opposed to the thesis that cheap food prices make us eat more.

Link via Marginal Revolution.

Quote Of The Day

“I have never quite encountered an intrinsically less fair institution than the university, at least in liberal terms of egalitarianism and respect for the underclass. A full professor may damn Wal-Mart, but Wal-Mart would never get away with the two-tier system that the university in built upon: the PhD part-timer has no job security, sometimes no benefits, no privileges, and earns usually about 25% of the compensation that is paid to the full professor to teach the identical class. When one factors in the use of graduate assistants not merely to TA courses, but to teach them in their entirety, then you can appreciate the level of exploitation that the university is built on. And add to the notion that tuition has climbed higher than the annual rate of inflation, and the picture is complete of an institution that is entirely immune from public scrutiny.” –Victor Davis Hanson

The Benefits Of Wal-Mart

Jobs:

They came in droves — high school students, retirees, young moms, the unemployed — all for a shot at a job at a new Wal-Mart on Memorial Drive in central DeKalb County.

In just two days, and with virtually no advertising or even any signs, a staggering 7,500 people filled out applications for one of the 350 to 400 available jobs.

Delois Zeigler was among those who packed a meeting room Tuesday at Saint Philips AME Church near Avondale Estates, hoping to soon be wearing Wal-Mart’s trademark blue uniform.

“I need a job,” said Zeigler, who has held temporary cleaning and cooking jobs since moving to metro Atlanta two months ago. “I’m open to anything.”

Although Wal-Mart often draws more than 1,000 applicants in one day, store manager Henry Greene said the turnout for the Memorial Drive site was stunning.

“When I arrived Monday morning and saw people lined up down the hill, it was absolutely frightening,” he said. “To see that many people, I was like, ‘Oh my goodness.’ I was very happy.”

The full article can be found here. Wal-Mart continues to bring what the poor most need – jobs and cheaper products.

Quote Of The Day

“Ever since Starbucks blanketed every functioning community in America with its cafes, the one effect of its expansion that has steamed people the most has been the widely assumed dying-off of mom and pop coffeehouses. Our cities once overflowed with charming independent coffee shops, the popular thinking goes, until the corporate steamroller known as Starbucks came through and crushed them all, perhaps tossing the victims a complimentary Alanis Morrisette CD to ease the psychic pain. In a world where Starbucks operates nearly 15,000 stores, with six new ones opening each day, isn’t this a reasonable assumption? How could momma and poppa coffee hope to survive? But Hyman didn’t misspeak—and neither did the dozens of other coffeehouse owners I’ve interviewed. Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door.” — Taylor Clark, writing in Slate on why starbucks actually helps mom and pops coffeehouses

Wal-Mart Is The Poor And Minorities Friend

Latino Politics Blog reports that, Wal-Mart Named One Of The Best Companies For Latinas…yet decided to continue its boycott of the company anyways.

You can read the blog and fellow commenter’s reason for taking that stance but I post here the other side of the argument. I left this comment on the blog (a comment that has yet to be approved):

You forget to mention one of the many, and I would say most important, positives of Wal-Mart: providing cheap products to the very poor. Have you been into a Wal-Mart lately? If you have, you must have noticed that Wal-Mart, both in its work force and its customers, is very different than the other ‘politically correct’ food chains like Vons, Ralphs, and Albertsons. Wal-Mart tailors heavily to the poor and minority. The customers and the workers there are overwhelmingly brown and poor – an area of the market that the other grocery chains business strategy has neglected.

Of course not being poor gives you the luxury of raising your nose at Wal-Mart, but to the poor and neglected, Wal-Mart is a godsend. Which is why, for example, Wal-Mart stores often receive thousands of job applications for even a handful of job openings. And why their base, both in customers and workers, is overwhelmingly brown and poor.

Me personally, I’m sticking with the brown and poor and supporting Wal-Mart, a company that has benefited the poor and minority in the two areas they need it the most – with jobs and cheaper products.

The Politics Of Unions

Gary Becker, Nobel Laureate in economics, writes:

Unions always favor increases in minimum wages, even when as in this case the minimum only apply to some employers. Any increase in the minimum wage would raise the demand for unionized skilled workers who would substitute for the less skilled employees displaced by the minimum. Unions have an additional reason to try to raise the costs of big box companies like Wal-Mart’s since these companies do not have unions, and aggressively oppose them. Higher costs forced on non-union companies reduce the competition they offer to unionized companies.

The full post can be found here.

One Of The Many Reasons Why I Like Wal-Mart

Wal-Mart is doing what it does best – bringing employment to areas that are in desperate need of it:

Bringing Wal-Mart to Chicago was a four-year journey that pitted unions and small business owners against politicians and activists eager to bring jobs to the city’s economically depressed West Side.

More than 15,000 people applied for the 400 jobs at the new store, where an estimated 98 percent of workers live in the neighborhood, said store manager Ed Smith.

The store’s opening comes two weeks to the day after aldermen failed to override Chicago Mayor Richard Daley’s veto of the city’s so-called “big-box ordinance.”

The measure would have required large stores like Wal-Mart to pay workers at least $10 an hour — plus $3 in fringe benefits — by mid-2010. The rules would have applied only to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet.

At the time, Wal-Mart officials cheered the measure’s defeat, saying the aldermen who voted against it were supporting “valuable job opportunities and increased savings for the working families of Chicago.”

On Wednesday, Smith said the lowest paid person at the store makes $7.25 an hour, and only two workers make that.

Daley and other opponents of the ordinance said it would have jeopardized the city’s ability to draw and keep large retailers.

Residents like Edwards echoed the sentiments of many Wal-Mart supporters who said a job that pays minimum wage is better than no job at all.

“I want to see them make $10 an hour, but if they can’t, at least they can make something,” Edwards said. “They’re creating jobs for our community.”

Yes people, you read that right, 15,000 people applied for 400 jobs. What Chicago needs is alot more Wal-Marts and alot less politicians that claim to ‘care’ for you.

Quote Of The Day

“The nonsense we hear from liberals about “living wages” at Walmart is just another example of liberals trying to babysit everybody with their dumb economic ideas. Ideas which can be tested very easily, by the way. If Walmart isn’t paying enough, they should have a hard time filling openings, but if people are willing to work at the wage Walmart offers, then Walmart is paying a fair wage, and that’s all there is to it”. –Greg Krehbiel

Quote Of The Day

“Liberals think their campaign against Wal-Mart is a way of introducing the subject of class into America’s political argument, and they are more correct than they understand. Their campaign is liberalism as condescension. It is a philosophic repugnance toward markets, because consumer sovereignty results in the masses making messes. Liberals, aghast, see the choices Americans make with their dollars and their ballots and announce — yes, announce — that Americans are sorely in need of more supervision by . . . liberals. Before they went on their bender of indignation about Wal-Mart (customers per week: 127 million), liberals had drummed McDonald’s (customers per week: 175 million) out of civilized society because it is making us fat, or something. So, what next? Which preferences of ordinary Americans will liberals, in their role as national scolds, next disapprove?…When liberals’ presidential nominees consistently fail to carry Kansas, liberals do not rush to read a book titled “What’s the Matter With Liberals’ Nominees?” No, the book they turned into a bestseller is titled “What’s the Matter With Kansas?” Notice a pattern here?” –George F. Will, writing in the Washington Post