“Black Friday,” the first day of the holiday shopping season, will soon be upon us. Crazed bargain hunters will line up at 2:00 A.M. for the chance at a $10 DVD player or a free (after rebate) pack of printer paper–anything retailers think will get shoppers through the door. This consumer frenzy will be accompanied by reports of unruly shoppers pushing and shoving each other to grab limited deals, followed by earnest pundits debating whether capitalism has gone too far.
Wal-Mart and its price-cutting smiley face will be at the center of this debate. To the anti-corporate Left, Wal-Mart represents everything wrong with America.
A few years ago, Starbucks was the target of this anti-capitalist ire. Globalphobes protested “corporate coffee,” which they claimed impoverished farmers, drove out local shops, and ruined communities’ aesthetic character. Yet Starbucks was an awkward villain for the Left because mainstream Democrats often are its most reliable customers. Urban liberal yuppies guiltily enjoy Starbucks’s comfy couches, clean restrooms, and eclectic music. Even the occasional sheepish protestor can be seen waiting in line for his morning caffeine.
Wal-Mart is a more comfortable enemy because it’s synonymous with red-state America. It caters to middle- and lower-income families concerned about saving a few dollars. Unlike Starbucks, which was born in the hipster mecca of Seattle, Wal-Mart hails from Bentonville, Arkansas–about as red-state as it gets.
The latest shot across Wal-Mart’s bow is a documentary called Wal-Mart: The High Cost of Low Price. The film makes a familiar case: That the big box retailer ruins communities by driving out mom-and-pop stores and good jobs and replacing them with a heartless corporation that mistreats and underpays its workers.
This plotline may set heads nodding in the East Village, but it’s woefully disconnected from the facts. Global Insights, an economic analysis firm, released a report earlier this month that details Wal-Mart’s impact on local communities and the wider economy. It will be difficult for anti-corporate fanatics to dismiss the report as Wal-Mart propaganda because it was reviewed by an independent panel of economists, including a scholar at the liberal–oh sorry, “centrist”–Brookings Institution.
Global Insights found that Wal-Mart’s expansion between 1985 and 2004 was associated with a 9.1 percent drop in the price of food at home, a 4.2 percent decline in the price of other commodities and goods, and a 3.1 percent decline in consumer prices overall, as measured by the consumer price index. As a result, Wal-Mart saves the average working family about $2,329 per year.
Even families who don’t shop at Wal-Mart benefit from the competition caused by the chain’s low prices. And some may be shocked to find that Wal-Mart was responsible for a net increase of 210,000 jobs in 2004 alone. Global Insights didn’t find evidence that Wal-Mart workers are paid below market wages and concluded that “real wages were 0.9% higher by 2004 than they would have been in an economy without Wal-Mart.”
Wal-Mart is also what the Left might call a good corporate citizen, giving away $170 million to non-profits and charities in 2004. Wal-Mart was a leader in responding to Hurricane Katrina, giving $17 million in cash donations to relief efforts and another $3.5 million in merchandise to shelters and command centers in the affected region.
Private charity and job creation isn’t enough for politicians who see the retail giant as a cash cow ripe for the milking. The Maryland state legislature, for example, has targeted Wal-Mart with legislation that would force the company to spend more on employee healthcare. The legislation applies solely to companies with more than 10,000 workers in the state–and Wal-Mart is the only corporation that meets this criterion.
If this bill becomes law, Wal-Mart likely will comply by shelling out more money for employee healthcare. Yet lawmakers should consider Wal-Mart’s alternative: It could fire employees in Maryland until fewer than 10,000 remain on the payroll–hardly an outcome good for Maryland citizens or their representatives. Although cutting its workforce by some 5,000 people isn’t something the company wants to do, it would help cure imperious politicians of seeing Wal-Mart as a state welfare agency and force kooky anti-Wal-Mart types to remember that employees need employers.
Ultimately, the extreme anti-Wal-Mart campaign will fail because millions of people still will choose to shop there. The real danger is that damage to the company’s image will leave it vulnerable to the kind of legislative theft now being practiced in Maryland. The eventual result will be higher prices, tighter family budgets, and fewer jobs. The cultural elitists might feel satisfaction, but America will be the poorer.
–Carrie Lukas is the director of policy at the Independent Women’s Forum.