Politics & Policy

Panic in a Small Town

A new documentary stokes a pathological fear of . . . Wal-Mart.

EDITOR’S NOTE: This piece appears in the December 5, 2005, issue of National Review.

The new movie WAL-MART: The High Cost of Low Price, directed by the Hollywood liberal activist Robert Greenwald, begins with the story of H&H Hardware, a small, family-owned business in Middlefield, Ohio. A man named Don Hunter describes how he founded H&H in 1962 and how it grew until one day it filled an entire building. As sensitive, slightly elegiac guitar music plays in the background, Don Hunter introduces viewers to his son Jon, to whom he turned over the business in 1996. Jon runs a good store; the employees really know the hardware business, and they work hard to help customers find what they need. And make things comfortable, too–an employee sets up benches outside the store each morning, right after he proudly raises the American flag.

At that point, the movie abruptly cuts to a black screen. The guitar is replaced by an ominous synthesizer. Shots of giant earthmovers appear, with the full-screen declaration: “WAL-MART DESCENDS ON MIDDLEFIELD!” Just in case the viewer might have missed the change in mood, a bulldozer dumps a load of dirt right onto the camera lens, and the screen goes black again.

A new Wal-Mart store is being built nearby, and the Hunters are not happy. “I’ve seen a lot of small communities crucified and forced out,” says Don Hunter. “There will be a dramatic change of some type.” And indeed there is; a few seconds later, the movie cuts to a shot of a sign announcing a liquidation sale at H&H. After 43 years the store is facing unbeatable competition and going out of business.

Wal-Mart has claimed another victim, leaving H&H’s frustrated, angry employees looking for ways to rein in the company’s power in the retail market. “I think the government should have more control,” says one worker. “You talk about monopolies–if Wal-Mart’s not a monopoly, I don’t know what is.” “They busted up Standard Oil and they busted up Ma Bell,” says another employee. “But Wal-Mart seems to be going on a rampage through the American economy and nobody’s even paying attention.” Shortly thereafter, the movie cuts to a shot of the H&H Hardware building at night, and the store’s lights go out one last time.

It’s an affecting scene, and the end of a powerful segment, but, as it turns out, it didn’t happen that way.

In fact, H&H closed before Wal-Mart even opened–three months before. The hardware store had suffered from Ohio’s recent economic slowdown, and additionally, according to some in Middlefield, H&H had been a troubled enterprise for quite some time, hampered by poor business and management decisions. Whatever the cause of H&H’s failure, it wasn’t the arrival of Wal-Mart in Middlefield. “Really, there was no connection,” Don Hunter recently told National Review. “I’ve seen a lot of small local entities wiped out because of Wal-Mart. It happens all over, but that was not the case here.” In fact, Hunter said, the business was sold to a new owner who has reopened it . . . as a hardware store.

The High Cost of Low Price also features a man named John Bruening, the owner of an optical shop not far from H&H Hardware. A self-described conservative Republican who questions some of Wal-Mart’s business practices, Bruening told National Review that he believes the moviemakers had a storyline in mind from the very beginning–big bad Wal-Mart–and were determined to present it no matter what the actual situation in Middlefield was. “I told them, ‘You’re probably hoping that you can get a shot of all these people in [my] store and then come back eight months later and we’re out of business,’” he said.

But that’s not how things turned out. “The Wal-Mart came May 18, and I sat back and waited for our business to go down the tubes,” Bruening said. “But it shot up, which the movie people didn’t want to hear about. We’re up about 38 percent right now. It has been so anti-climactic.”

THE WAGES OF WAL-MART

The High Cost of Low Price is the leading edge of a new wave of activism against the nation’s–and the world’s–largest retailer. Promoted heavily by several unions, particularly the United Food and Commercial Workers, which has been locked in combat with the company for years, the movie is a one-stop, 97-minute compendium of every charge, valid or invalid, that has ever been leveled against Wal-Mart. Some of those accusations are dead wrong, like the depiction of Middlefield. Others are questionable. And still others are valid: Wal-Mart does, after all, have some problems. But taken in its entirety, The High Cost of Low Price, and the anti-Wal-Mart activism it represents, is so one-sided and so unfair that it is unlikely to sway anyone beyond the self-styled progressive activists who already hate the company.

Leaving Middlefield, Greenwald’s film crew goes to Texas, to show viewers how a Wal-Mart (which closed in 1990) destroyed the quality of life in the small town of Hearne. As the soundtrack plays Bruce Springsteen’s plaintive version of “This Land Is Your Land,” a Massachusetts-based liberal activist named Al Norman, founder of the group Sprawl-Busters, says of Wal-Mart’s management, “They don’t get it. When we start talking about quality of life, they start talking about cheap underwear. I keep saying you can’t buy small-town quality-of-life in a Wal-Mart. They don’t sell it. But once they steal it from you, you can’t get it back at any price.”

It’s certainly true that some aspects of small-town life in the United States have changed dramatically in the last few decades. There are hundreds of places across the country where one can drive through a mostly empty main street to a strip outside town lined with big-box stores and fast-food joints. But did Wal-Mart do that? All by itself? Even Al Norman wouldn’t make that argument; Sprawl Busters advertises its successes in fighting not only Wal-Mart but Home Depot, Target, Lowe’s, Kohl’s, and CVS stores–”If it’s unwanted development, Sprawl-Busters can help you stop it.” The changes in small-town America are the result of a long list of factors, with Wal-Mart playing only one part, but The High Cost of Low Price would have the audience believe otherwise.

Moving on, the picture cuts to another full-screen banner: “Wal-Mart Drives Down Retail Wages $3 Billion Every Year.” A look at the supporting material Greenwald compiled for the film shows that the figure comes from a new study by the University of California Berkeley Labor Center, a think tank funded in part by union money and staffed by pro-union professors and researchers. (The Center’s advisory board is made up of representatives of the Service Employees International Union, the American Federation of State, County, and Municipal Employees, and the Teamsters, among other labor organizations). Using what they call a “novel” methodology, the Center’s scholars argue that wages go up a bit in rural areas when a Wal-Mart arrives, but go down significantly in urbanized areas when a new store opens its doors.

Although The High Cost of Low Price presents this argument as unquestioned truth, there is, in fact, serious disagreement among economists about Wal-Mart’s effect on wages. In early November, the company assembled a conference in Washington to address the issue, as well as the larger question of Wal-Mart’s role in the U.S. economy. In what might be called an act of extraordinary open-mindedness, Wal-Mart made sure that anti-Wal-Mart experts were allowed to present their research. And indeed, the conference featured reports which argued that the presence of a Wal-Mart store tended to lower the wages in a given community. But the conference also included a study by Global Insight, the economic firm hired by Wal-Mart to run the conference, that argued that Wal-Mart’s low prices have meant a net increase in spending power for workers, in spite of a decline in wages. In fact, the study said, Wal-Mart is so big that between 1985 and 2004, it single-handedly kept the national Consumer Price Index 3.1 percent lower than it would otherwise have been:

The expansion of Wal-Mart over the 1985 to 2004 period can be associated with a cumulative decline of 9.1% in food-at-home prices, a 4.2% decline in commodities (goods) prices, and a 3.1% decline in overall consumer prices as measured by th

e

Consumer Price Index. . . . The 3.1% decline in the price level was partially offset by a 2.2% decline in nominal wages, so that the net effect was to increase real disposable income by 0.9% by 2004.

Taken together, the studies suggested that the issue of Wal-Mart’s impact on the American economy is a complicated one, with costs and benefits. None of that complexity, however, made it into The High Cost of Low Price.

It is true that a lot of Wal-Mart workers earn relatively low wages. According to company spokeswoman Mona Williams, Wal-Mart’s average wage in the United States is $9.67 per hour. Roughly three-quarters of Wal-Mart’s 1.3 million American employees are full-time, Williams says, meaning they work at least 34 hours per week. Of those, most work about 2,000 hours a year, for an annual income of $19,340. The national poverty level, as set by the Department of Health and Human Services, is $19,350 for a family of four. Even though that sum has significantly different buying power in different parts of the country, and even though not all Wal-Mart workers are the sole supporters of families of four, it’s still a pretty low figure.

Relying on the work of a pro-union organization called Good Jobs First–which receives a substantial amount of its funding from the United Food and Commercial Workers–The High Cost of Low Price says that Wal-Mart’s wages are so low that they have forced some employees to rely on state and federal poverty programs, especially for medical care. That, too, is true. But even a cursory examination reveals that Wal-Mart is not alone in that situation, and that workers from other companies also rely on poverty programs. For example, in March the Arkansas Democrat-Gazette, based in Wal-Mart’s home state, reported that

8

.8 percent of company employees in the state receive public assistance, a number “similar to other large retailers.” For comparison, the paper noted that 8.6 percent of Target’s Arkansas employees are on public assistance.

The percentage of Wal-Mart employees on public aid is higher in some other states. (That is because Wal-Mart’s Arkansas workforce includes higher-paid corporate workers at company headquarters.) But in any event, concentrating on Wal-Mart, as is done in The High Cost of Low Price, does nothing to address the problem of working families on public aid, whether they are employed by Wal-Mart, Target, McDonald’s, or any other company.

And it’s not just private businesses either. For the state of Texas, the movie points to a study promoted by Good Jobs First showing that a high number of Wal-Mart’s employees (or their dependents) receive help from the state-run Children’s Health Insurance Program. Wal-Mart does indeed top the list. But The High Cost of Low Price leaves out the rest of the story. The majority of listed employers are not voracious corporations. They are public schools: The school districts of Houston, Dallas, El Paso, Austin, Brownsville, and others, including the University of Texas system, all have significant numbers of workers who rely on assistance programs. All those systems are ranked separately; if public education were considered one entity, it would far outrank Wal-Mart in the number of employees receiving public aid.

What all that suggests is the rather obvious point that low-wage workers, wherever they work, have a problem securing health insurance. That is a serious issue, but it is by no means a problem caused by or confined to Wal-Mart. The High Cost of Low Price also leaves out the overwhelming majority of Wal-Mart employees whom the company insures, many for the first time. “More than 160,000 people covered by our health-care plan had no coverage at all when they came to Wal-Mart,” says Mona Williams. “That’s 160,000 people who are off the list of America’s uninsured because they work for Wal-Mart.”

KILLER PARKING LOTS

The High Cost of Low Price goes on to attack Wal-Mart for its environmental policies, its relations with other countries, its founding family’s wealth, and its ownership of corporate airplanes. It even attacks the company for what Greenwald believes is an inordinately high crime rate in Wal-Mart parking lots. The movie includes the story of Laura Tanaka, a woman who was abducted and robbed in a parking lot in California (she was later released unhurt). Tanaka sued the Wal-Mart, alleging that the company did not do enough to protect her–and she won more than $500,000, which was reduced to a little less than $145,000 on appeal. The High Cost of Low Price suggests that her experience is common at Wal-Mart; it features a montage of TV clips from news stories about crimes in store parking lots.

Greenwald cites searches of the online Google and Lexis-Nexis databases to support his point. But there’s nothing systematic about his method, and the listing of dozens of crimes (several of them purse-snatchings) appears more damning than the reality. Yes, there are crimes in Wal-Mart parking lots, just as there are crimes in Target parking lots and Home Depot parking lots (Lexis-Nexis searches for crimes in other retailers’ parking lots turn up dozens of examples). But it seems likely that there are more crimes in Wal-Mart parking lots for a simple reason: Wal-Mart has more customers–many more customers–than any other store. “We have more than 100 million visits to our stores every week,” says Mona Williams. That is roughly equal to one-third of the population of the United States (although the total includes people who go to the store several times in any given week). “To highlight some incidences of crime–well, the percentage is very low.”

In the end, many of the arguments against Wal-Mart presented in The High Cost of Low Price fail for one unavoidable reason: Wal-Mart appears at or near the top of nearly every index of corporate activity in the United States, including the bad ones, not because it is a particularly evil corporation, as Greenwald would have viewers believe, but because it is ranked near the top of everything. A lot of low-income workers? Yes–out of a workforce of 1.3 million. A big effect on local economies? Yes–just like when any other $285 billion company comes to town. A lot of crime in parking lots? Yes–out of 100 million customer visits per week. Wal-Mart’s problems are not unlike those of other big-box retailers; they’re just bigger.

The High Cost of Low Price concludes on what is, for Greenwald, a hopeful note. After more than an hour of sad stories and downbeat music, a bouncy, upbeat song plays in the background and a we-can-fight-back mood fills the screen as activists describe their successful drive to prevent Wal-Mart from building in Inglewood, Calif. “The future of this community depends on our ability to stop the monster in its tracks,” says Democratic Rep. Maxine Waters, who represents the area. The monster is Wal-Mart.

No doubt Greenwald and his colleagues sincerely believe that. But will they convince those people who visit Wal-Mart stores 100 million times each week? Not likely.

Byron York, NR’s White House correspondent, is the author of the new book The Vast Left Wing Conspiracy: The Untold Story of How Democratic Operatives, Eccentric Billionaires, Liberal Activists, and Assorted Celebrities Tried to Bring Down a President–and Why They’ll Try Even Harder Next Time.

Byron York is a former White House correspondent for National Review.

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