fear_this

fear_this, originally uploaded by grynstar.

This isn't apocalyptic or anything.

Disliking WalMart

Disliking WalMart (WM) is a tough gig. It's convenient, fully stocked, and equipped with nearby parking in spacious well-lit lots. The stores are clean, well-organized, and family friendly. Most importantly to its customers - it is dirt cheap. According to WM spokesperson Jay Allen, "We are easily the first retailer you think of with low prices. Even people who don't like us or respect us would not argue we have the lowest prices."

So what is to dislike about a store that is widely considered to be the golden standard for business management? WM sings a sweet song that leads 1.4 million Americans into the status of the employed. Its low-price melody has made it the largest retailer in the US, with a 19% share of the national retail market. Like a pied piper, it has attracted all 50 states to join in its profitable prance with the undeniable promise of jobs and convenience.

But I hate the store. I don't want my shopping experience to be homogenized. I dislike large monstrous merchants that build giant stores with titanic parking lots (mainly because I can never find my car). Primarily, however, I hate WM because it is just so big, all-powerful, and un-avoidable.

Yet despite all of this WM-bashing rhetoric, I shop there anyway. But what I have found is that as with any business, you get what you pay for. It’s the karma of economics that no money making enterprise can avoid. This paper is about the karma of WM.

WM's profit plan is a siren song of low prices and the promise of jobs, which leads to a working poor resulting in substantial hidden public costs. The problem is simply that the retail giant provides such cheap goods by putting the squeeze on its suppliers and employees. This means that wages and benefits for WM employees are often so substandard that they place a significant burden on public assistance programs, such as health care and food stamps paid for by you and me. You see, the karma of WM is our karma too.

Wally World's mantra of convenience and low-prices primarily affects its own employees. Their annual average wage is $18,000 a year, about $1,000 more than the Federal Poverty Level for a family of four. On average, the WM worker earns 31% less than workers in large retailer stores, and is 23% less likely to be covered by employer sponsored health insurance. In summary, it simply blows to work at Wally World.

On the other hand, better to have shitty jobs than no jobs. Also, nobody is being forced to work at any WM stores. There is no denying the work of Adam Smith’s invisible hand, strong businesses equals strong communities. Right? Right. Except WM's business strategy harbors hidden costs that actually harm their own workers, burdens the American taxpayer, and defoliates the local business community. One hidden cost is the drain on taxpayer funds that results from a higher use of public assistance programs. According to WM spokespeople, approximately 90% of WM employees are covered by health insurance. Yet only 48% of the WM workforce is covered by WM health insurance; leaving over 50% to feed off public health care programs. Yet, WM does care about its employees, it actually disperses information about how to apply for and qualify for federal health care. As a result, WM employees have a significantly higher enrollment rate in public health care programs than the general population, thus effectively pushing the cost of providing employee health insurance onto the taxpayer.

And this cost is substantial.

A recent study by the UC Berkeley Labor Center found that WM workers disproportionately rely on public assistance compared to workers in other large retail firms, costing Californians $86 million in medical care, food stamps, subsidized housing, school lunches, etc. This chunk of change results from a 40% higher Wal worker usage in family level Medical and healthy families programs and a 38% greater consumption of non-health related public assistance compared to other retail employees. If taken in a store-by-store basis, a typical 200-employee WM costs federal taxpayers $420,750 a year - about $2,000 per employee! The cherry on top is that these shirked costs don’t count hard-to-measure dollars such as emergency room visits, which make up a significant chunk of health care costs and are most often absorbed by county budgets.

Allright, so WM sucks for employees and for Joe Taxpayer, but what about the communities? Afterall, there are constantly reports peppering the local news sources about a WM clashing with a small community about the opening of a new store. The anti-WM fellas complain about environmental impacts, loss of community character, increased traffic, and loss of locally bred businesses. But these arguments almost always lose out against concerns about jobs and local economics.

Yet new evidence suggests that these pro-WM arguments concerning local economic health are most likely not supported by reality. Studies of the overall impact of WM on employment are inconclusive. Some point to increases in employment, but other localized studies illustrate a net job loss as WM stores replace local retail businesses. In some cases, study results have found that the jobs created by new WM stores often replace better paying jobs as existing retailers are forced to close or scale back. New information like this has led some localities such as the LA City Council to require an economic impact analysis to show the economic benefits of a new development before ‘big box’ stores like WM are approved permits to build.

So, if WM rips-off employees, drains taxpayer funds, and robs communities of better paying jobs, then why do they survive and prosper? The answer lies in WM’s unbeatable convenience and low prices that combine to create a powerful pheromone driving the consumer’s libido to blue light specials and super savers. Back to school sales and cut-rate car tires, however, are not to be scorned but to be taken advantage of. When customers and businesses prosper together and from each other.

But businesses that have hidden and unexpected costs undercut that mutual positive relationship. I think WM is one of those businesses and the only way to prevent this type of market behavior is to build strong communities that foster a more well rounded type of growth.

To prevent businesses with bad and irresponsible practices to grown and reproduce, what we have to do is create environments that will nurture responsible business development. That means building better and smarter communities. Sowing the seeds of opportunity in the form of financial and technical assistance for local entrepreneurs. Watering small businesses by spending money in their stores. Staking the new stalks with community planning to direct growth.

So, as you can clearly see disliking WM is a tough gig all right. Especially when your much better at blue light sales than green thumbs.