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January 25, 2008
Evil Wal-Mart
Russell Roberts
A lot of people think that when Wal-Mart comes to town, wages fall along with the quality of life. Wal-Mart jobs are low-paying which drains money from the community. Wal-Mart jobs don't have enough benefits along with the low wages. Wal-Mart jobs exploit workers because Wal-Mart workers aren't unionized.
Here are 7,500 arguments on the other side.
From the Atlanta Journal Constitution:
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.
Posted by Russell Roberts in Work | Permalink
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Comments
I think you raise and excellent point about the good Wal Mart can do for a local economy. Not to mention prices for many goods should drop in the coming years to give citizens more purchasing power. But to be the devil's advocate what was the labor market in this area like prior to the Wal Mart...I'm guessing pretty soft.
Posted by: Worthless | Jan 25, 2008 12:32:18 PM
Gee I did not realize that the private economy was that poor in Georgia that so many people were looking for work.
Actually, WMT pays competitive wages for the retail industry. But retail wages are among the lowest in the economy.
Posted by: spencer | Jan 25, 2008 12:35:26 PM
Just because there aren't enough good jobs to go around in Dekalb County anymore doesn't mean that people WANT to work at WalMart. That's just ridiculous.
Are these people leaving other full-time jobs to go work there?
Is their choice: a) no job, or b) work at Walmart?
Show me that the positive impact of a new Walmart store going up in a community outweighs the negative impact, and maybe we'll have something to talk about. Otherwise, no. People applying for Walmart jobs doesn't mean that Walmart is a great company to work for.
Next, you'll be telling us that increases in beef consumption in the US are an indication that E-Coli is actually good for you.
Come on.
Posted by: olivier blanchard | Jan 25, 2008 1:28:06 PM
Sorta negates all of the talk of a "Bush boom."
A more interesting development may be that Wal Mart is becoming a de facto bank for low income people who are not welcome at real banks. I may have to start liking Wal Mart a little.
Posted by: save_the_rustbelt | Jan 25, 2008 1:29:45 PM
Olivier, you just made a great point! Let's say their options are as you say: a) no job, or b) work at Walmart.
That's awesome then! Walmart has come in and given jobs to people who would not have had them? Are you suggesting that people instead stay unemployed?
Posted by: Tim | Jan 25, 2008 1:31:16 PM
I shop at Wal-Mart more than any other store. Wal-Mart is fine with me. I love Wal-Mart. I've never demonized Wal-Mart, and I never will.
7500 applicants for 300-400 openings proves that 7500 people in the local market have no better opportunity. Build a Wal-Mart in North Korea, and people might line up for the jobs too. What am I supposed to conclude? Wal-Mart beats the rest of the North Korean economy? O.K. I'll buy that.
What else? Everything's coming up roses for me and for you? I don't see it at all. Maybe for me. Maybe I should just be happy with that and hope for the best. Or maybe the percentile with stagnant income is working its way up to me while the percentile with growing income creeps ever higher. We'd need to acknowledge the reality to consider this possibility.
I just can't call the line at Wal-Mart good news. You're stretching your Pollyanna hat to the ripping point.
Posted by: Martin Brock | Jan 25, 2008 2:17:18 PM
Wow! If all these posts referencing the sad state of the DeKalb County economy are correct, then Wal Mart must be opening the store as an act of charity. How can they possibly make any money operating in such a depressed area?
Posted by: Bruce | Jan 25, 2008 2:39:15 PM
To all who speak ill of Walmart:
How can the introduction into a community of a large retailer which utilizes massive economies of scale to reduce prices on basically all consumer goods possibly be a bad thing for the local economy?
Or more simply, by what logic do you claim that the protection of the retail sector from the entrance of a more efficient competitor will help the consumer?
I'm sorry, but the tangled narrative that Walmart will put other retailers out of business leading to so much unemployment that the community ends up WORSE off economically is just ludicrous. Once you factor in the gains from lower prices to EVERYONE in the community, plus the jobs created by Walmart (so net job loss would probably be small) it would require extreme assumptions to claim that Walmart does net harm to the community.
Otherwise any monopolist could argue that he should be protected from the entrance of competitors because otherwise he would have to cut costs and become more efficient (even cutting pay, benefits, or jobs!) to compete. It doesn't take much to argue to absurdity from the ridiculous assumptions underlying this critique of Walmart.
Posted by: Jon | Jan 25, 2008 2:48:20 PM
Oliver --
You want to show some evidence of the "negative impact" of Wal Mart? It would be great to see some hard numbers on that.
Thanks
Posted by: Eric | Jan 25, 2008 2:51:30 PM
Here's a thought question:
If there are 400 job openings, and 7,500 applicants, how come Walmart does not lower wage offers? Particularly since the prevailing wage is above the mandated minimum.
Must be because they are nice. Or pay close attention to their critics.
Posted by: wintercow20 | Jan 25, 2008 2:55:36 PM
I am not sure what the beef is with Wal-Mart either. According to the AJC, the store was built on what was an unused Mall, so some thousands of jobs were lost at a mall at some point in the past and now there are jobs to replace them.
Yes, apparently the labor market is depressed in the area, but it seems to me that to quibble over the quality of Wal-Mart jobs versus other jobs in a region that simply needs jobs is to look a gift horse in the mouth. Besides, and speaking from experience, Wal-Mart really does treat its employees pretty well, and in my youth I worked a fair amount of retail jobs.
Posted by: Matt Johnston | Jan 25, 2008 2:59:36 PM
Oliver,
Apparently the negative impact that Wal*Mart has on a community is the fact that so many consumers in the locality have their arms twisted to become shoppers there.
So, you make a really good point and you should repeat it every chance you get.
Posted by: lowcountryjoe | Jan 25, 2008 3:09:48 PM
Jon,
"...by what logic do you claim that the protection of the retail sector from the entrance of a more efficient competitor will help the consumer?"
Just occurred to me that the real question is, who is doing the complaining? I grew up in a small town and it was the local retailers who pretty much ran the town. They were the political bosses as well as being generally the most wealthy. So when these folks say that "the community will be ruined", they don't mean the whole community, they just mean themselves, because they think of themselves as the community.
Posted by: Randy | Jan 25, 2008 3:11:17 PM
Martin Brock, Save the Rustbelt and others,
The point of the post is that it's good for the people in DeKalb that Wal-Mart's opening a store there.
It's not a defense of George Bush. It's not a defense of the American economy.
It's an attack on the people and the politicians who would ban Wal-Mart from their city in the name of "protecting" the community. That's all.
Posted by: Russ Roberts | Jan 25, 2008 3:16:12 PM
wintercow20 wrote
Must be because they are nice. Or pay close attention to their critics.
Or becuase they want to be able to select the best 400 out of 7,500 or that they were unfamiliar with the local job market.
Posted by: Floccina | Jan 25, 2008 3:31:46 PM
DeKalb looks fairly prosperous to me, or at least, not like Detroit.
DeKalb County At-A-Glance
Population: 677, 959
Unemployment Rate (Aug. 2006): DeKalb, 5.2 percent; Georgia, 4.6 percent
Median Household Income: $49,117
Higher Education: Agnes Scott College, Columbia Theological Seminary, DeKalb Technical College, Emory University, Georgia Perimeter College, Gupton-Jones College of Funeral Service, Luther Rice University, Oglethorpe University
Top Five Employers: BellSouth Telecommunications, 22,041; Emory University, 21,807; DeKalb County Schools, 6,876; DeKalb County Government, 6,600; Cox Enterprises, 5,322
Sources: U.S. Census Bureau, DeKalb County Chamber of Commerce, Georgia Department of Labor, Emory University
Posted by: The Albatross | Jan 25, 2008 3:33:27 PM
P.S. When I was first learning economics 5.2 percent unemployment made economists break out their Phillips Curves and start worrying about inflation.
Posted by: The Albatross | Jan 25, 2008 3:40:56 PM
wintercow20: "If there are 400 job openings, and 7,500 applicants, how come Walmart does not lower wage offers? "
Do you think that perhaps 7,500 applicants wouldn't have lined up if Walmart were paying $5.85 instead of $10.33 for fulltime workers? As Floccina intelligently observed:
"becuase they want to be able to select the best 400 out of 7,500"
Posted by: John Dewey | Jan 25, 2008 3:45:58 PM
Martin Brock: "I just can't call the line at Wal-Mart good news."
It will result in good news for 400 new Walmart workers. Do you think they'll believe you if you tell them otherwise?
Posted by: John Dewey | Jan 25, 2008 3:49:34 PM
"or that they were unfamiliar with the local job market."
That could be. But that is not the way to bet.
And I am surprised that nobody mention the other Walmart -- since the store here has started offering $4.00 generic drug prescriptions other stores have had to offer *gasp* $4.00 generic drug prescriptions.
Oh, the trauma!
Posted by: Larry Sheldon | Jan 25, 2008 3:50:12 PM
It's an attack on the people and the politicians who would ban Wal-Mart from their city in the name of "protecting" the community. That's all.
O.K. I take back the bit about your Pollyanna hat ... but don't let it cut off the circulation. The podcast is great. I'm a Russ Roberts groupie, really.
Posted by: Martin Brock | Jan 25, 2008 3:56:42 PM
olivier blanchard: "People applying for Walmart jobs doesn't mean that Walmart is a great company to work for."
Right. Walmart gets thousands of job applications every time it opens a store in the U.S. They get those applications regardless of economic conditions, local or national. I guess those millions of workers who continue to apply are just too dumb to realize what a bad deal Walmart is for them.
Posted by: John Dewey | Jan 25, 2008 3:58:20 PM
It will result in good news for 400 new Walmart workers. Do you think they'll believe you if you tell them otherwise?
If confining your attention to the 400 gets you to sleep at night, that's great. If you're interested in the broader reality, you can ask the other 7100.
Blinders mostly blind you.
Posted by: Martin Brock | Jan 25, 2008 4:02:09 PM
Martin,
Have you ever worked at a job where there were no complainers?
Posted by: Randy | Jan 25, 2008 4:07:07 PM
As Floccina intelligently observed:"becuase they want to be able to select the best 400 out of 7,500"
According to the report, Wal-Mart was stunned by the size of the applicant pool. They expected to select from maybe a thousand applicants, and they'll probably fill their vacancies long before they sort through 7500 applications.
Posted by: Martin Brock | Jan 25, 2008 4:08:25 PM
Have you ever worked at a job where there were no complainers?
No. There's usually room for complaint. We can complain about people demonizing Wal-Mart, for example, and I do that myself sometimes.
Posted by: Martin Brock | Jan 25, 2008 4:12:07 PM
Martin Brock,
When you wear a Pollyanna hat, your circulation is always fine, but thanks for the encouragement. Just trying to keep the discussion on point.
Posted by: Russ Roberts | Jan 25, 2008 4:12:11 PM
Playing devil's advocate for a second here: It's not necessarily a vote in favor of Wal-Mart. The applicants might think that Wal-Mart will decimate smaller businesses, and want to cast their lot with the eventual winner.
Posted by: Joe Grossberg | Jan 25, 2008 4:24:54 PM
Russ,
You might check into how Wal-Mart routinely exploits decidedly non-free-market "tax increment financing" (extortion of local governments) to make a good portion of its superstores economically feasible (something like 30% of them I believe).
Also we'll see where their retailing advantage goes when all that cheap Chinese crap starts getting expensive as the Yuan peg fades away.
Of course none of this makes them any more "evil" than any other company that also uses tax increment financing and imports made cheap because of currency manipulation. But it's enough to dissuade me from singing any of their praises.
Posted by: Aaron Krowne | Jan 25, 2008 4:37:23 PM
I'm not knocking WMT. I think it is a great company and years ago I made a lot of money with WMT stock.
WMT is being blamed for the problem in the economy. The biggest problem in the economy is that we are destroying high paying high productivity jobs in other areas and replacing them with low paying jobs in retail and services. That is why real wage growth is so weak -- it is a problem of composition.
look if you want to believe that replacing a $20 / hour job at the local Westinghouse plant in DeKalb county with an $8 an hour job at WMT is a sign of how great the economy is doing, more power to you.
Posted by: spencer | Jan 25, 2008 5:06:38 PM
7,500 people looking for a job at Wal-mart with only 400 positions is a good sign????
Posted by: muirgeo | Jan 25, 2008 5:28:47 PM
spencer:
Do you think those manufacturing jobs should be protected by the US government? That if a paper company is doing poorly, they should be taken over by the government and keep paying $20/hour? Maybe VAST new public works projects like the New Deal is in order? Sorry, but America is not the socialist paradise of the 1930s anymore.
Posted by: FreedomLover | Jan 25, 2008 5:30:06 PM
Spencer,
Did you know that a crane operator at a port facility can make six figures? I saw it on Discovery. I also saw a show about modern distribution facilities and transportation systems. These are the jobs that have replaced the factory jobs - and they pay very well.
Also, I've worked in a factory, and I grew up on a farm. There isn't anything wonderful or magical about either. Factory work is mind numbing and farm work is just plain hard. I've also worked in retail and its just about the least stressful work I've ever done. Pay isn't everything. So, anecdotal as all this may be, speaking as one who's roots are solidly working class, I've got no problem at all with the way things are going.
Posted by: Randy | Jan 25, 2008 5:31:51 PM
muirgeo --
Sure. It's a sign that 400 people will be better off. The 7100 aren't any worse off. Heck, even assuming that all 7100 are out of work, now they have a place where their foodstamps go farther.
In reality, a good portion of those 7100 are probably working, but just at lower-paying jobs. Some of them will get Walmart jobs and others will get jobs that were vacated by those who just got Walmart jobs. And so on.
The end result is that a lot more than just 400 people will be better off.
So, yeah, it's a good thing.
Posted by: Chris | Jan 25, 2008 5:50:20 PM
You free market types got some nerve ignoring those other 7100. They're entitled to a job...somewhere. And at a living wage, too, because if you're currently not making a living wage, just how in the hell is it that you're managing to stay alive?
Posted by: lowcountryjoe | Jan 25, 2008 6:01:24 PM
Thanks Chris, the 7100 "stampers" and I will sleep better now that you've told us the truth.
Posted by: muirgeo | Jan 25, 2008 6:01:53 PM
Aaron Krowne: "Also we'll see where their retailing advantage goes when all that cheap Chinese crap starts getting expensive as the Yuan peg fades away."
The production costs for goods sold at Walmart are a fraction of the selling price. So even if the cost of Chinese goods doubles, the impact on Walmart prices will be small.
The production costs of goods sold at Walmart's competitors will increase just as much. So it is unclear how Walmart will lose any competitive advantage with a change in exchange rates.
Walmart's big advantage for a couple of decades has been logistics and marketing. Their computer systems allow them lower inventory and distribution costs. Those same systems have reduced their stock out levels below competitors. The computer systems also allow them to track real time turnover of individual items and adjust purchases and pricing accordingly.
Posted by: John Dewey | Jan 25, 2008 6:05:09 PM
Thanks Chris, the 7100 "stampers" and I will sleep better now that you've told us the truth.
Posted by: muirgeo | Jan 25, 2008 6:01:53 PM
What should be done to alleviate their plight? Guaranteed high-paying government jobs? Tell us what you want instead of just endlessly bitching and moaning.
Posted by: FreedomLover | Jan 25, 2008 6:13:44 PM
Good point, FreedomLover. If the lefties would just give us a firm statement of what it would take to get them to shutup, we could just tell them no and be done with it.
Posted by: Randy | Jan 25, 2008 6:23:03 PM
spencer,
The Skeptical Optimist disproves this myth on a monthy basis. Here's the summary:
"the private sector nonetheless created 1.5 million new jobs in the last 12 months, which more than offset the half million jobs that went away, for a net increase of one million new jobs. More good news: one million (of the 1.5 million) new jobs pay more than the half million jobs that went away."
Posted by: Jason | Jan 25, 2008 6:23:24 PM
What should be done to alleviate their plight? Guaranteed high-paying government jobs? Tell us what you want instead of just endlessly bitching and moaning.
If they're able to work, yes! And if not, they deserve the wage anyway. You free market extolling trogs act as though incentives matter or something but you're wrong: there is a third way!
Posted by: lowcountryjoe | Jan 25, 2008 6:27:18 PM
If they're able to work, yes! And if not, they deserve the wage anyway. You free market extolling trogs act as though incentives matter or something but you're wrong: there is a third way!
Posted by: lowcountryjoe | Jan 25, 2008 6:27:18 PM
You realize that public works programs do not help the economy unless they are highly targeted at improving infrastructure that helps the private economy. Or just build light-speed rail in Kansas, that will provide LOTS of high paying jobs.
Posted by: FreedomLover | Jan 25, 2008 6:34:14 PM
You realize that public works programs do not help the economy unless they are highly targeted at improving infrastructure that helps the private economy. Or just build light-speed rail in Kansas, that will provide LOTS of high paying jobs.
And why not, the government will pay for it. It's not like the money cannot just be created with a printing press; it's done all the time without consequences.
Posted by: lowcountryjoe | Jan 25, 2008 6:37:14 PM
And why not, the government will pay for it. It's not like the money cannot just be created with a printing press; it's done all the time without consequences.
Posted by: lowcountryjoe | Jan 25, 2008 6:37:14 PM
LOL. Of course the government can print infinite money and no inflation. Besides, silly me, the private economy is just a tool for the wealthy to oppress the proleteriat that wants to rise up and break the capitalist shackles. It's only a matter of time before the American Lenin appears on the scene to stir up the American Bolshevik Revolution!
Posted by: FreedomLover | Jan 25, 2008 6:39:07 PM
YES! Now you're getting it, Komrade
Posted by: lowcountryjoe | Jan 25, 2008 7:00:11 PM
Ok, let’s pretend this is website dedicated to a discussion of economic matters. We have a situation where 7,500 people showed up for 400 jobs in an economy with relatively low unemployment (nearing or at frictional levels) and higher median income than per capita GDP. The article mentions that many of the applicants are elderly, high school students, young moms, and the unemployed. It was easy to make the connection in the Depression where thousands of people might show up for a single vacancy but why here? A logical explanation might be that these are people who normally do not enter the labor force but will do so if the right opportunity arises—like flexible working hours, the need for low-impact work, etc. So let’s look at who showed up, and why Wal-Mart may be a good fit for them.
1. High School Students: The unemployment rate among high schoolers is high. Part of this maybe that they are too busy trying to get into good schools (at least the rich ones). The other might be that since they have no skills, they are priced out of most jobs (see minimum wage), but not so at Wal-Mart, which in whose organizational structure they can create enough value to justify a fairly high wage.
2. Single Mom’s: They might not usually work, but a Wal-Mart job allows them the flexibility they need.
3. Old Farts: Want to work, but when they want to, not too much, and with nap time. Plus, greeter gives them a chance to talk to people and old people love talking to people.
4. The Unemployed: Well supply and demand dictates that they show up anyway, and since they probably already shop exclusively at Wal-Mart, then the employee discount does extra wonders for their standard of living.
5. People who hate their jobs: see unemployed.
Just an idea, but I think again we see Wal-Mart breaking new ground, they might have created jobs for those who would otherwise not work—I smell Smithian gains.
P.S. Freedom Lover: If I remember Krugman’s economics textbook from his class, there was a great article on the benefits of public works in the State of Kansas—something about stimulus.
Posted by: The Albatross | Jan 25, 2008 7:51:54 PM
lowcountryjoe: "And why not, the government will pay for it."
No, you and all of us will pay for it; the government only distributes the money WE give it (or rather, extorts from us).
lowcountryjoe: "It's not like the money cannot just be created with a printing press; it's done all the time without consequences."
Are you having a brain fart? Do you understand the difference between "bills" (those paper things you can print with weird inks) and "money" (the concept those paper things are trying to represent)? Do you know the meaning of "inflation"?
Posted by: Frederick Davies | Jan 25, 2008 8:15:42 PM
No, you and all of us will pay for it; the government only distributes the money WE give it (or rather, extorts from us).
You are having pronoun trouble...I am one of the ones on the dole.
Are you having a brain fart? Do you understand the difference between "bills" (those paper things you can print with weird inks) and "money" (the concept those paper things are trying to represent)?
I only know that I'd prefer what passes for money on the Island of Yap. Because my stones are bigger than all of ya-all's.
Do you know the meaning of "inflation"?
Duh. Everyone knows thats what happens to a tire when air is put into it?
Posted by: lowcountryjoe | Jan 25, 2008 8:28:34 PM
What should be done to alleviate their plight? Guaranteed high-paying government jobs? Tell us what you want instead of just endlessly bitching and moaning.
Posted by: FreedomLover
- how about letting the American worker compete with other workers on a level playing field?
- multinational corporations bypassing environmental, safety and labor laws that our country supports is a hand out to the corporate elitist and a slap in the face to the American worker
- pass the "Employee Free Choice Act"
- seriously if we had a country that was producing really cheap products made by child slave laborers would we still trade with them? Where do you draw the line?
Posted by: muirgeo | Jan 25, 2008 8:52:23 PM
What should be done to alleviate their plight? Guaranteed high-paying government jobs? Tell us what you want instead of just endlessly bitching and moaning.
Posted by: FreedomLover
What you are calling capitalism I'm calling corporate welfare.
How about this. If I was king after 9-11 I'd would have done exactly what we did in Afganastan but then left it at that.
Then with the $500,000,000,000 used for GAURANTEED HIGH PAYING GOVERNMENT JOBS for Exxon, Haliburton, KBR, Raytheon and Blackwater in Iraq I would have spent it for an Apollo project for renewable energy HERE along with a massive public transportation system upgrade HERE, along with massive subsidies for solar, wind and alternative energy sources HERE.
And Then those 7100 people would have good jobs, our economy would be kicking ass over the crap we have now and the President wouldn't have to make trips to dictatorial Saudi Arabia begging for lower gas prices.
But no we've followed the path of the money grubbers that has NOTHING to do with competitive markets and here we are listening to you dopes make excuses for something that has nothing to do with capitalism or democracy.
Posted by: muirgeo | Jan 25, 2008 9:01:21 PM
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