Wal-Mart once again. This match pits Wal-Mart supporter Jason Furman against former Wal-Mart employee and detractor, Barbara Ehrenreich:
Is Wal-Mart Good for the American Working Class? I wish it was better, by Barbara Ehrenreich and Jason Furman:
From: Jason Furman
To: Barbara Ehrenreich
Subject: The Low Prices Are Good News
Posted Monday, June 26, 2006, at 3:18 PM ET
...I myself have never worked at Wal-Mart, and I can only remember shopping there once. In fact, I instinctively recoil at the big-box shopping centers spreading their uniformity across the American landscape. But I try hard not to let my personal and somewhat elitist shopping inclinations get in the way of an appraisal of Wal-Mart's positive role in America's economy and society. (For my full appraisal, see this paper ...)
Are you as surprised as I am by how quickly Wal-Mart's critics move past the issue of low prices? You will hear comments like, "Yes, Wal-Mart may have somewhat low prices, but let's talk about its impact on workers, the environment, trade with China, etc." But given just how important these low prices are to the hundreds of millions of Americans that shop there, I hope I can beg your indulgence to linger on them for a few moments.
A range of studies has found that Wal-Mart's prices are 8 percent to 39 percent below the prices of its competitors. The single most careful economic study, co-authored by ... MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn't mean much for those of us in the top fifth of the income distribution.... But that's a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food. In fact, it is equivalent to a 6.5 percent boost in household income...
OK, enough indulging. Maybe you're ready to grant my point that Wal-Mart's low prices are great for the 298 million Americans who don't work there. But what about the 1.3 million Americans who do work for Wal-Mart? Here the evidence is murkier, in part because Wal-Mart refuses to release the data on its wages and benefits... What we do know is that its wages and benefits are about average for the retail sector—which is to say, not so great. It is harder to quantify other aspects of the job...
Studies have reached conflicting conclusions about the impact of Wal-Mart on local labor markets, with some finding that it creates more jobs than it displaces and others finding that it reduces jobs and nominal wages. ...
But I understand why progressives are so upset about low wages and inadequate benefits. I am also upset by the rise of inequality and the relatively slow economic progress that the bottom 80 percent of Americans have made over the last several decades. I just think Wal-Mart is the wrong place to put the blame or to expect the solution. But I'll postpone that discussion for another day.
From: Barbara Ehrenreich
To: Jason Furman
Subject: I Wish It Were Better
Posted Monday, June 26, 2006, at 6:35 PM ET
...With your '05 article, "Wal-Mart: a Progressive Success Story," you've created a situation that has a certain Seussian appeal, and, if I had the talent, I'd write this in rhyme. Here was the Grinch, holed up in Bentonville, gnawed on by unions, churches, academics and grass-roots community groups. Then along comes a Democrat, a professor at an elite university, possibly a liberal—at least you use "progressive" as a praise word—to tell us we should love the Grinch after all... It's as if Cindy Sheehan, wandering around Iraq, had stumbled on Saddam's WMDs and announced her support for the war....
[L]et me start by reporting from my corner of the ring that, yes, indeed, Wal-Mart critics do talk about Wal-Mart's low prices. ... And it is because we appreciate the low prices that we are not yelling: Stamp out the Beast! ...
We are saying, pretty calmly for the most part: Why can't it be better? Why can't it offer decent-paying jobs as well as low prices, especially if it's such a genius, as you say, at increasing productivity?
If you're right that Wal-Mart's low wages are redeemed by its low prices so that Wal-Mart offers a net boon to the working class, then I'll fold up my placards and go away. But your argument has been challenged, for example, by Jared Bernstein and L. Josh Bivens, who say that the numbers you base much of your case on—from the consulting firm Global Insight—are statistically dodgy. Then there's Barry C. Lynn in this month's Harper's, who confronts you with, among other things, Wal-Mart's wage-depressing effects on its many suppliers. He accuses Wal-Mart and other "dominant firms" of "dictat[ing] downward the wages and profits of the millions of people and smaller firms who make and grow what they [Wal-Mart et al.] sell."
The problem isn't Wal-Mart, we critics like to say, it's the Wal-Martization of the entire economy, which involves not only low wages at Wal-Mart itself but depressed wages throughout the company's whole supply chain as well as at competing companies (e.g., supermarkets).
I have my own, somewhat less technical, problem with some of the data you offer in your "Success Story" article: You expect me to believe Global Insight, which was commissioned by Wal-Mart to study the wage/price trade-off? You expect me to believe it when Wal-Mart says its mean hourly wage is $9.68 an hour?
I'm not being bratty here. Wal-Mart has a record of falsifying data on employee hours to conceal unpaid overtime work, so why should I believe them on anything?
Wal-Mart's reported mean wage of $9.68 seems to me particularly suspect. I was hired in 2000—at store in the suburbs of a major city—at $7.00 an hour. To my knowledge, wages for low-wage retail workers have not increased since then. Presumably my pay would have gone up in time; at least co-workers assured me I could be making $7.50 within a year or two. Now maybe the $9.68 figure reflects a lot of multiyear veterans, except that turnover is extremely high at Wal-Mart. (Jason: Got any numbers on that?) My store was "orienting" about 30 new hires a day, suggesting a sizable and steady leakage. So, I find it hard to believe that half of Wal-Mart's associates earn above $9.68 an hour.
By the way, the 8-hour Wal-Mart orientation included, in addition to much cheerleading from the dead Sam Walton, a 12-minute video on the evils of unions.
This gets me in trouble, and arguments, but I'm sympathetic to the Wal-Mart is not a beast story. That's not to say there is no room for improvement.