Maybe WalMart Should Destroy More Jobs


This article is interesting. If the stats below are true, I wonder how the Wal-Mart haters will respond.

Most of the value created by the company is actually pocketed by its customers in the form of lower prices. There is general agreement that Wal-Mart prices are significantly lower than its competitors. Assuming that the company's prices are 8 percent lower-at the low end of the estimates from various studies summarized in a recent report by Global Insight-and applying that to Wal-Mart's domestic sales volume, U.S. consumers save on the order of $18 billion per year. And because Wal-Mart forces its competitors to charge lower prices as well, this figure is a fraction of the company's real impact.

These kinds of savings to customers far exceed the costs that Wal-Mart allegedly imposes on society by securing subsidies, driving employees toward public welfare systems, creating urban sprawl, and destroying jobs in competing operations. Thus, juxtaposing these customer savings against the estimate cited by Fishman and others that Wal-Mart destroyed 2,500 jobs (on a net basis) in 2005 yields customer savings of more than $7 million per year for each job lost. (Fishman actually works with higher numbers for customer savings, so if he had done this calculation, he would have come out in the $12-$60 million range.)

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  • We’ve discussed this on our message board for parents. I asked members how much they saved at WMT vs other stores. Answers came back in the 30% to 50% range on everything from yorgut (38%) to diapers. Serious shoppers save big at the WMT, and that helps consumers so they can buy more stuff elsewhere, creating millions of jobs in the U.S. and around the world.

    The more countries that depend on the U.S. as a major market, the less likely they’ll think of us as an enemy that should be attacked. If only the Arabs had anything to sell besides oil.

  • One does not need be a WelMart hater to see several other sides to WalMarteconomics. Not all Americans are motivated soley by personal savings when choosing where to shop. Additionally, those savings will be relatively small for any one WalMart consumer or small family over a year. I think many of us see poor wages as a major source of negative consumerism, meaning those people purchase less from all businesses. And, of course, the unemployed add very little to our economy. One can also see WalMart downsides that hurt our economy in other ways, but I think I’ll leave those for others to share. Is their a place for WalMart? Sure! Does WalMart create a net gain or net loss for the U.S. economy? Smart and fair people can argue effectively from either side.

  • Consumers are just like investors, speculators, workers, politicians and nonprofits—they follow the money and go for the deals.

    And when it comes to saving at the supermarket, there is a reason the papers are full of coupons every Sunday. Consumers go where the deals are, and these days they’re at Wal-Mart more often than not.

    So to say consumers worry about how much retailiers pay their workers is wishful thinking. If that were the case, there would be no retailers, restaurants or hotels, and we wouldn’t eat.

    I have no investments in nor connections to Wal-Mart, but I’m a customer, and I’m becoming a better customer daily as I find more and more savings compared with what I find at the unionized Kroger (King Soopers) stores in my market.

    Just yesterday I discovered that King Soopers raised prices 10% my favorite protein smoothies to $3.29 a bottle from $3. Went to Wal-Mart and found a comparable product for $2.46, or 74.8% of the price KS was charging.

  • So “consumers are just like investors, speculators, workers, politicians and nonprofits—they follow the money and go for the deals” huh?

    So what about Starbucks and Ipods and microbrews and Toyotas and thousands of other examples?

    I know this is off topic but readers should know that research doesn’t support this simplistic “most people are price shoppers” nonsense. Even Wal-Mart knows it takes a lot more than a low price to keep and grow customers. Yes there are people who will drive across town and switch from a trusted brand to save 80 cents but not enough.

  • The majority of Wal-mart haters have no concept of overall economics and the things that are affected by seemingly “right” choices.

    When you think of the wage aspect of it, and the connection to prices, there is really nobody that will be hurt more by price increases than people that depend upon lower prices to live.

  • Gary, bold statement and that is not a bad thing. As a business consultant, I would find your research data backing up your statement useful and encourage you to share it. I look forward to learning something everyday. Thank you!

  • Lewis, you write, “Does WalMart create a net gain or net loss for the U.S. economy?” It’s a good question but I have another.
    “Does government meddling in the choices made by business create a net gain or a net loss for the US consumer?” One bit of research showed that monopolies (usually bad) were the the result of legislative meddling.

    Even if there are net losses from Wal-Mart practices (and I don’t know that there are any) the alternative may be worse. Again as you wrote, it’s only “smart and fair” to consider the whole question.

  • Laurence,

    I am a Libertarian, so there is no doubt where I stand. But just in case there are some who don’t know why folks become Libertarian, here is our basic belief: Any government involvement in our lives usually create more problems than they solve. And Just to make clear my postings: My comments are about economics, not politics.

  • Thanks that’s very clear. Some who argue against Wal-Mart’s practices want political intervention. You don’t. I think that’s for hte best.

    I, BTW, like the IKEA model over the Wal-Mart one. But IKEA is privately owned. It can ignore the advice of the cynics from Wall Street.

  • The true story is available on amazon and other retailers.
    The Walmart Way Not Sam’s Way.
    A view from inside the stores.