Pajiba on Wal-Mart--so close, and yet so far.

A review of the new anti-Wal-Mart flick is over at this (generally quite good) film-review blog. The author gets a lot right about Wal-Mart, and dismisses a lot of the ridiculous anti-WM agitprop, but then falls victim to this:

Unfortunately, Greenwald fails to elucidate the circular damage that low-income shoppers bring upon themselves by taking advantage of those low prices, in the form of higher taxes (for every Wal-Mart store, taxpayers pay an addition $400,000 to cover emergency health care, rent assistance, and educational services the government must pick up to supplement the average full-time Wal-Mart employee’s salary), suppressed wages, and fewer options once the alternatives are run out of town.

What’s also not mentioned is the way a Wal-Mart store has of stripping a community of its identity: In exchange for one-stop shopping and lower prices, a town loses the unique [read: "quaint"] qualities that come in the form of local shops and personal, first-name service (an artifact of previous generations in most communities, by this point).

As I tell my students: "Quaint" is the new word for "poor." So when people say, "Wal-Mart destroyed the quaintness of small town America," now you know what they're really saying.

AND ANOTHER THING! The 1 WM=$400K in government spending line. What can that possibly mean?

Were workers generally earning higher wages in their old jobs, and then did those same people get wage cuts once the Wal-Mart came to town? I don't think so.

No, what's really going on is that WM is hiring the less-skilled. That's why they can pay the low wages. Remember: A business can't just "decide" to cut everyone's pay in half, and just pocket the savings. If a business cuts its wages, that business is going to start fishing in a pond of lower-skilled job applicants.

Why? Because people aren't (usually) the suckers that sociologists make them out to be: If you're a high-skilled worker and you get laid off, you might spend a couple of months wringing your hands and wondering if you can find a good job in your same town, but after a while, you'll pick up and move the family to a place with more opportunity. For the average American, "I'm stuck takin' a job at Wal-Mart" is not the modal response to getting laid off.

One of the amazing things (to me) about WM is how they have found a way to make less-skilled workers pretty darn productive. They use a mixture of optimism, threats, cajoling, and good cheer to turn employees that other companies would take a pass on into some of the most productive retail workers in the country.

How they do that is probably one-part economics to two-parts psychology, and if you could bottle that and sell it, you'd have a great career as a consultant.

[Ed.: So, bottom line on the 1WM=$400K formula? I'm not interested in digging up the number's real source. My best guess: It's made up--in other words, a product of wishful thinking and an afternoon of bad sociology research. ]

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Posted by Garett Jones to Right Economy at 12/02/2005 03:21:00 PM