Does Walmart contribute to poverty?

-A A +A
By The Staff

By Hannah Hayes

There was a time when you could market a product based on its inherent value. Lately, low price has become the predominant criteria in the marketplace. The world’s largest corporation, Walmart, shares mightily in the creation of that business ethic. The company is even benefiting during these tough economic times as it draws people in with low prices, while many say it’s Walmart that created the difficulties in the first place.

But wait — isn’t low price everything? Certainly not to the dwindling population of small-business owners, underpaid and unprotected workers, and those who don’t want to live in an environment filled with cheap plastic crap.

If you believe that Walmart is providing a good shopping alternative, have you taken a hard look at what’s behind the low prices? Shopping there is the kind of shortsighted action that has gotten our country into this spectacular economic crash, which was fueled largely by outsourcing America. Walmart began with the slogan “We Buy American,” but that sham was quickly dispelled as it became the surprising force behind the Chinese economic boom, thereby compelling U.S. manufacturers to set up shop in Asia.

When the free-market system is driven by a 7,870-store chain raking in more than $404 billion in yearly revenue, the negative fallout from this greedy giant becomes global. It has used its heft to squash local businesses, muscle manufacturers to create bargain goods, and spawned a national 2.1 million-person labor force working under difficult conditions.

Germany was able to oust Walmart by keeping cultural values intact and rejecting foreign U.S. customs, like smiles from strangers (simply not done there), union busting, husbands and wives being unable to work side by side, and those disgusting plastic shopping bags. Germany’s overriding strong preference for buying local is what ultimately forced Walmart out.

Shopping choices are a powerful tool for change. How do you reconcile the richest family in the world launching green initiatives while building a Supercenter at the base of Machu Picchu, the ancient Inca city in Peru? Check out the Walton wealth on Forbes’ top billionaire list, keeping in mind that they pay Chinese workers 50 cents an hour. All those manufacturing jobs that left the U.S. to help achieve the almighty everyday low prices did require a minimum wage. Never mind — those workers can collect unemployment instead of a paycheck, at least for a while.

You won’t see me shopping in Walmart or camping on one of their asphalt parking lots. I’m trying to figure out how to keep my business afloat and my workers employed. Small-business owners are told we’re the backbone of economic recovery and American ingenuity. Small companies with fewer than 500 employees are 99.9 percent of the 24.7 million businesses in the U.S. We have a lot riding on where you spend your money.

Why Walmart has become the preferred demon of the liberal establishment, the Death Star to Dick Cheney’s Darth Vader, I’ll never understand. Purely and simply, it’s a business that survives on price alone. Low prices are a boon to everyone, allowing many people to have a lifestyle that wasn’t possible before.

I grew up in a small town in the middle of nowhere, and when I was young, we had one small grocery store, a minuscule True Value hardware store and a five-and-dime store. That was pretty much it. We ordered things from the Sears catalog if we needed something that wasn’t in one of those stores. The local stores carried more dust than merchandise, and had higher prices. They didn’t employ anyone, and certainly didn’t pay anything a liberal would call a “living wage.” When a Walmart finally came to our town after I had left for college, it provided decent merchandise at low prices and a raft of jobs that our area had not seen in a very long time. That didn’t stop anybody from complaining that it had run the five-and-dime out of town.

Price, whether of goods or labor, cannot be dictated by arbitrary forces, or it causes major disruption. The price of labor is determined by what that labor produces, not what some elitist thinks it should be. If an employer’s labor costs exceed the price he can get for the good or service produced for that labor, he goes out of business, and then there are no jobs there anymore at any price. When liberals rail about a “living wage,” what they don’t tell you is that setting an arbitrary price for labor eliminates jobs. It’s quite clear from the economic evidence. Higher minimum wages, or higher union contract wages, or higher employment regulations, mean less jobs throughout the economy.

Labor cost includes anything that an employer has to put out in order to hire an employee, like health insurance, workers compensation insurance, OSHA regulations, etc. Higher health insurance coverage mandates mean that the employer has higher marginal labor costs. That means fewer jobs and, ultimately, less choice for consumers when businesses fail.

Some people don’t have the skills or the personal wherewithal to work at highly skilled jobs. Entry-level positions for young people, especially those who can’t go to college, don’t pay a lot. But employers like McDonald’s and Walmart offer a path to learning skills that will give people an opportunity to lift themselves up. These folks will be on government handouts without Walmart, and perhaps that is what the liberals desire. Personally, having been poor, I prefer work with dignity, even if it doesn’t meet the liberals’ definition of “worthy.” The evidence shows that Walmart, and employers like it, have alleviated more poverty than any liberal’s government program.

Hayes Rebuttal

There you go again, Kelly, mentioning evidence. That is very different from providing evidence.

Here’s a small drop of the evidence that Walmart contributes to poverty: A study by Stephan Geotz in the Social Science Quarterly finds an increase in dependence on foods stamps nationwide of 8 percent over the last decade, but in counties with Walmart stores, the increase was 15 percent. The hours and wages for employees “do not help these families transition out of poverty.” Walmart’s low wages come without any other job choices, and closing mom-and-pop businesses “destroys local leadership.”

Furthermore, “The Hidden Price We All Pay for Walmart” details a per-store cost to taxpayers of $420,750 per year to cover free and reduced-cost lunches, housing assistance, children’s health services, low-income energy assistance, etc., for Walmart families.

Other studies show how Walmart uses taxpayer money to finance its never-ending growth, how big-box grocers and their decreased wages cause a loss in spending, and how a family can’t get its basic needs met on Walmart wages.

McDonald’s? I’m not lovin’ that, either.

Weist Rebuttal

Products have never been sold based on their “inherent value.” Value is determined by what someone will pay for it. If you don’t value plastic crap, then you won’t buy it at any price. However, if the value placed on something by most consumers is less than the cost to manufacture it (including the price of labor), then it won’t be produced. Hannah’s use of the term “inherent value” means what she and the rest of the elitist left think it’s worth. Here’s a hint: They don’t value the same things you do.

Regardless of how they act, liberals understand the basics of price. That’s why they try to make everything so much more expensive to produce. Adding to the cost of things by forcing arbitrary wage rates, regulations and taxes on stores like Walmart means that they can put people they dislike out of business. Walmart and the Walton family have committed the cardinal sin of not kowtowing to the elitist left, so they must be eliminated. The people who work and shop at Walmart are not the kind of people elitists want anything to do with.

Hannah B. Hayes is a small-business owner and activist with Evergreen Peace. A recent graduate of Leadership Evergreen with a master’s degree in education, Hayes has remained active in this community through her writing and organizing for 35 years.

Attorney and political activist Kelly Weist has served on the board of directors of the Colorado Federation of Republican Women and is the co-founder of Mountain Republican Women. She is an adjunct professor of political science at Metropolitan State College of Denver.