For many morally minded college students, shopping at Wal-Mart is their wallet’s guilty pleasure. Wal-Mart has made life harder for union leaders, community organizers and owners of traditional mom and pop stores. However, the benefits Wal-Mart provides for average Americans overwhelmingly outweigh the pain caused to those influential special-interest groups.Despite the political and social pressure special-interest groups have leveraged against the company, a strong case can be made that Wal-Mart has affected America for the better.Wal-Mart plays a large role in our way of life. The facts speak for themselves. Every week, about 100 million Americans — about one-third of our country’s population — will be greeted as they walk through Wal-Mart’s doors.To handle this demand, the company employs more than 1.3 million Americans, more than any other private company. On average, full time workers are paid $10.11 per hour, according to walmartfacts.com.In most retail stores, full-time employees make up only 20 to 40 percent of the workforce, but at Wal-Mart, more than half of their employees work full-time.And these jobs are in high demand. In early 2006, Wal-Mart opened a new store in the Chicago area. Of the 25,000 applicants, only 325 were accepted. As blogger Matt Johnston pointed out, “Even Mensa requires that you be in the top 2 percent on an intelligence test! Thus, this Wal-Mart store had to be even more selective than Mensa.” Mensa is the largest high-IQ society in the world.No matter which way you slice it, Sam Walton’s company gives a lot to our country’s lagging workforce. And this doesn’t include the army of 3 million suppliers required to distribute and stock final products.The secret to Wal-Mart’s success lies in its strategy. By tightly managing its stock, Wal-Mart’s managers are able to drive down prices, making profits only by selling in large quantities.To compete, other stores have been forced to become far more efficient and slash their prices as well. When Wal-Mart enters a new region, prices decrease by 8 percent in rural areas and 5 percent in urban areas, according to an August 2005 article in The New York Times.And these price drops are not temporary. The increased competition that Wal-Mart has brought to the industry allows Americans to save $287 billion per year whether they shop at Wal-Mart or not. This averages out to more than $2,500 per household, and not including the time and gas saved by not visiting multiple stores, according to a 2007 study by Global Impact, an independent economic analysis firm.And there is no denying many of these savings go places they are needed most. The company has two-and-a-half times as much selling space per inhabitant in the poorest third of states as in the richest third, according to the same New York Times article.At present, the American dream is not fully realized for all Americans. A store that aggressively cuts costs, and forces others to do the same, is just what we need.Some claim Wal-Mart drives more traditional stores out of business. In the face of the rampant price cutting, more inefficient, personal stores cannot compete.There is something charming about the old style of doing business. Conversations over the register with relaxed owners of more traditional stores are far more satisfying than high-pitched computers in the self-check-out lane.However, the benefits of a traditional store must be weighed against its costs. For the average American household, the cost of the store is $2,500 per year. A personal touch is valuable, but not that valuable. Every week, 100 million Americans choose savings over nostalgia.This element of choice cannot be overlooked. No one forced consumers to choose Wal-Mart over any other business. Besides the occasional tax subsidy, something questionable for any business, Wal-Mart’s success comes not from the iron fist of government but from the invisible hand of the free market.The goal of any enterprise is to give the customers what they want — to satisfy consumer demand.Criticizing Wal-Mart for driving antiquated businesses out of the marketplace is not equivalent to criticizing the company that instituted the policy, but the people that made that policy profitable.There are a lot of reasons to hate choices Americans make — “Twilight,” anyone? — but I do not judge people, especially the less affluent, for wanting to save money.It may be the case that more aesthetically appealing, friendly stores will one day be able to compete with the big-box behemoths of this day and age. But at present, they cannot.This is bad news for irrelevant union leaders, nostalgic community organizers and owners of antiquated stores that want us to pay more, but good news for Americans that want to always save.If it is in your self-interest, then shop at Wal-Mart and feel good about it.—-Contact Daniel Morgan at [email protected]
Common Cents: Wal-Mart’s benefits overwhelmingly outweigh its costs
January 14, 2009