Wal-Mart Exposed

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

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NY Sun
NEW YORK SUN CONTRIBUTOR

While a Fahrenheit 9-11 style anti-Wal-Mart film is hitting the movie theatres, a study by one of the world’s top research companies presents a very different image of the retail giant. New York’s lawmakers may have missed the recent release of Global Insight’s “The Economic Impact of Wal-Mart” report because of the election, but it’s worth a read.


The year-long study concluded that “A full accounting of Wal-Mart’s impact using Global Insight’s modeling framework finds that Wal-Mart has generated a positive net economic impact on the U.S. economy.” According to the study in 2004 the retail giant caused $263 billion in consumer savings. That’s $895 a person or $2,329 for each American household. The study – commissioned by Wal-Mart but given complete independence – also found real wages were 0.9% higher by 2004 than they would have been without Wal-Mart and that the company created 210,000 jobs nationwide – 10% of the 2,077,000 total jobs created in 2004.


What’s the reason for Wal-Mart’s success? The study found “evidence that Wal-Mart has directly raised the economy’s potential to produce by investing in more capital, by using all its factors of production more efficiently, and by helping suppliers operate more efficiently. The higher supply potential raises productivity, lowers consumer prices, and increases real consumer purchasing power.” A lesson to other companies of how to compete: Increase efficiency and become more competitive.


What about the criticism that Wal-Mart gives its employees low wages? Global Insight’s analysis of data provided by Wal-Mart found that the retail giant’s wages are comparable to similar jobs and are not below-market wages. The most telling rebuttal of this criticism of Wal-Mart, along with other similar attacks – that the company provides poor benefits for workers and gives consumers poorer quality products – is that of the American people. No one is forced to work at Wal-Mart and no one is forced to shop there. That 138 million people shop at the retail giant every week and that Wal-Mart has no problem hiring employees shows that Americans believe they get better jobs and better value-for-money products there than elsewhere.


The other major criticism leveled at Wal-Mart is that because of its lack of benefits it’s freeloading on the economy. The critics charge that Wal-Mart’s workers have to turn to the state for help if needed. The City Council recently passed legislation targeting Wal-Mart – which we dubbed the Higher Priced Groceries and Minority Unemployment Act – forcing grocery stores of a certain size to spend about $2.75 an hour on health care for their employees. But the Global Insight study shows that the opposite is the case: Far from freeloading on the economy, it’s boosting it.


One of the member’s of the three-member advisory board offering feedback on Global Insight’s methodology was a financial economist, Robert T. Parry. Mr. Parry, who was president of the Federal Reserve Bank of San Francisco till 2004 from 1986, told The New York Sun that the City Council’s hostility to Wal-Mart is “unfortunate” and that the “consumer is the loser” as a result, especially “low-income and middle-income consumers,” because they can’t enjoy “goods and services at a lower price.” New Yorkers will be hoping the city’s politicians continue their election-time focus on the interests of ordinary New Yorkers and start reconsidering their hostility to Wal-Mart.

NY Sun
NEW YORK SUN CONTRIBUTOR

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.


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