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Minding Wal-Mart’s business
Posted by: McQ on Wednesday, May 04, 2005

The love-hate relationship with Wal-Mart continues with activists now trying to force Wal-Mart to pay more:
With most of Wal-Mart's workers earning less than $19,000 a year, a number of community groups and lawmakers have recently teamed up with labor unions in mounting an intensive campaign aimed at prodding Wal-Mart into paying its 1.3 million employees higher wages.

A new group of Wal-Mart critics ran a full-page advertisement on April 20 contending that the company's low pay had forced tens of thousands of its workers to resort to food stamps and Medicaid, costing taxpayers billions of dollars. On April 26, as part of a campaign called "Love Mom, Not Wal-Mart," five members of Congress joined women's advocates and labor leaders to assail the company for not paying its female employees more.
Interesting that the same people who demand higher wages would probably be unwilling to pay higher prices in the stores Wal-Mart runs to pay for the wage increases.

That's what I call the "Wal-Mart" dilemma. I always hear the criticism that Wal-Mart runs the "Mom and Pop" shops out of business when it comes into town.

Think about it. It doesn't have too. All you have to do is have enough people willing to support Mom and Pop by patronizing their store and paying the higher prices Mom and Pop have to demand because they're unable to get the volume deals and live on the thin margin that Wal-Mart does.

But it never happens does it? Mom and Pop go the way of the Dodo bird and Wal-Mart saves people a bunch of money.

There's a reason for that, folks. Its because Wal-Mart has kept its costs down through volume deals and lower wages.

Now there's a decision to be made here. People need to either say out loud that they're willing to pay more in Wal-Mart so the workers there can make more (and be willing to put their money where their mouth is) or they need to shut up. Until or unless they are willing to do so, something they have proven unwilling to do in the case of Mom and Pop, they don't have anything to say about this.

This is between Wal-Mart and its employees, and none of anyone else's business.
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Previous Comments to this Post 

No, Walmart needs to pay it’s employees $23.50 an hour and still sell Bounty 12 packs for less than they pay!

</unneeded sarcasm>

The only reason I step into Wally world is for Ammo. Other than that, I don’t like the Wal Mart culture and usually don’t find their prices to be all that good anyways.

But they stock good .357 Magnum ammo!
Written By: Sharp as a Marble
Another example of this is Maryland’s attempt to require Wal-Mart to pay more towards their employees health insurance - by passing a law that applies ONLY to Wal-Mart. Done partly to benefit Wal-Mart’s competitors and partly to benefit the unions trying to organize Wal-Mart, the effect is the same: keeping Wal-Mart from expanding its presence in the state and making it more costly for Wal-mart to operate the stores they already have.

Here’s my full post on it
Written By: steve
"This is between Wal-Mart and its employees, and none of anyone else’s business."

Unfortunately, the above statement goes into the wishful thinking category.
Written By: pilsener
URL: http://
Mom and Pop don’t have to go out of business when Wal-Mart comes into town. They just have to create demand for their superior customer service or their superior selection of products in a specific area. It’s not Wal-Mart that drives them out of business; it’s their inability to adapt.
Written By: Wacky Hermit
Naturally, the thing to do is freeze prices and triple everyone’s hourly wage. Why hasn’t this been done already?

South Park did a good job handling the Wal-Mart question, I think.
Written By: Mike
Does anyone have an idea of the substance behind the allegation that Wally World’s "low pay had forced tens of thousands of its workers to resort to food stamps and Medicaid, costing taxpayers billions of dollars"?

Granted, it sounds like war rhetoric but it would be interesting if this can be shown to be the case. If true then this conflict is not just "between Wal-Mart and its employees, and none of anyone else’s business" as McQ asserts. Rather, it should interest the taxpayers that the largest private sector employer in the world is sponging from the Welfare State, via proxy, in order to pad it’s bottom line.
Written By: D
URL: http://
Some of us resist the 2nd WalMart in the area more than the first.

I can point to several locations around Dallas now blighted by empty structures. These used to be WalMarts. Then WalMart built new bigger “super” stores, often within 2 miles of the original sites, closed up the old shop, and boogied on down the road. In general the WalMart approach is to buy a large – say 20 acre—plot of “green” previously undeveloped property, build their store, sell parcel-sized lots to other developers for strip-mall gas stations, shoe stores, cell phone stores, video rental stores, etc – all sharing the paved parking and highway access roads. But when WalMart moves … it’s like the Sears or Penneys pulling out of an indoor mall. Not only is the “anchor” department store standing emply, but the lesser retailers struggle – many going broke and their facilities becoming empty. Note this is not merely an old downtown Mom&Pop problem. The first generation of small Daughter&Son franchise shops—your Blockbuster, your Payless Shoes, your Korean Specialty Nail Design shops —all near the first ring of development between ’burbs, all going under together. This, not because they’re doing anything wrong: not charging excessive prices, not paying excessive wages, not playing political games with city or county governance, or anything. They merely relied on WalMart to draw traffic, and when that center of gravity shifts, these shops fail. Just like downtown before them.

Now we have big paved surfaces and empty stores become places where kids congregate to drink beer and drive stupid – leaving skid marks and practicing Rockford-style spin-turns in their jalopies. Litter blows around in the wind. Vagrants may seek shelter between the old trash dumpsters and the wall of the building – provided they don’t break in to scrounge for useful or saleable stuff. Rain runs off the pavement into storm drains and rushes down stream, contaminated by asphalt and antifreeze drippings instead of soaking into the soil and water-tables—which it did before, mind you, but at least with the justification of supporting the economy. Now the water is tainted and the creeks are flooded with no pretense of compensatory community benefit. Traffic drives by the old shops near the old houses, burning $2 a gallon gas and filling the air with fumes, all to get out to the edge of the sprawl, where everything is shiny and new and bounded by green agricultural lands.

A lucky community may be able to put an old store to use – a paint ball indoor battleground, maybe. The once-a-year use as a Halloween “haunted house” – or maybe the remaindered-book trucksale will put up tables and banners and sell out of such a store for a month – from November to Christmas an ornaments wholesaler might run a market. But for every such “active” store there’s another still drawing hobos, bored teen-agers, and trash.

The suburb city of Grand Prairie attempted to turn an abandoned store into a “civic center”. The project required three years and a budget of 5 million –actual cost of over six. The architect and the contractor assured tax-payers a bigger, better, more beautiful and more accessible facility could have been built for less money if only the site had been vacant. But as it was, the old store had to be converted, or torn down, first. This city-funded re-use is not atypical. A recent feature in the Dallas Morning News business section reported the major real estate firms charged with sale (more like, "disposal" ) of such properties find the majority only sell, after years of vacancy, to "public" buyers. City, county, state—taypayers picking up the tab to clean up an eyesore. Now, this is just me, but I think the shell of an old WalMart (or K-Mart, or Payless Cashways lumber yard, or other “big box” retailer – I do NOT mean to pick on WalMart alone for leaving useless properties behind like snakes shed skins) might make the beginnings of a good jail. But how many jails does one local government need?

The problem of a failed store leaving a blighted – un-used, untaxable, unproductive – property behind has been and is always going to be with us. But the problem of a SUCESSFUL gigantic chain of stores trailing a series of blights behind it is new. Perhaps new solutions are appropriate? Should a new WalMart be double-taxed until the old empty store-building is back in use? Should WalMart (or again I should stress, any big box chain retailer) be required to demolish buildings and restore the landscape behind themselves before being allowed to build new? Should new building permits only be granted for architecture and construction that assumes a 40 year life of a building that will be put to multiple purposes over that time frame—WalMart must build stores that might later be used for schools or theaters or apartment houses? I don’t know. But I’m concerned. And I therefore support those who resist allowing WalMart to build new stores. Let’s talk about the old stores awhile – and THEN move on to the question of new.

It might be fair to compare WalMart closing one store and building another to the problem of Congressional “Base ReAlignment and Closing” (BRAC) decisions regarding military installation re-allocation. Has there ever been a city happy to see the US military pack up and leave a bunch of empty buildings? Why should WalMart escape comparable scrutiny?

It might also be useful to establish a good precedent with the hundreds of old former WalMart stores that can then be applied to the few successful gigantic corporate owners of professional sports franchises in the NFL or AL/NL Baseball, who want to build (have taxpayers build for them) new stadiums or basketball arenas while leaving the old facilities empty and useless behind. Addressing the general problem in the broader context of normal daily commerce like WalMart instead of the narrow passionate fanatical context of "keeping the Cowboys in Dallas—well, at least Irving" (instead of risking the team’s move to Louisana) well, having a good body of case law is always useful. WalMart may not deserve to be the first victim chosen for such legal tests. But fairness hardly ever determines who will be hauled into court ...

I do recognize this is all a bit off topic for questions of WalMart wages and benefits, but as a general background for a general anti-WalMart bias, you may find the explication useful.

Written By: pouncer
URL: http://
"And in a book to be published this fall, a group of scholars will argue that Wal-Mart Stores, having replaced General Motors as the nation’s largest company, has an obligation to treat its employees better."

Somehow I don’t think the Walmart management will be tripping all over themselves to become the new GM - a company whose future has been crippled by caving into the excessive demands of its labor.
Written By: Jody
Has there ever been a city happy to see the US military pack up and leave a bunch of empty buildings? Why should WalMart escape comparable scrutiny?

Because Wal-Mart doesn’t report to the US Taxpayer in the same way that the military does?
Written By: Bob Dobalina
URL: http://
"low pay had forced tens of thousands of its workers to resort to food stamps and Medicaid, costing taxpayers billions of dollars"?
And where, exactly, were these tens of thousands working before Wal-Mart came to town?
I doubt that very many left high paying jobs with excellent benefits so they could get the employee discount.
Written By: Paul
URL: http://
"low pay had forced tens of thousands of its workers to resort to food stamps and Medicaid, costing taxpayers billions of dollars"?
And where, exactly, were these tens of thousands working before Wal-Mart came to town?
I doubt that very many left high paying jobs with excellent benefits so they could get the employee discount.
Written By: Paul
URL: http://
"... Wal-Mart doesn’t report to the US Taxpayer in the same way that the military does?"

True and agreed. However, the payer of national taxes in localities far removed from, say, Fort Gillam or Fort Monmouth may wonder exactly what valuable training is being accomplished on such prime property near highly valued urban infrastructure that could not be more cheaply done in the remote areas of Fort Ord or Fort Hood, for example—a question the city and state taxpayers in Georgia and New Jersey are often ill-prepared to discuss with their peers in California or Texas. Hence the need for more-or-less party-and-region neutral representatives to the BRAC.

And I don’t necessarily insist that a group convened to look into the problem of WalMart and other successful chains abandoning facilities report to the taxpayer or social/public/government authorities, either. It’s a market problem; perhaps a special group of realtors, better-business-bureaus, chambers of commerce, bankers and retailer’s associations might pool their wisdoms and make some suggestions. There might be an opportunity for somebody to make a buck off an unserved need after all. I dunno. But the problem remains, WalMart is a major contributor to the problem, and the sorts of solutions applied to similar problems seem worth study in fashioning a new solution.

Written By: pouncer
URL: http://

Maybe I’m wrong, but most jurisdictions in this country charge property tax. The value of the property didn’t evaporate in a flash when Wally World packed up and left. Somebody still owns that property and pays taxes on it, or else it gets seized by the state for non-payment and auctioned. So I’m curious as to your assertion that the vacant properties are untaxable. How, exactly, are they untaxable?

A case from my area is illustrative. WalMart moved approximately one mile to build a new store on the site of an old K-Mart. The old store has still not been sold. So as of this date, WalMart is paying the property tax and sales taxes from the (newer, larger) store in addition to the property tax on the old property. How, exactly, is this a problem for the community?
Written By: T
This anti-Wal-Mart nonsense is Unions.
Pure and simple.
Written By: Bithead

I think what Pouncer is suggesting has more to do with overall quality-of-life and environment than "just" with taxes. In his example the abandoned lots attract all sorts of vagrant behavior in what had previously been woodland. So, the question he is posing is one of community standards that WMT essentially flouts; passively but brazenly.

In your example is the old WMT site still vacant? If so who, if anyone, takes responsibility to ensure that Pouncer’s scenario does not become reality? Does the municipality have to invest more in policing that privately-held parcel? If yes, does that offset the taxes paid by WMT? Valid questions all.
Written By: D
URL: http://
They merely relied on WalMart to draw traffic, and when that center of gravity shifts, these shops fail. Just like downtown before them.

When they purchased or rented this space from Wal-Mart, did they sign agreements with Wal-Mart that required to Wal-Mart to maintain its presence in that location for a set amount of time?

If not, then they should have known this was a possibility. Wal-Mart has no obligation to provide surrounding retailers with clientele. They chose the location hoping to draw from Wal-Mart’s overflow. If they were unable to establish a repeat business great enough to sustain them after Wal-Mart’s departure, it is themselves they should be angry with, not Wal-Mart.
Written By: Liberty Dog
A city I recently lived in addressed pouncer’s issues with Wal-Mart before Wal-Mart was allowed to build there. The city has had architectural covenants in place for new construction for years. It was a fast growing area and Wal-Mart tried to build there several times over seven years. Wal-Mart refused to meet the city’s requirements each time and the city rejected them each time.

I suppose the crunched numbers for that area eventually met some threshold because Wal-Mart finally accepted the city’s guidelines. They agreed to a council-approved custom building design rather than the standard Wal-Mart building, no "We Sell For Less" written anywhere on the building, and no Wal-Mart-style abandoning of the building.

I should note that this was not a special law just for Wal-Mart, which I would be opposed to, it was in place before Wal-Mart ever approached the city.
Written By: ZG
URL: http://
"People need to either say out loud that they’re willing to pay more in Wal-Mart so the workers there can make more (and be willing to put their money where their mouth is) or they need to shut up. Until or unless they are willing to do so, something they have proven unwilling to do in the case of Mom and Pop, they don’t have anything to say about this."

Well said, but don’t forget that these activists know NOTHING about the most basic economic principles and they are much too busy feeling good about themselves, thus preventing them from shutting up any time soon.
Written By: Mark
The constant vilification of Wal-Mart is beyond tiresome. I wonder how the average pay at the NY Times stacks up against other media outlets, especially when adjusted for cost of living?

Notice that, except in one instance, the story doesn’t tell us the average length of employment of the average worker. It says that Wal-Mart has a turnover rate of about 500,000 per year. That means an awful lot of their employees are brand new and it’s not surprising that they would make a low wage starting out. I’ve read other stories that say when you adjust for the part timers and length of employment that Wal-Mart employees make significantly more than this story would have you believe. Furthermore, even the lead plaintiff in the Wal-Mart gender discrimination class action lawsuit pending in San Francisco Federal Court told USA Today that she likes her job and doesn’t want to quit.

Also, why do they compare the average wage for all of retail? I used to date a girl who worked at the Polo Store on Rodeo Dr. in Beverly Hills and she made $70,000 a year in salary and commissions. That is retail, but it is an entirely different business than Wal-Mart. The only fair comparison is with other big box discounters. They mention CostCo but what about Target or K Mart? In addition, CostCo requires an annual membership fee of $45 to $100. Therefore, it is a different business plan with different revenue streams and profit margins. The $6.5 Billion in extra wages recommended by the story would eliminate 65% of Wal-Mart’s profit. They laughingly reference the automotive industry as an example for Wal-Mart to follow in employee compensation. GM and Ford have been moving production out of the U.S. for as long as I have been alive and GM is about to go under. In typical liberal fashion, the NY Times got it exactly backwards. The history of the automotive industry’s compensation structure is a cautionary tale for Wal-Mart and serves as an example of what not to do. Do you know that the employee health care costs included in the cost of producing one GM car is greater than the cost of the steel used to make it (factoid courtesy of Kudlow & Cramer)?

The most important distinction is that most WalMarts are located in small towns and rural areas where the cost of living is significantly lower than in urban areas. $18,000 goes alot farther in Arkansas than it does in Los Angeles County where CostCo has thirty stores. The majority of CostCo employees are located in California and I guarantee you that no individual reading this web site would want to subsist on $16.00 an hour in LA, let alone if they had a family to provide for. With $18,000 in small town USA you could afford to buy a house and you wouldn’t have to deal with all the crime in the crappy area of LA you would be forced to live in with a $16 per hour job. A $70,000 Beverly Hills employee with a family will never own a home in the city of LA and will probably spend 1-2 hours commuting from any area they can afford to live so that they can pay over $100 per month for BH parking and the highest state income tax in the country. I’ll take Arkansas over that any day.
Written By: jt007
URL: http://
Wal-Mart doesn’t seem to lack for workers. The workers know in advance, what the wages will be for the job they are hired in for and yet they shake the person’s hand and accept the jobs, anyway.
Written By: LASunsett
Bithead wrote: "This anti-Wal-Mart nonsense is Unions. Pure and simple."

Not pure and simple. Unions are certainly anti-Walmart because of the importation of so many goods, and resistance to unionization.

But much of the resistance to Walmart was originally based on 2 other concepts: anti-capitalism/globalization and elitism.

The crowd that protests WTO meetings hate Walmart as a symbol: Rich American capitalists importing products made by oppressed foreigners and being wildly successful at it.

Walmart is a classic blue-state sucess story. Small town boy conquers the conuntry and the world. The red-state elites (including journalists who want to be elites) scorn Walmart BECAUSE of its success. The idea that Sam Walton could be so succesful in small town America with stores that the elites would not be caught dead in, selling products that the elites consider inferior, really grates.

I understand that these are generalizations, but you can only understand the anti-Walmart sentiment in the realm of these non-economic factors. Walmart’s customers, employees, and suppliers all like the company. It’s those who don’t deal with Walmart that hate them.

I live near Boulder Colorado that has done its best to destroy its retail tax base with the sentiments I’ve described.
Written By: pilsener
URL: http://
I just noticed I got my reds and blues mixed in the previous post - sorry.
Written By: pilsener
URL: http://
pilsener, you’re generalizing. There are plenty of folks who weren’t smashing windows in seattle who dispise walmart’s slave wages (overseas), overdependence on medicare and its tendency to build, crush competition and leave.

You’re also generalizing that all walmart employees like the company. I can even offer you some examples from my local wally world.

personally, i think walmart is smelly, crowded, and filled with indifferent single mothers who let their kids scream at 110 db. That’s not even going into their management styles. Give me a costco or a target anyday.
Written By: verplanck colvin
URL: http://
yes, I was generalizing. If you like Target or Costco better, shop there. But millions also shop at Walmart & Sam’s, even when there are other options. I live in an upper middle suburb that has both a Sam’s & Costco,and a Super Target and Super Walmart. They all do well, but the Walmart appears to get the most traffic.

No place with more than 10 employees has a completely satisfied work force, especially places that pay low wages. But from my experiences, the employees at Walmart are more efficient and pleasant than the much higher paid US Postal workers.

Written By: pilsener
URL: http://
Speaking of General Motors, their roof is about to cave in and Ford is in the same tent. Small wonder Wally’s is resisting the pressure to follow Big G.
Written By: D
URL: http://
It would be between the company and employees if the employees could unionize - but they can’t. Not with the Bush administration "enforcing" the labor laws.
Written By: Mike Houser
There’s a reason for that, folks. Its because Wal-Mart has kept its costs down through volume deals and lower wages.
Dont forget the massive tax-breaks and incentives that Walmart gets at all levels of government that WalMart gets that mom & pop shops simply dont have the lobbying power to get for themselves.

I have long maintained that the death of small business in this country has been more a function of a broken tax system than anything else. I would love nothing more than to see a relatively small flat-tax levied on all businesses with no deductions or exemptions, or with deductions but with a minimum paying amount.

An even tax-playing field would go a long way towards making an even business field. If a small to medium sized business is paying close to the maximum rate while larger businesses have lobbied themselves into a position of zero tax liability, how can they compete? They cant, and thats part of the reason why they are going the way of the dodo.

Please note that I am not advocating taxing Walmart (and other large corporations) *more* than everyone else, but rather taxing Walmart the *same* as everyone else.
Written By: Rosensteel
URL: http://

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