Wal-Mart, again

In an earlier post, I said that Wal-Mart was being criticized for practicing corporate social responsibility because they were looking at ways of improving employee health and benefits. However, since then a few things have happened in the media.

• In Aaron Bernstein's BusinessWeek article, "Some Uncomfortable Findings for Wal-Mart", he discusses the mixed bag of research results that were due to be presented at a conference organized by Wal-Mart, itself. What other firm or bureaucracy, has ever put itself under a microscope that it doesn't control?
• According to the preliminary Global Insight research commissioned by Wal-Mart, a new Wal-Mart displaces about 53-253 jobs in a town, but increases by about 350, for a net increase of 97. Cherry picking? Wal-Mart has been criticized for being too open with Global Insight, whose final results are yet to be published and are said not to be all favorable.
• Emek Basker's earlier study arrived at similar conclusions about payroll sizes, adding the nuance that because it is vertically integrated, Wal-Mart creates wholesale jobs (warehousing and what-not) while only shifting retailing jobs. This also answers critics who claim that if Wal-Mart is selling for less, it must be paying less. Actually, Wal-Mart's success comes from at least three other sources: vertical integration of its supply chain, constant improvement in efficiency of that chain, and relentless pressure on suppliers.
  
• Retailers on average have about 4% of their workforce on public assistance of one type or another; Wal-Mart has on average about 5% (unknown source, though Wal-Mart seems to stipulate to it). When combined with the statistic above, it seems that Wal-Mart hires the poor from retailers, then hires more poor from the unemployment roles. Is that good or bad? I suppose it depends on whether or not you are poor and unemployed.
  
• From this Jerry Hausman study, Wal-Mart Supercenters (the kind with supermarkets in them) sell for 27% less than their rivals (Albertsons, Krogers - you know, evil anti-union corporations), and force their rivals to decrease prices by 5% more than they would on their own. The poor spend a higher percentage of their income on food than others, so this is a significant effect in favor of the poorest element of society.
  
• Overall, Wal-Mart has a 3.1% downward effect on prices (both Global Insight and Basker). That's why Jerry Hausman criticizes the Bureau of Labor Statistics for overlooking their effect on the CPI (he also has a new NBER paper with Ephriam Leibtag out on the fact that Wal-Mart's downward pressure has significant positive benefits for low income households).
• Kevin Drum is aggregating the Democratic case for Wal-Mart (including the following:)
  
• Kerry advisor Jason Furman is making a left-wing case for Wal-Mart, based in part of the impact of Wal-Mart on the food bill cited above. He has been calling Wal-Mart a "progressive success story."
  
• Rosa Brooks is making the feminist case for Wal-Mart, chiefly that single moms enjoy the fact that they can get all or most of their shopping done under one roof.
• Via The Agitator, the NY Times' John Tierney knocks a big hole in the "documentary", "Wal-Mart: The High Cost of Low Prices." In one sequence, they show how a small hardware store is knocked out of business by a new Wal-Mart, but Tierney points out that a new hardware store has opened in the exact same location, and the customers think it is better. I suspect that a lot more instances of poor management are unfairly blamed on Wal-Mart.
• But what of the criticism that Wal-Mart is laying off its labor costs on us, the taxpayers? My first reaction upon hearing this is to think of Julian Simon's response to immigration critics who claim that they take advantage of those same programs: Julian asked whether the problem is immigrants or the availability of those services. They, after all, are only taking advantage of the outstretched hand. Via Don Boudreaux of CafeHayek (from whom several Wal-Mart articles may be found here), Sebastian Mallaby of The Washington Post lays waste to the "public dole" criticism. As Mallaby says,
  

  Wal-Mart's critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid. Actually that's a typical level for large retail firms, and the national average for all firms is 4 percent. Moreover, it's ironic that Wal-Mart's enemies, who are mainly progressives, should even raise this issue. In the 1990s progressives argued loudly for the reform that allowed poor Americans to keep Medicaid benefits even if they had a job. Now that this policy is helping workers at Wal-Mart, progressives shouldn't blame the company. Besides, many progressives favor a national health system. In other words, they attack Wal-Mart for having 5 percent of its workers receive health care courtesy of taxpayers when the policy that they support would increase that share to 100 percent.

In fact, such progressive critics of Wal-Mart, who are frequently supporters of national health care, say that they believe that this will be a tremendous competitive advantage despite the fact that American businesses routinely compete favorably against countries with such programs.

As one of the Drum commenters says, I still remain agnostic on Wal-Mart. I enjoy buying groceries there because they are in fact cheaper. Do they violate labor laws? Perhaps, but then again some labor laws are stupid. Do they take advantage of public largess? In reality, no, it is the employees that take advantage of it. To the extent that Wal-Mart is able to pay wages that would otherwise not support them, Wal-Mart is an indirect beneficiary, and so are we the customers. But we, the taxpayers, wanted those programs. So this is one of those points of nexus between business and government. I would limit the government, the left would regulate the business. But they're also the ones who enlarged the government and continue to argue for more - much more - of the same. How can they in good conscience make this argument against Wal-Mart?

Wal-Mart derives some benefit from public policies like roads and public assistance. Isn't it strange to say that they shouldn't? I'm sorry, maybe I wasn't paying attention in Civics class - what is the purpose of public policy, again? Isn't it to benefit members of the public? Maybe Wal-Mart's shareholders are not members of "the public"? So why is it called a "publicly traded company"?

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