Wal-Mart Under Siege in the Culture Wars

Published June 30, 2005

If a capitalist corporation gets to be a big success, it inevitably finds itself in the cross-hairs of leftist political activists who don’t much like capitalism, and especially don’t like large corporations.

In the 1980s, General Motors found itself in this position when Michael Moore made the movie “Roger and Me.” More recently McDonald’s has been a target, attacked by (among other people) film maker Morgan Spurlock in “Super Size Me.”

Wal-Mart, now the largest business corporation in the world, could hardly escape the activists’ ire. The huge retailer has been charged with underpaying and mistreating its employees, destroying communities, and oppressing workers in the Third World.

Wal-Mart’s critics claim the average wage of sales clerks (conveniently, the lowest-paid group of workers in the company) is only $8.23 per hour. Point out that this is well above the federal minimum wage of $5.15 an hour and the activists will complain many of the employees work only part-time, and many of them don’t buy the relatively expensive health insurance coverage Wal-Mart offers employees.

Of course, a lot of people–women who want to devote time to their families and people who are working a second job–prefer to work part-time. And in a modern economy, many workers have spouses whose jobs provide full medical coverage. If the pay and working conditions at Wal-Mart were in fact so intolerable, the company would have trouble finding employees. But it doesn’t, even when the economy is booming and unemployment is low.

Wal-Mart is said to “destroy communities” by driving traditional “mom and pop” stores out of business. No doubt this is often true, but the reality of the modern American economy is that small and medium-size businesses are booming–but only when they offer some high-quality or specialized good or service, when they’re particularly innovative, or when they fill a niche nobody has noticed before.

The days of the corner appliance store that sells the standard models at prices substantially higher than the “big box” stores are gone. So Junior and his sister Janie don’t get to inherit the family appliance store. Why they would want to do that, rather than open a boutique or start a computer software business, is a mystery.

When economist Emek Basker of the University of Missouri looked at the employment effects of having a Wal-Mart move into a community, he found it actually increases employment. Nostalgia can be gratifying, but it’s not a good basis for preferring fewer jobs rather than more.

Another charge commonly made by the activists is that Wal-Mart oppresses Third-World workers by paying them too little and having them work in substandard conditions. It’s perfectly true that wages and working conditions in Third-World countries are poor by American standards … and perfectly unclear why “American standards” should be relevant.

The employment provided by the suppliers of Wal-Mart (and other American firms) is quite a lot better for everyone involved than the alternative–typically subsistence agriculture. Nobody has produced any evidence that Wal-Mart’s suppliers pay less or have poorer working conditions than other industries in poor countries.

The simple fact is that all advanced economies began with a “take-off stage” when the workforce left agriculture to do hard and poorly paid work in industry. That creates the foundation for a more advanced economy, where the pay is better and working conditions more comfortable. Nobody knows how to skip that first stage.

I suspect what the critics really dislike about Wal-Mart is not economic, it’s cultural. Wal-Mart is very “red state.” It’s headquartered in Arkansas. It’s mentioned in country songs.

The crowd that likes to say it’s on the side of poor Americans ought to appreciate a place whose prices make a modest paycheck go a long way. But they prefer to fight the culture wars, and Wal-Mart is their bugaboo.

John McAdams, Ph.D. ([email protected]) is a policy advisor to The Heartland Institute and a professor in the political science department of Marquette University.