Wal-Mart’s virtues

Despite the relentless attacks on Wal-Mart by American community groups and labour unions, the local benefits provided by Wal-Mart far outweigh the costs, say Harvard University business professor Pankaj Ghemawat and business consultant Ken Mark.

  • Wal-Mart contributed to significant growth in labour productivity between 1995 and 2000.

  • When Wal-Mart enters a market, prices decrease by 8 per cent in rural areas and 5 per cent in urban areas.

  • With two-thirds of its stores located in rural areas, as a whole Wal-Mart saves customers about $16 billion a year.

  • Wal-Mart's customers tend to be those who could most benefit from low prices; 80 per cent of Wal-Mart's square footage is located in the 25 per cent of ZIP codes with the greatest number of poor households.

    Without Wal-Mart, the rural poor would pay much more for food and other household goods, say Ghemawat and Mark.

    Additionally, Mayor Pro Tem Philip E. Mella of Woodland Park, Colorado, notes that Wal-Mart pays 25 per cent above the average entry-level retail wage, and 70 per cent of Wal-Mart's managers begin as front-line workers.

    The billions of dollars in savings far exceed the costs that Wal-Mart supposedly imposes on society through loss of jobs, urban sprawl and driving employees to public welfare programmes.

    Source: Pankaj Ghemawat and Ken A. Mark, The Price is Right, Dallas Morning News, August 14, 2005; and Philip E. Mella, Free Enterprise, Choice And Wal-Mart's Virtues, Letter to the Editor, Wall Street Journal, August 16, 2005.

    For DMN text (registration required): http://www.dallasnews.com/s/dws/dn/opinion/points/stories/081405dnediwalmart.228d5074.html

    For WSJ text (subscription required): http://online.wsj.com/article/0,,SB112415992336414130,00-search.html

    For more on Economic Issues: Corporations: http://www.ncpa.org/iss/eco/

    FMF Policy Bulletin/ 30 August 2005
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