Why Wal-Mart doesn’t need a bailout

While America’s auto manufacturers and other companies are begging Washington for bailouts, the liberal-derided Wal-Mart Stores Inc. is making money hand over fist, providing the nation with more jobs than any other employer and doing something else very, very positive: serving the poor.

Times are getting harder, people want cheap stuff, and the place they find it is at Wal-Mart, which boasted a 9.8 percent increase in earnings and a 7.5 percent increase in sales the third quarter, according to The Wall Street Journal.

The paper provided still more interesting figures about the firm during a period when so many other retailers are taking a whipping — 8.2 cents of every dollar spent last year for products other than autos was spent in either a Wal-Mart store or a Sam’s Club, which is part of the operation.

Wal-Mart is able to sell inexpensively — its chief strategy since its 1962 inception — because of its innovative, wealth-producing productivity and in part because of its large size of 3,000 U.S. stores, which enables it to negotiate some very nice deals. It keeps prices down more controversially through imports from China and other foreign lands, incurring the wrath of many who think that somehow traitorous, and through holding down employee costs, which incurs the wrath of many more.

Those angry about the China connection insist the consequence is lost jobs in the United States, shoddy goods and worker exploitation abroad. That’s all nonsense, for as one careful analysis points out, the kinds of products China makes haven’t been made in the United States for years, and Wal-Mart is in fact assiduous in making sure foreign suppliers maintain reasonable standards and treat workers decently.

Free trade is never a winner-loser game, but one of mutual benefit, and the political babble about the decline of manufacturing is just that — babble. While the manufacturing scene in America has vastly changed, we still have an extraordinary output. The reason is our technological know-how, which is also mainly responsible for the very real decline in manufacturing jobs. That’s not a disaster, for those jobs have largely been replaced by jobs that require more skill and also pay more.

It’s true that most Wal-Mart jobs aren’t of that kind — they are low-skill jobs, and they are compensated at the level low-skill jobs are usually compensated, not so well. Those who would force Wal-Mart into higher compensation ought to consider that the results would likely be fewer jobs from a company that now employs 1.45 million people, a million in this country. Says the Journal, it generates millions more jobs and hired 33,000 additional workers over the past 12 months alone.

So just when jobs are otherwise disappearing, left-wing politicians would make more go away? Would they enjoy doing something else just as cruel, raise prices that right now are doing more to lift the standards of living of millions of Americans than any number of governmental social programs combined?

Jason Furman, a Brookings Institution economist who also has advised Barack Obama, has written that Wal-Mart’s low-price savings to America came to $263 billion in 2004, or something like $2,329 per household.

One estimate says its food prices are much as to 25 percent less than you find in supermarkets, and one report observes what a hugely constructive difference it makes to a poor neighborhood when a Wal-Mart moves in. The company benefits the whole nation, but especially those of meager means.

The federal government could, of course, over-regulate this business, the way it has the auto industry, and it could foster runaway unions, which have afflicted the auto industry. And some years down the road, it could give Wal-Mart bailout billions.

Instead, let’s leave this remarkable company alone.

(Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay(at)aol.com.)

2 Responses to "Why Wal-Mart doesn’t need a bailout"

  1. Gloria Bryant  November 19, 2008 at 10:23 am

    ‘Leave this remarkable company alone’. I do and have left them alone for several years. I keep my money and they keep their junk!

    Then Bentonville bunch were removed from my shopping radar shortly after Sam Walton died and his tribe of greedy kids reversed many of his ‘make it in America’ policies. Sam had pushed hard to keep jobs in America and still sell at reasonable prices. The kids haven’t lowered prices that much, just their costs, so that they are multi-billionaires. Not with my nickel!

  2. griff  November 19, 2008 at 4:54 pm

    We wouldn’t be clamoring for cheap stuff if we had decent jobs. Toxic food and toxic toys for the kiddies at Christmas – oh joy!

    Wal-Mart sells junk made in China with prison labor, with no environmental or labor standards. While they do provide jobs, we don’t care to think of the millions of jobs lost due to the de-industrialization of this country in favor of this cheap labor.

    I refuse to shop there myself.

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