In Defense of Walmart

I can not express just how uninterested I am in Black Friday shopping. Long lines and the potential for violence is not worth a cheap TV. Nor do I feel like a corporation with balance sheets the size of many countries needs much defending, especially as they lobby for regulatory favors or for internet taxes.

However, Walmart, for all of its faults, probably does more for America’s less fortunate than any social program. Their food is 20%-40% cheaper than most grocery stores and offer supplies of cheap goods to communties which need them. And as we begin President Obama’s 2nd term, its clear unions are gunning for profitable companies and will force them into funding their political activities, while consumers suffer.

Peter Suderman, senior editor for Reason.com, on Saturday used Twitter to lay out his observations on the big box giant. His points are reasonable and brilliant:

Really enjoyed talking Walmart and Black Friday on @upwithchris [MSNBC’s Chris Hayes] this morning. I’m going to add a few stray observations on twitter.

1. Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food.

2.The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile.

3. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food.

4. Obama adviser Jason Furman has estimated the welfare boost of Walmart’s low food prices alone is about $50b a year.

5. Walmart’s wages are about average for retail. Not amazing. But not the worst either.

6. Paying Walmart’s workers more would mean the money has to come from somewhere. But where?

7. Erase the Walmart CEO’s entire salary, and you can raise average hourly wages by just a penny or so.

8. Erase the entire Walton family fortune and you get an average $1/hour boost to Walmart workers.

9. Raise prices to pay for increased wages and you cut into the store’s huge low-price benefits for the poor. It’s regressive.

10. But what about Costco? They pay more, right? Yes, but it’s a different, smaller market.

11. Walmart’s average customer earns roughly $35k. Costco’s average customer earns about $75k.

12. Costco only has about half as many employees as Walmart. What would happen if Walmart adopted a Costco model and shrank to Costco size?

13. Not at all clear that the remaining half of Walmart workers would be better off. Many would almost certainly be worse off. Unemployed.

14. Obama econ adviser Jason Furman did a lot of the work on Walmart’s progressive benefits. His case: slate.me/R3bkc2

15. Finally, as someone who’s actually been a regular, small-town Walmart shopper, I’d like to argue for its community benefits.

16. Yes, some small stores close when Walmart opens. But in small towns, Walmart can become real community hubs – more so, because of size.

17. As for Walmart workers getting health benefits thru Medicaid, that’s due in part to a policy liberals argued for: wapo.st/axXXNE

The arguments against Walmart are anti-poor and are about union power. MSNBC and other liberal media outlets, working as paid PR efforts for AFL-CIO, pushed the news of striking “walk outs” well through the holiday weekend, even as the protests failed, as a way to publicly shame Walmart.

This will be a long, drawn-out war. Sadly, many Americans don’t think as clearly as Mr. Suderman.