September 11, 2004

WM's Impact on Wages Abroad

In a recent study looking at wages paid to Wal-Mart workers in the San Francisco area, researchers out of Cal-Berkeley say that pay scales are about 30% below what unionized workers at competing large retailers get. The study's authors suggest that without Wal-Mart, these workers would be making far more money and be less prone to use public assistance, though nowhere in their extensive study do they offer any evidence of this key assertion. Every employer is subject to the sloppy claim that their workers might have found better jobs elsewhere (and then used less public assistance). But how many? Where is the analysis?

With the concern about these $11/hour workers, it seems we've all but forgotten the hard working people who make the stuff people buy at Wal-Mart. Some of them are only making 50 cents an hour. As I travel in China and find factories in more and more remote areas every time I go back, it is always astounding to see how rapidly an area can change from one with no phones and few bikes and no refrigeration to one in which people have healthful diets, better schooling, and great opportunities for children to grow in mind and body and spirit.

There are huge problems, and still about eighty-million Chinese who live on $75 a year or less... but the progress is unbelievable. It is the purchasing agents for Wal-mart and Target and Home Depot who are pushing incessantly for lower and lower costs that are central to the process. If they weren't pushing so hard for lower prices they wouldn't need to bother with getting new factories on line, back in the boonies where unpredictable problems will arise. We wouldn't see millions of Chinese migrate from the poor areas to the richer areas and then later returning to manage the new plant back home.

If you've never experienced the physical sensation of enduring hunger, or had to decide if you can feed both your children tonight, think carefully before you attack Wal-mart... they may well be the real revolutionaries of our time.

Of course, few are suggesting that we ban big-box stores entirely. Suppose an anti-Wal-Mart campaign were able to slow their growth to a trickle. For the really poor who live in remote areas of China, India, or the Dominican Republic.... their children's hope to live in the opportunity society that now predominates in much of China may be greatly delayed but not necessarily ruined.

The notion that those who care must oppose the companies who cut costs, like Dell or Wal-Mart is only possible if you ignore the vision of a billion people who still live on a dollar a day. We found that singing "We are the World" with Michael Jackson and Bruce Springsteen didn't end the suffering in Africa. Meanwhile we see much of Asia has banished hunger and privation. The hope of those still suffering in dire poverty lies not with the followers of Mother Theresa but with the cost-cutting purchasing agents of Kiichiro Toyoda, Sam Walton, and Michael Dell.

Posted by Dave at 3:38 PM

September 9, 2004

WM Tries to Boost Image

Neil Buckely notes that WM wants your love:

Wal-Mart vowed to go on the offensive to protect its reputation from critics of its business and labour practices, and said growing opposition would not slow its growth.

Lee Scott, Wal-Mart's chief executive, told a Goldman Sachs retail conference in New York that the world's largest company was engaged in an ´┐Żoutreach programme´┐Ż to get its story across.

The company has faced growing publicity over the past year over its poor pay and benefits for workers [compared to what?--ed.]. It has also met increased opposition to new stores - often organised by labour unions - particularly as it expands into urban areas.

They haven't reached out to me. Also, all you economic pessimists should note:
He added Wal-Mart had not changed its optimistic outlook for the Christmas shopping season in spite of weaker-than-expected August sales.

Posted by Kevin at 10:12 AM

September 4, 2004

Wal-Mart in Mexico

Tyler Cowen over at Marginal Revolution posted some excerpts from a financial Times( which is subscription only) story talking about how Nafta has lead to social change in Mexico. Appearantly, most adds feature light skinned Mexicans, but the arrival of American companies has changed this somewhat as they seek out customers beyond the wealthy elite. Wal-Mart is mentioned:


Over the past five years, cheap credit from vehicle companies, department stores and credit card companies has put their products suddenly within the reach of the working classes.
Rogelio Ramirez de la O, an economic consultant, estimates that the Mexican market for cars and appliances is 30m, while the market for cell phones could be as high as 70m [TC: that is out of a total population of about 100 million]. He dates the change to the 1994 North American Free Trade Agreement, which lowered tariffs and prices for US goods and encouraged manufacturers to overproduce. Companies started to issue credit, while Wal-Mart brought rigorous pricing policies, enabling it to sell to more Mexicans. "Foreign companies came to sell to all Mexicans, not just the top 10m, and that is a reality that has influenced Mexican companies."

Posted by Bob at 5:23 PM

September 3, 2004

Daley Feels Sorry for Wal-mart

Wal-Mart Scaling back plans in Chicago(via Drezner):


Wal-Mart will continue work--for now--on plans for a new store on Chicago's West Side but will not pursue a proposed outlet on the South Side in the wake of wrangling and delays, the company said Tuesday.

Wal-Mart foes said they will seek to block a zoning change that would allow the South Side store anyway, questioning the sincerity of a company that has been under a withering attack since announcing its intention to open stores in the city earlier this year.

Wal-Mart's plans in the city may be determined by what happens with two pending ordinances that would set minimum pay and benefit standards for employees of "big box" retailers, including Wal-Mart, said John Bisio, a company spokesman.

If a measure considered burdensome by Wal-Mart is passed, it would put the firm at a competitive disadvantage with other retailers, he said.

Wal-Mart has purchased the West Side site, at Grand and Keating Avenues, and hopes to begin demolition of an existing building there this fall, Bisio said. But "if an onerous big-box ordinance is passed, we may have to re-evaluate that location," he said.

Delays related to opposition to Wal-Mart have pushed back plans for a South Side shopping complex at 83rd Street and Stewart Avenue that would have included a Wal-Mart. When the retailer sought to persuade the site's developer to extend a recent signing deadline in order "to see how those [big box] proposals played out," the request was turned down, Bisio said. That forced the company to cancel its plans on the South Side, he said.

North Side Ald. Joe Moore (49th), a Wal-Mart foe, said he still will vote against the zoning change for the South Side property at Wednesday's City Council meeting.

"I am just concerned that Wal-Mart is trying to play games here," he said. "I have been around long enough to know that never rarely means never."

Critics contend that Wal-Mart offers unacceptably low wages and benefits to many of its workers.

Mayor Richard Daley asserted that Wal-Mart has "made a commitment" to proceed with the West Side store, but if the company doesn't build elsewhere in the city, "there's always somebody else to come in."

The mayor blamed Wal-Mart for its public relations woes.

"They have to understand, one thing at a time," Daley said. "You can't have everything. Maybe that's why they have some bad PR. I feel sorry for them."

Meanwhile, Ald. Howard Brookins Jr. (21st), whose ward includes the South Side site, said he believes that Wal-Mart still could be part of the retail complex there if the developer does not find another tenant.

"I haven't written them off because they still say they are interested in a South Side location," Brookins said.

Moore is co-sponsor of a measure that would require big retailers to pay a minimum of $10-an-hour in wages and benefits to workers. Ald. Edward Burke (14th) has co-sponsored another proposal that would set a $12.43-an-hour minimum wage and require that 40 percent of all merchandise sold by the big retailers be manufactured in the United States.

Moore's ordinance would apply only to new big box stores; Burke's to new and existing stores.

Burke said Tuesday that he would like a Wal-Mart in his Southwest Side ward, but not if it means backing off on his proposal because the measure "is the right thing to do."

Daley took a dim view of the proposed ordinances.

"If you start regulating them, you start regulating everyone, and I think that is very difficult to do as a city," he said. "Sometimes you don't have the development."

Posted by Bob at 1:47 PM