# Why does Wal-Mart want to expand into inner-city neighborhoods? **URL:** \ **Category:** Great Debates\ **Created:** [April 5, 2006, 11:03pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489 "2006-04-05T23:03:10Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 10, 2006, 10:09pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/81 "2006-04-10T22:09:33Z")
[QUOTE=yellowval] You ask why Wal-Mart should provide healthcare for its employees, and I ask why should I provide healthcare for its employees? [/QUOTE] Well, I could say that you should provide it because you’re the one who wants them to have it. But assuming you believe that universal healthcare insurance is a worthwhile public good, that it is good social policy, then it makes more sense to pay for that with public money. I think it makes no sense for you (or the state) to say: We forbid you to hire someone if you are unwilling or unable to pay for their healthcare insurance. We don’t require employers to pay for their employees phone bills, gasoline, rent, car insurance, or any other consumer good. In fact, tying healthcare to a person’s place of employment is probably one of the stupidest things we do in the US. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 10, 2006, 10:14pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/82 "2006-04-10T22:14:05Z")
> [@Kimstu](#): > > Sorry, but I don’t understand your answer. Are you saying you do consider that other people’s saving money on prices helps compensate for your own wage cut, or that you don’t? > [@xtisme](#): > > Yes, thats exactly what I’m saying. Argh! **Which** of those are you saying? > [@xtisme](#): > > The fact that the places I patronize also may have better wages/benifits never really comes into the equation as far as I’m concerned Okay, I think I get you: you don’t take into account questions of other people’s wages and benefits when you think about saving money on prices. Fine. Okay, then why did you initially suggest that low-wage workers would want to take into account other people’s saving money on prices when they think about their own wages and benefits? > [@xtisme](#): > > Even assuming you are right and Walmart pays its employees rock bottom (even criminal) prices for their labor aren’t more poor people helped out by the low prices on goods that Walmart gives? My point was simply that it’s not reasonable to expect workers to take into account the Greater Good ™ of all those other poor people saving money on groceries when what matters most to them is the size of their own paycheck. (Even if there **is** a total Greater Good effect from WalMart of saving poor people money, which I haven’t yet seen solid evidence of.) ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 10, 2006, 10:16pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/83 "2006-04-10T22:16:51Z")
[QUOTE=Kimstu] It’s quite true that WalMart and Costco have very different business models in some respects. But so what? Nobody is forcing WalMart to use its current business model. [/QUOTE] Forcing them? No, of course not. Their model is obviously successful. What I was trying to get across is…maybe its successful because they have been very careful in calculating what wages and benifits they can minimally meet (and stay within the law) while dropping prices as low as they can. And perhaps its not so easy after all, and that raising wages/benifits would in fact have a harmful effect on their model…forcing them to raise prices. After all, I don’t see any OTHER Walmart wanabe’s out there cutting in on their market…though as you pointed out there are other companies out there with DIFFERENT business models but who overlap (somewhat) with Walmart in their core business. like Costco and Sams Club (which I actually DO use sometimes…though again I hate the poor service and lines). [QUOTE=Kimstu] And if you’re arguing, like WillMagic, that you have to support WalMart’s current business model because otherwise you must hate poor people who are saving all that money on groceries, I’m just pointing out that it’s not necessarily such a savings if it’s costing them money in other respects. [/QUOTE] Well, for myself I was mainly making a joke…though one with a core of truth to it if you are of the opinion that ‘the needs of the many outweigh the needs of the few’…greater good and all that noble stuff. Isn’t it better that entire communities of the poor can purchase goods at cheap prices (thus saving their limited funds) while having a few people ‘suffer’ (voluntarily) with the supposed poor wages and benifits of Walmart? Seems like a no brainer to me if you are of that philosophy…lots of poor folks are helped at the cost of a few Walmart workers. Even if you look at it that ‘society’ has to make up to the Walmart workers in the fact that they have poor wages and benifits…because ‘the poor’ don’t really PAY for that kind of thing. It shifts the burden on the middle class (I’m just blowing through the fact that this is an entirely debatable subject here and playing devils advocate btw). So ‘the poor’ seem to generally make out of this at ever angle I can think of…they get goods at arguably the cheapest prices with no real cost to themselves, as they SAVE money. So…do you hate the poor? 😉 -XT ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 10, 2006, 10:29pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/84 "2006-04-10T22:29:35Z")
[QUOTE=Kimstu] Argh! Which of those are you saying? [/QUOTE] Sorry…I wasn’t deliberatly talking in circles. 🙂 [QUOTE=Kimstu] Okay, I think I get you: you don’t take into account questions of other people’s wages and benefits when you think about saving money on prices. Fine. [/QUOTE] Exactly. [QUOTE=Kimstu] Okay, then why did you initially suggest that low-wage workers would want to take into account other people’s saving money on prices when they think about their own wages and benefits? [/QUOTE] Did I say that? If so its not what I meant (or perhaps I was trying to be funny). Lets see… > [@](#): > > Well of course I would…and I’m hardly alone. Perhaps you’ve noticed that Walmart is not on the brink of bankruptcy due to lack of customers? I think most people look at the matter more practically. The folks at Walmart aren’t slaves. They aren’t indentured servants. They CHOSE to work there. So…if me, a blue collar worker, can save $50/week on groceries (or other odds and ends) compared to going somewhere else, but if that (supposedly) costs the folks working at Walmart something in wages…well, thats THEIR choice. My own is driven by my own needs…or to put it bluntly by my selfish needs and the selfish needs of my family. No, I seem to be saying here that workers take their own situation into account when they shop out their labor. i.e. they CHOOSE to work where they work. They could go work for Safeway or Sears instead of Walmart for instance if they thought they would get a better deal there (and if the wages and benifits would overcome, say, a longer commute or some other problem). I think the confusing part is this: 'So…if me, a blue collar worker, can save $50/week on groceries (or other odds and ends) compared to going somewhere else, but if that (supposedly) costs the folks working at Walmart something in wages…well, thats THEIR choice. ’ Basically I’m saying that a non-Walmart blue collar worker is going to look at things from their own perspective. It is a rather confusing paragraph and I assume this is where things got hazy. [QUOTE=Kimstu] My point was simply that it’s not reasonable to expect workers to take into account the Greater Good ™ of all those other poor people saving money on groceries when what matters most to them is the size of their own paycheck. (Even if there is a total Greater Good effect from WalMart of saving poor people money, which I haven’t yet seen solid evidence of.) [/QUOTE] Well, my point is that workers DON’T take into account the Greater Good™…they shop out their labor based on their own needs and wants, not on some concept of The Greater Good™. My JOKE was that folks in this thread should be happy with Walmart because it DOES help out The Greater Good™…so why all the bitching. Though as I said in my last post (we are kind of talking past each other posting atm) its a joke with a core of truth to it…IF you happen to belong to that philosophy (which I’m not saying you do btw). -XT ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 10, 2006, 10:31pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/85 "2006-04-10T22:31:29Z")
> [@xtisme](#): > > Even if you look at it that ‘society’ has to make up to the Walmart workers in the fact that they have poor wages and benifits…because ‘the poor’ don’t really PAY for that kind of thing. It shifts the burden on the middle class (I’m just blowing through the fact that this is an entirely debatable subject here and playing devils advocate btw). So ‘the poor’ seem to generally make out of this at ever angle I can think of…they get goods at arguably the cheapest prices with no real cost to themselves, as they SAVE money. In other words, WalMart’s much-lauded business model consists of getting governments to subsidize it by paying for the basic needs that its employees can’t afford on their wages? Hey, if people in general **want** to use WalMart as a kind of semi-competitive, supply-chain-managed pseudo-capitalist version of the old Soviet “People’s Commissariats” or whatever they called them, I guess that’s cool. Getting cheap food and clothes to the struggling masses is certainly a worthy cause, and worth shelling out some taxpayer dollars for. I just don’t understand why anybody would consider it a shining example of capitalist market-driven success. > [@xtisme](#): > > Sorry…I wasn’t deliberatly talking in circles. No prob, I think we eventually achieved communication. 🙂 ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 10, 2006, 11:01pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/86 "2006-04-10T23:01:12Z")
[QUOTE=Kimstu] In other words, WalMart’s much-lauded business model consists of getting governments to subsidize it by paying for the basic needs that its employees can’t afford on their wages? [/QUOTE] You can’t be serious. Do you honestly think that is the only key to its success? Not the inventory management system that they created, not the marketing studies they do, not the supplier management methods… just paying rock bottom wages? Please tell me you’re being facetious. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [April 10, 2006, 11:16pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/87 "2006-04-10T23:16:52Z")
[QUOTE=Kimstu] In other words, WalMart’s much-lauded business model consists of getting governments to subsidize it by paying for the basic needs that its employees can’t afford on their wages? Hey, if people in general **want** to use WalMart as a kind of semi-competitive, supply-chain-managed pseudo-capitalist version of the old Soviet “People’s Commissariats” or whatever they called them, I guess that’s cool. Getting cheap food and clothes to the struggling masses is certainly a worthy cause, and worth shelling out some taxpayer dollars for. I just don’t understand why anybody would consider it a shining example of capitalist market-driven success. [/QUOTE] Maybe not. While WalMart may earn more per dollar of sales than Costco, I did a little digger deeping. Over the past [5 years](http://finance.yahoo.com/q/bc?s=WMT&t=5y&l=off&z=l&q=l&c=COST), WalMart has seen a decline in the value of its stock. Over the same time period, Costco is up around 60%. Most of Costco’s appreciation vis-a-vis WalMart has occurred in the last two years. I will admit I’m surprised by the investment return numbers. I think that WalMart’s continual bad press is hurting it, but I will confess that I haven’t done a deeper dive into their books and records (nor am I going to). WalMart’s has lower P/E and a greater dividend yield, but Costco’s balance sheet is stronger (however, not enough in my _own_\* amateur analytical opinion to warrant a 70% difference in return over the past 60 months). \*My own experience has been with post-trade portfolio analytics, not specific company, economic, or sector analytics. I’ve worked closely with them, as we share a lot of the same data and concepts (and I usually had the quickest access to reams of historical data). Of course, that was all before I became a consultant and now help people implement departments on post-trade portfolio analytics, among other areas of expertise ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 11, 2006, 11:27am UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/88 "2006-04-11T11:27:06Z")
> [@John Mace](#): > > You can’t be serious. Do you honestly think that is the only key to its success? Not the inventory management system that they created, not the marketing studies they do, not the supplier management methods… just paying rock bottom wages? Please tell me you’re being facetious. Of course I’m not being entirely serious, **John** , since of course WalMart’s business model is much more complicated than that. However, paying rock-bottom wages (and letting governments and taxpayers pick up the slack on the basic needs of their impoverished employees) is clearly a key feature of this model. Because apparently none of its other geewhizzier features like integrated supply chains and so forth is capable of making enough money for WalMart that they can afford to pay better than rock-bottom wages. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [April 11, 2006, 12:47pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/89 "2006-04-11T12:47:27Z")
[QUOTE=Kimstu] Of course I’m not being entirely serious, **John** , since of course WalMart’s business model is much more complicated than that. However, paying rock-bottom wages (and letting governments and taxpayers pick up the slack on the basic needs of their impoverished employees) is clearly a key feature of this model. Because apparently none of its other geewhizzier features like integrated supply chains and so forth is capable of making enough money for WalMart that they can afford to pay better than rock-bottom wages. [/QUOTE] Why should they pay better than rock-bottom, but legal, wages (conveniently ignoring the labor issues certain stores and the firm has had)? What is in it for WalMart? People still flock to the store. Many, many people _only_ care about low price. WalMart provides low price. And why shouldn’t WalMart legally maximize its profit? If WalMart couldn’t find employees to work for minimum wage, it would have to pay a higher wage. It’s not like the businesses being displaced are paying their fewer employees higher wages. Personally, I feel this is very shortsighted - not from WalMart’s view, but from the people who shop WalMart’s view. _(Did I butcher the grammar there?_ I don’t, however, fault WalMart. I fault WalMart shoppers. Let the crickets chirp in the stores, and let stockroom overflow for lack of employees to move the merchandise, and WalMart would change. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 11, 2006, 1:00pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/90 "2006-04-11T13:00:50Z")
> [@D\_Odds](#): > > Why should they pay better than rock-bottom, but legal, wages (conveniently ignoring the labor issues certain stores and the firm has had)? What is in it for WalMart? That’s for them to decide. My point was simply that if their low wages end up costing taxpayers extra money in subsidized benefits, then their low prices aren’t necessarily such a bargain. And as you pointed out (and thanks for the research, btw!), their rock-bottom wages and consequent image problems may actually be hurting their stock value. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 11, 2006, 1:09pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/91 "2006-04-11T13:09:37Z")
> [@D\_Odds](#): > > It’s not like the businesses being displaced are paying their fewer employees higher wages. Do you have a cite for this? My impression was that there definitely **is** a wage suppression effect from the influence of WalMart. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [April 11, 2006, 1:56pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/92 "2006-04-11T13:56:09Z")
[The Impact of WalMart on Unemployment and Wage Differentials in Alabama](http://web.bsu.edu/cob/econ/research/papers/ecwps0508keil.pdf) _(PDF)_ > [@](#): > > This paper examines the impact of a Wal-Mart on the income and employment differentials in Alabama counties during the decade of the 1980’s. It differs from previous work in that it focuses on the impact of one large firm that hires workers at the low end of the skills distribution. Thus, one might expect that human capital considerations would not be relevant in terms of excluding workers from obtaining these new job offerings. Furthermore, since most of the migration literature generally examines increases in labor demand over the full spectrum of skills, it is thought that such an investigation might yield atypical results. In fact, this is somewhat the case since our findings are mixed. _Our empirical work indicates that, the existence of a Wal-Mart and the length of time in which a Wal-Mart was present make a significant impact on the relative unemployment rate of blacks in Alabama counties. On the other hand, it does not appear that the presence of Wal-Mart has any impact on improving the relative incomes of blacks compared to whites. There may be reason to believe, however, that the long run results could differ. The impact on unemployment rates suggest that local residents obtained jobs they would not otherwise have had. These jobs provide job skills. While the opening of a Wal-Mart is a one time event, those receiving jobs are permanently better off because of these increased skills._ Thus, one direction for future research would be to examinethe impact of Wal-Mart (or any other big box retailer) on the long run effects on those hired after an opening by following a cohort of those employees for a number of years. > > There are four important reservations with this analysis. First, because of the possibility of laborers from non-Wal-Mart counties commuting to Wal-Mart counties, it is possible that our results understate the impact of Wal-Mart on both income and unemployment differentials. That is, some of the benefits might be accruing in the workers’ place of residence rather than their place of work. Second, from our data set it is impossible to determine what the long-run effects on retail activities that are compliments to and/or substitutes of Wal-Mart. We have only examined the impact of Wal-Mart over a ten-year period. Since most Wal-Marts are longer lasting, it is quite possible that we are examining this issue too early. Third, the results obtained are only relevant for Alabama during this time period. It is likely that the labor markets, the culture and the legal environment facing Wal-Mart are quite different in other states and might even be different for Alabama over different periods of time. These results represent only a small part of the impact of a Wal-Mart upon the inhabitants of a given economic area. Each of these reservations provides an avenue for further research. Finally, the results of this study would not be, for the most part, very useful for those who argue either for or against the establishment of a Wal-Mart in any given community. _Emphasis mine_. Neither a glowing nor a damning recommendation. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 11, 2006, 3:35pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/93 "2006-04-11T15:35:26Z")
[QUOTE=Kimstu] Of course I’m not being entirely serious, **John** , since of course WalMart’s business model is much more complicated than that. However, paying rock-bottom wages (and letting governments and taxpayers pick up the slack on the basic needs of their impoverished employees) is clearly a key feature of this model. Because apparently none of its other geewhizzier features like integrated supply chains and so forth is capable of making enough money for WalMart that they can afford to pay better than rock-bottom wages. [/QUOTE] I don’t know if WalMart can or cannot afford to pay higher wages, and I don’t really care. There may be a few companies out there that purposely pay employees more than the going rate, but not many. WalMart complie with minimum wage laws (in fact most employees make more than MW), and is under no obligation to provide benefits simply because you think they should. Your argument rests on the assumptiont that if those employees were not working at WalMart, they would be employed somewhere else making either better pay or getting more benefits. That’s something we simply cannot know. And it’s unclear exactly which WalMart shoppers are “subsidizing” the healthcare benefits of WalMart employees. In fact, the poor the shopper is, the less likely he or she is paying much state or federal income tax in the first place. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [April 11, 2006, 4:00pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/94 "2006-04-11T16:00:04Z")
[QUOTE=Kimstu] That’s for them to decide. My point was simply that if their low wages end up costing taxpayers extra money in subsidized benefits, then their low prices aren’t necessarily such a bargain. [/QUOTE] And, more fundamentally, any resulting sales are not an indicator of success **in the free market**. ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [April 11, 2006, 4:23pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/95 "2006-04-11T16:23:04Z")
WalMart, as stated in my cite, brings jobs - low-paying, but jobs nonetheless - into an area. WalMart will employ unskilled labor - there are many jobs for those who’ve only gotten HS diplomas. The question isn’t that government has to subsidize WalMart workers, then. The question should be “What is the delta in government subsidies after a WalMart opens?” Is WalMart responsible for increasing the subsidies arising from displaced businesses, or does it lower the subsidies by expanding the local/regional work force and moving people to lessened subsidies. Is WalMart preventing these people from getting jobs that would provide greater benefits? If it is, why aren’t these people already in those jobs and the WalMart job pool dry? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 11, 2006, 4:36pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/96 "2006-04-11T16:36:05Z")
[QUOTE=Kimstu] That’s for them to decide. My point was simply that if their low wages end up costing taxpayers extra money in subsidized benefits, then their low prices aren’t necessarily such a bargain. [/QUOTE] Which laws are Walmart breaking? Or to put it another way, why exactly should Walmart do more than the law requires? [QUOTE=Steve MB] And, more fundamentally, any resulting sales are not an indicator of success in the free market. [/QUOTE] Ridiculous. Of course they are. Walmart works within the system as its been layed out. Its as ‘free’ a market as the government has permitted it to be…and Walmart excels in that arena. -XT ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 11, 2006, 4:55pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/97 "2006-04-11T16:55:09Z")
> [@John Mace](#): > > I don’t know if WalMart can or cannot afford to pay higher wages, and I don’t really care. Thanks for that contribution. > [@John Mace](#): > > WalMart complie with minimum wage laws (in fact most employees make more than MW), and is under no obligation to provide benefits simply because you think they should. :rolleyes: This is the well-known “ **Bricker** Diversion”, where a debate about ethics, practicality, or some other issue is pointlessly diverted to a trivial question of legality. Yes **John** , I already know that WalMart is currently under no legal obligation to provide particular employee benefits (although some states may change that with new laws about mandating employer health care contributions). There’s no debate there. The **non** -trivial points that we’ve actually been debating about include the following: - Should WalMart provide better employee benefits and/or higher wages? - Could WalMart afford to provide better employee benefits and/or higher wages and still stay in business? - If WalMart employees are dependent on taxpayer-funded services to supply basic needs that they can’t afford on their low wages, how does that affect WalMart’s claim to be a free-market success story or to save consumers money overall? > [@John Mace](#): > > And it’s unclear exactly which WalMart shoppers are “subsidizing” the healthcare benefits of WalMart employees. In fact, the poor the shopper is, the less likely he or she is paying much state or federal income tax in the first place. Well, like I said, if people want to use low-wage retail business as a form of government-subsidized income redistribution, where the “merchant” charges poor customers low prices for goods, pays poor employees low wages, and makes up the difference with public services funded by higher-income taxpayers—sort of a semi-capitalist version of the old Soviet government shops—it’s okay by me. I just don’t see the point of calling it a free-market success story. > [@D\_Odds](#): > > WalMart, as stated in my cite, brings jobs - low-paying, but jobs nonetheless - into an area. Well, your cite is one study on one area. Other studies have indicated that sometimes the jobs it brings are offset or exceeded by jobs lost elsewhere (see below). > [@D\_Odds](#): > > Is WalMart responsible for increasing the subsidies arising from displaced businesses, or does it lower the subsidies by expanding the local/regional work force and moving people to lessened subsidies. AFAICT, the answer appears to be some of each. In economically depressed areas where WalMart causes a net gain in jobs, it replaces some subsidies with employment. In areas where WalMart successfully competes with higher-wage businesses, though, it depresses wages and puts more strain on taxpayer-funded services. A sample study on California (pdf) finds that: > [@](#): > > We estimate that Wal-Mart workers in California earn on average 31 percent less than workers employed in large retail as a whole […] If other large California retailers adopted Wal-Mart’s wage and benefits standards, it would cost taxpayers an additional $410 million a year in public assistance to employees. […] > > If Wal-Mart’s entry into market creates net new jobs, an argument can be made that though Wal-Mart workers earn wages that leave many below self-sufficiency, the alternative for a part of the work-force would be unemployment, with other attending public costs. There is strong evidence, however, that the jobs created by new Wal-Mart stores generally replace other, often higher-paying jobs, as existing retailers are forced to scale back or go out of business. […] Studies of the overall impact of Wal-Mart on employment are inconclusive, with some pointing to a net job loss and others to small increases in employment. > [@xtisme](#): > > Which laws are Walmart breaking? Another “ **Bricker** Diversion”. (That is, assuming you don’t really want to get into the question of whether WalMart actually **is** violating labor laws as part of its company policy, as alleged in [more than forty lawsuits](http://www.chicagolegalnet.com/in_house_audit_walmart.htm).) Nobody is alleging that paying low wages is illegal. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 11, 2006, 5:27pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/98 "2006-04-11T17:27:54Z")
[QUOTE=Kimstu] Thanks for that contribution. [/quote] It’s called a lead-in to the discussion. But thanks for playing anyway. > [@](#): > > :rolleyes: This is the well-known “ **Bricker** Diversion”, where a debate about ethics, practicality, or some other issue is pointlessly diverted to a trivial question of legality. Yes **John** , I already know that WalMart is currently under no legal obligation to provide particular employee benefits (although some states may change that with new laws about mandating employer health care contributions). There’s no debate there. And that’s called an _ad hominem_. People are saying that WalMart should pay higher wages. I called them on that. Hence this debate has ensued. > [@](#): > > The **non** -trivial points that we’ve actually been debating about include the following: > > - Should WalMart provide better employee benefits and/or higher wages? > - Could WalMart afford to provide better employee benefits and/or higher wages and still stay in business? > - If WalMart employees are dependent on taxpayer-funded services to supply basic needs that they can’t afford on their low wages, how does that affect WalMart’s claim to be a free-market success story or to save consumers money overall? No. That’s the debate you want to have. I’m still waiting to hear why WalMart should pay higher wages. > [@](#): > > Well, like I said, if people want to use low-wage retail business as a form of government-subsidized income redistribution, where the “merchant” charges poor customers low prices for goods, pays poor employees low wages, and makes up the difference with public services funded by higher-income taxpayers—sort of a semi-capitalist version of the old Soviet government shops—it’s okay by me. I just don’t see the point of calling it a free-market success story. And that’s an argument contrary to fact. There is nothing in the definition of the free market that includes providing social benefits to workers, and there is nothing “Soviet” about paying for those benefits thru taxation. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [April 11, 2006, 5:49pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/99 "2006-04-11T17:49:01Z")
> [@John Mace](#): > > And that’s called an ad hominem. How you figure? An _ad hominem_ fallacy is the use of a personal attack or criticism rather than responding to the substance of an argument. I criticized the substance of your (trivial) argument that WalMart has no legal **obligation** to pay higher wages. I did not offer any insults or criticism of **you personally** , nor have I ever done so AFAIR. > [@John Mace](#): > > I’m still waiting to hear why WalMart should pay higher wages. Because when it doesn’t, it undermines the claims of market advocates that market systems make poor people prosperous. If hardworking WalMart employees earn so little that they need government-subsidized Medicaid and food stamps just to make ends meet, then WalMart can hardly claim to be a free-market success story. > [@John Mace](#): > > and there is nothing “Soviet” about paying for those benefits thru taxation. Well, it resembles Soviet practice in the sense that it is socialist. It is certainly not part of what is generally considered “the free market”. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [April 11, 2006, 6:06pm UTC](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489/100 "2006-04-11T18:06:46Z")
[QUOTE=Kimstu] Because when it doesn’t, it undermines the claims of market advocates that market systems make poor people prosperous. [/quote] Which market advocates make that claim? I don’t. The market system may allow more people to become prosperous than a socialist system, but it doesn’t make anyone prosperous all its own. > [@](#): > > Well, it resembles Soviet practice in the sense that it is socialist. It is certainly not part of what is generally considered “the free market”. I think you’re setting up a false dichotomy. I can’t think of anyone other than the strictest Libertarian who would say taxes = socialism. The Soviet system was characterized more by a cap on wages than a floor, and by government ownership and control of all industry. You are cherry picking one feature, and an unimportant feature at that, and using that as if it were some key, defining feature. [Previous page](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489.md?page=4) [Next page](https://boards.straightdope.com/t/why-does-wal-mart-want-to-expand-into-inner-city-neighborhoods/351489.md?page=6)