A Brief Essay on Wal-Mart

(Derived from Econ 101)

I’ve had all I can take of the dissing of Wal-Mart, which has become so incessant that even USA Today has reported recently on clergymen complaining about Wal-Mart on moral grounds, claiming that it pays low wages, which was said to be a moral issue.

Well, I would like to find out who was ever forced to take a job at Wal-Mart, at wages less than they could have obtained elsewhere. Know anyone? All right, assuming Wal-Mart employees aren’t forced into servitude, Wal-Mart must be paying market value wages and benefits to its associates, or why would any of them choose to work there? Surely if they had better opportunities, they would take them. So, what’s the beef? Would it be better they were unemployed?

These arguments don’t just assail Wal-Mart; they assail the idea of a free society, where people can choose where to work, based on their own needs and desires, which includes the pay scale, among many other factors. They assail the idea that employers can offer jobs at the lowest price at which they can be filled, which is just common sense. Wal-Mart, in this respect, is no different from any employer. The arguments are, in fact, hypocritical, requiring Wal-Mart to live up to some pretended moral standard (that of paying higher than market wages) that doesn’t exist anywhere else.

Obviously, the fact that retail workers generally make lower pay than many workers in our society is nothing new, nor has it anything uniquely to do with Wal-Mart. It is based on the skill level required to do the job. For example, a college degree is not required to ring up groceries. However, Wal-Mart does, in fact, pay higher wages and benefits than many retailers.

What isn’t often said is how much Wal-Mart has contributed to our society by offering low prices on a wide array of goods, and easy access to those goods, to consumers. If Wal-Mart were not offering superior value, it would never have succeeded in the marketplace. People would continue to shop at their corner retail stores, or wherever, paying the higher prices of yesterday.

Low prices have indeed been the foundation of Wal-Mart's success. This has been a boon to millions of low-income consumers, who badly need such an affordable source of basic necessities for their families.

It’s nostalgic to want the local “mom and pop” stores to continue to thrive, but the lesson of the marketplace is this: one needs to offer superior value to earn and retain business. And, global competition is now the order of the day, thanks largely to technologies such as the Internet.

Those retailers who can differentiate themselves by superior value will continue to exist and thrive, even if right alongside a Wal-Mart. Wal-Mart offers commodity goods at commodity prices. That is where it excels. Those offering unique goods or superior services to a defined customer segment will continue to thrive in retail.

The nation’s economy has benefited tremendously from the lower prices made possible by such things as the Internet, discount retailers, and, indeed, goods from abroad. These things make prices lower in the USA and help make all of us more affluent and productive. They reduce the rate of inflation in this country and around the world.

Going back to the 1950s isn’t going to help America. Getting ready for the 2000s is the only thing that can help keep our country growing and prosperous and raise our standard of living. In its way, Hagerman & Company is helping in that effort, by providing products and services that help enable companies to be more productive and more able to compete in the world economy.