Why Wal-Mart Hirings Do Not Help U.S. Economy

Reuters reported Thursday morning that Wal-Mart will hire an additional 22,000 individuals to staff its voluminous stores. Certainly, in this time of mounting job losses, a job at Wal-Mart is better than nothing as everyone has bills to pay. However, on a broader level, we are disturbed by what this announcement "means" for the country. Apparently, the deepest recession since the Great Depression has not been enough to derail Wal-Mart's growth. What then, could ever stop the discount retailer?

Obviously, those folks who view Wal-Mart as a net contributor to the US economy will cite the addition of 22,000 jobs as proof that the Company is a benevolent sort of Giant, offering regular Americans the chance to earn an honest living. The evidence however, suggests that Wal-Mart compensates its associates so meagerly that they are forced to seek the refuge of Government assistance just to make ends meet. A Government inquiry into Wal-Mart's labor practices, the results of which are contained in the report below, concluded the following:

• In 2001, Wal-Mart Sales Clerks earned on average $13,861 per year.
• In 2001, the federal poverty line for a family of three was $14,630.
• A 200 employee Wal-Mart store costs taxpayers an average of $420,750 per year.

Assuming that Wal-Mart's announcement of 22,000 new jobs corresponds with an opening of roughly 100 new stores(this is generous, and assumes that 9% of the jobs created will be white collar, higher paying positions), we could confidently say that Wal-Mart Thursday was really announcing a cost to the federal taxpayers of $42,075,000. This figure doesn't even include the state and county level tax incentives that are so often used to lure Wal-Mart into a particular area.

Does the US need more Wal-Mart jobs? We would say no.

Source:

"A Report By the Democratic Staff of the Committee on Education and the Workforce" - US House of Representatives, Representative George Miller (D-CA), Senior Democrat, February 16, 2004

Disclosure: No position in WMT

Comments

[TKA:]

What? Wal-Mart employees are "forced" to seek government assistance because of low wages? Are these people herded into Wal-Mart at gunpoint? Carneades, every Wal-Mart employee can walk away from their job at any time or not accept the job in the first place. The fact that thousands of people accept (and keep) these jobs under the terms offered clearly indicates they decided they are better off with a Wal-Mart job than without it. The source of your data gives the game away. Your piece is standard Democrat partisan politics - demonize the successful under the guise of "helping" the "oppressed".

Jun 05 09:37 AM

[Chris Butler_:]

This drivel was painful to read. I lost 10 IQ points start to finish. I'll just point out one thing. I'm not sure what the "government inquiry" looked at (source link?), but giving WM tax incentives to open a store is not done without the expectation of getting something back. Think about it. 200 or so people who had no job or income prior, now do. They spend it somewhere. Where they spend it, somebody benefits. Others benefit from Wal-Mart's low prices. Wal-Mart bashing is the most mindless leisure activity since someone first got high on paint thinner.

Jun 05 10:38 AM

[FDNY RET:]

It's certainly comforting to know, that once the American consumer has dropped off his bucks for Chinese made cheap goods: Not to large a slice is carved off for American employees, rather --China will buy our T-Bills/Bonds -(that pay interest)-to keep them alive for another day at the "Store".

Reminds me of 16 tons and the company Store. Communism where you get to vote!.

Jun 05 12:32 PM

[MrBuzz:]

I used to work for Walmart. They paid me far above min wage. They had good training program so I could learn about marketing in my dept and across other areas. When you go to work for a company. The big part of your personal success is what YOU make it. Walmart was a good place to work. But, you have to do your job and work.

Jun 05 12:38 PM

[Mr. Ed, Jr.:]

It wasn't you that lost 10 IQ points start to finish, it was the author, who does not want to be identified.

The report cited at the bottom of the article is just another pro-union attack on Wal-Mart, one that we have seen many times before.

The article is 100% drivel.


On Jun 05 10:38 AM Chris Butler wrote:

> This drivel was painful to read. I lost 10 IQ points start to finish.
> I'll just point out one thing. I'm not sure what the "government
> inquiry" looked at (source link?), but giving WM tax incentives to
> open a store is not done without the expectation of getting something
> back. Think about it. 200 or so people who had no job or income prior,
> now do. They spend it somewhere. Where they spend it, somebody benefits.
> Others benefit from Wal-Mart's low prices. Wal-Mart bashing is the
> most mindless leisure activity since someone first got high on paint
> thinner.

Jun 05 12:53 PM

[Mr. Ed, Jr.:]

By the way....the report cited by the author-- it is from 2004. That is why the hiding author uses 2001 numbers. So, what we have here is an angry political hack, with no new "insight" or relevant information, writing a column that rehashes union propaganda.

How does this trash article find its way to SA ?

Jun 05 01:34 PM

[Larry House:]

I took a position in WMT today. Avoiding this love/hate thing with the company, I think in this climate it is a good place to be.

Jun 05 01:38 PM

[rlxdoc:]

The stat about the "cost of a store" at $420,000 is based mostly on tax credits which are costs if you assume that all wages are owned by the government and what the worker keeps is a "cost".

WMT looks like a good place to be in a recession that hasn't quite ended yet.

Jun 05 02:04 PM

[Carneades:]

I appreciate the constructive criticism that has been directed towards this article. It appears that there are several common themes within the arguments being advanced by the folks who disagree with the article's conclusion. On a few of these points, which I have included in quotations below, I feel that a rebuttal would be appropriate.
1) "Carneades, every Wal-Mart employee can walk away from their job at any time or not accept the job in the first place."
I don't believe this is necessarily the case. You're assuming that this individual would either possess the financial wherewithal to walk away from a job, or that this person could quickly become gainfully employed elsewhere. Both of the previous examples are luxuries that are not enjoyed by many Americans.

2) "The source of your data gives the game away. Your piece is standard Democrat partisan politics - demonize the successful under the guise of "helping" the "oppressed"
While it is important to evaluate the source of any information in order to identify possible bias, simply referring to the political party that sponsored a certain study is not in itself a repudiation of that study's validity. I did not find my information on the pages of a radical website, rather, this is a document prepared by (staffers at least) and presented before the United States House of Representatives.

3) "Think about it. 200 or so people who had no job or income prior, now do. They spend it somewhere. Where they spend it, somebody benefits"
Somebody does benefit. Logically, if an individual's earnings are less than the federal poverty line, they will seek out the most cost efficient venue to spend their money. That venue is Wal-Mart. The beneficiary is Wal-Mart and the Chinese supplier.

4) "The report cited at the bottom of the article is just another pro-union attack on Wal-Mart, one that we have seen many times before"
Without more specificity as it relates to the particular issues you have with the study's methodology, analytics, or assumptions, I am unable to evaluate the merits of your statement.

5) "By the way....the report cited by the author-- it is from 2004. That is why the hiding author uses 2001 numbers."
If you are aware of a more recent study of this content matter, or you would like to present evidence that this study's findings are no loner applicable in the year 2009, then I will gladly write an article containing the new findings, and submit it to the editors.

6) "The stat about the "cost of a store" at $420,000 is based mostly on tax credits which are costs if you assume that all wages are owned by the government and what the worker keeps is a "cost". "
Actually, only $125,000 of the total is lumped into the category of "Tax credits". To argue over the merits of the tax system would be to deviate from the central theme of this article. The rest of the "cost" is attributable to Wal-Mart employees utilizing the following government programs: Free Lunch, Section 8 housing, education of low income families, health care assistance and energy cost assistance. Wal-Mart underpays its employees, and according to the report, encourages workers to apply for government assistance i.e you, the taxpayer, are filling the gap.

As a final note, I neither consider myself a Democrat nor a Republican. There was absolutely no political purpose or agenda behind the writing of this article. I will call it how I see it, and will not allow a political party's prepackaged set of talking points to dictate my stance on an issue.

Jun 05 03:26 PM

[willynill:]

Don't forget the benefit to the consumer. Being able to buy Walmart merchandise at a lower price is a good thing--like being able to buy gasoline at a lower price or having a tax cut which brings about an increase in tax revenues to the government. This is not a zero-sum game where we are losing because Walmart is winning. It's win-win with everyone better off because of the existence of Walmart. I think I just talked myself into buying some Walmart stock!

Jun 05 05:33 PM

[JPSmith:]

"I don't believe this is necessarily the case. You're assuming that this individual would either possess the financial wherewithal to walk away from a job, or that this person could quickly become gainfully employed elsewhere. Both of the previous examples are luxuries that are not enjoyed by many Americans."

In other words, the pay offered by Walmart represents the free market valuation of this individual's labor. If it didn't, he would be able to find a higher-paying job. You imply that the person's labor should somehow be valued higher than Wal-Mart values it, despite the fact that he can't find a job at a higher rate. Who will determine this, the government I suppose?

Jun 05 07:01 PM

[profithungry:]

Looks like what we have here is an intelligent contributor with a mob of angry idiots attempting literacy. WALMART steals tax payers dollars and exploits its workers so that is can raise margins. The beauty of it is that they know the world is filled with idiots like the ones attacking this author who would rather gain share price and look the other way when it is stolen back from them every April 15th.. Probably like aig fannie and freddie too right fellas? This Author just owned you all in his reply which i am sure was hard for him to do because internally he probably though.." I should just lets these guys drown in their own incompetence, its not worth my time" A simple look at his other articles and his blog will let you know that he does not have a political bone to pick.

Jun 05 07:14 PM

[Mr. Ed, Jr.:]

The author states ...

"and will not allow a political party's prepackaged set of talking points to dictate my stance on an issue"

Yet, you have.

I will not waste much more time on this, but your rebuttal points are pretty ridiculous.

The fact that it was "prepared by staffers" "and presented before the United States House of Representatives" is not supposed to be a rebuttal, is it ? Or do you not understand how this stuff is generated in Congress ?

But this one is the giveaway...."Logically, if an individual's earnings are less than the federal poverty line, they will seek out the most cost efficient venue to spend their money. That venue is Wal-Mart. The beneficiary is Wal-Mart and the Chinese supplier."

So......a citizen who actually looks for the best prices is what ? Anti-American ? Because Wal-Mart and "the Chinese supplier" are beneficiaries ? Or is it just poor people who shop at Wal-Mart, and you are concerned they are being exploited ? This just drives home my original point-- this nonsense article is pro-union drivel.

And I guess your "buddy" (alter-ego ?) , "profithungry" just had to make his very first comment in here, defending you and clicking on everybody's "thumbs down". Well, click away, clowns. Then, please go away.

Jun 05 08:40 PM

[profithungry:]

anti American? who said that? liberty and justice for all. I think it is anti American to let huge corporations keep their employees below poverty level an of lay off the burden on to the tax payers. That is just my opinion though. Let me guess you are going to come back with the "what about the trickle down effect" defense next. We have started to discuss moral issues here on a financial board and we both know that they don't mix. So you win man. I actually own the stock. And yes I do follow VAR and was linked to this thread via their blog. Buddies? hardly...


On Jun 05 08:40 PM Mr. Ed, Jr. wrote:

> The author states ...
>
> "and will not allow a political party's prepackaged set of talking
> points to dictate my stance on an issue"
>
> Yet, you have.
>
> I will not waste much more time on this, but your rebuttal points
> are pretty ridiculous.
>
> The fact that it was "prepared by staffers" "and presented before
> the United States House of Representatives" is not supposed to be
> a rebuttal, is it ? Or do you not understand how this stuff is generated
> in Congress ?
>
> But this one is the giveaway...."Logically, if an individual's earnings
> are less than the federal poverty line, they will seek out the most
> cost efficient venue to spend their money. That venue is Wal-Mart.
> The beneficiary is Wal-Mart and the Chinese supplier."
>
> So......a citizen who actually looks for the best prices is what
> ? Anti-American ? Because Wal-Mart and "the Chinese supplier" are
> beneficiaries ? Or is it just poor people who shop at Wal-Mart, and
> you are concerned they are being exploited ? This just drives home
> my original point-- this nonsense article is pro-union drivel. <br/>
>
> And I guess your "buddy" (alter-ego ?) , "profithungry" just had
> to make his very first comment in here, defending you and clicking
> on everybody's "thumbs down". Well, click away, clowns. Then, please
> go away.
>

Jun 06 01:08 AM

[buoy:]

Although walmart does not pay the type of wages most desired, they oftentimes contribute to household income paying for small but vital needs (food, utilities, meds, etc.) This, in itself, is viable.

Jun 06 03:46 PM

[wirestripper:]

Good Grief!

More drivel from the social engineers!

LOL:-)

Jun 07 11:02 PM

[aja8888:]

ANY new business coming into a community is offered tax incentives for a period of years. That's how it has worked since I have been siting (site selection work) new businesses in the U.S for the last 30 years. Cities pay incentives for the new business, not mater if it is Wal-Mart or an auto parts manufacturer.

Wages? Wal-Mart is doing what all the retailers are doing. Most people who work at those locations do so to add to family income, get "first job" experience, or just palin do it because that's all there is. At the rate the U.S. is losing it's industrial base, in a few years, those will be the only jobs left unless a person has specialized skills.

Jun 21 11:23 AM

[tired of mi...:]

Why doesn't anyone realize that these figures include many part time workers whose ranks include: retirees, students, people with other part or full time employment, among others. Both my wife and I have worked for the company in two different states. We are both hourly employees. With our (supposed low) pay we are looking to buy a new home. We have prequalified for a $220,000 30 year fixed rate mortgage. This will help keep construction workers employed. We also will have to have new appliances as we currently are renters. Some one will have to manufacture those appliances. We also dine out regularly helping keep restaurant workers employed. By the way our combined earnings just from Walmart are about $60,000 per year. These are good jobs for those who work hard to get ahead and they help support many other jobs in our economy in all fields

Jun 22 05:58 PM