Business

If Washington's poor are able to obtain needed household goods at lower prices, they'll have more money left over to buy other products. Those products could include a coffee at Mr Shallal's business, or healthier food, or a training course that will enable them to find a better job.

Do you really believe that?
Poor folks get welfare cards for food.
Poor folks get grants for college, they just have to make time
and effort to get the degree.

I try to hit the local hardware store and other local establishments.

They don't ask for tax abatements and then tout "Everyday low wages."

I see where Home Depot is letting go managers and will hire more part-time employees.

Call me old fashioned, but part of shopping is interacting with someone who is knowledgeable about what you are need, or will suggest an alternative route to fixing a problem or another merchant who may be able to better serve you.

Some of these businesses are family businesses. They may make a few cents more on an item, but at least they will pay taxes, are part of the community, and will not pull up stakes and leave once the tax abatement ends.

On Bill Moyer's PBS program, a reporter told how Wal-Mart employees have to take advantage of every government or other social help program to survive. They do not independently make enough money at Wal-Mart. A former Wal-Mart manager who was with Wal-Mart for 17 years showed a long file he kept of all the social service programs for his employees. He also said that the turn over rate hindered many employees from ever enjoying any company benefits. No one thinks about adding all the extra costs at the end of the bill when they shop at Wal-Mart.

Also...

A Mayor of a Southern California town told how his town gave Wal-Mart $1.2 million dollars to build their store in his town. The town never recouped the money and now Wal-Mart is closing down the store and moving to greener pastures after putting out many local businesses.

Source: http://tapsearch.com/tapartnews/id25.html
(I saw both shows on PBS)

AND.... Because R.A. loves Texas...

Texas gave abatements over $33 million to Walmart, taxes the local guy has to pay.
http://info.tpj.org/watchyourassets/walmart/

Remember when kids played baseball?
Those city league teams were sponsored by local merchants.

Regards

@ hedgefundguy,

So, you are basically saying that Walmart is so horrible, it is better for the unemployed to stay unemployed. Very enlightened viewpoint.

"Nothing like a rich man arguing that new jobs aren't likely to be good enough for workers who are currently unemployed."

Amen R.A.

People have to stop looking at small businesses through rose-colored glasses. Mr. Shallal and Walmart are the same thing - capitalists. Capitalism does not contemplate charity. Capitalism is about one thing and one thing only, maximizing profits. Shallal wants to maximize profits by preventing low-cost competition. Walmart wants to maximize profits by using economies-of-scale to undercut high-cost competitors and making up for the difference in volume sales. Neither gives a damn about you or the local community until their primary purpose (maximizing profits) is met.

LexHumana:

No, hedgefundguy is saying that WalMart drives out local businesses, and local businesses pay better. That is, WalMart does not create new jobs, it merely moves them. The choice is not jobs at WalMart vs. no jobs; the choice is between jobs at WalMart and jobs at local businesses.

What the independent hardware store owner isn't considering is the car. Good cars and roads killed small businesses, not Wally World.

I lived in a small town for 15 years and watched it empty out on weekends as the citizens fled to the big cities over an hour's drive away to do their shopping.

When a Wally World (the Caucasian cultural center) came to town, it boosted sales tax for the town by keeping a few people in town.

"more, Wal-Mart can only pay rock-bottom wages in Washington if there's surplus labour. And if there's surplus labour, well, that may be because businessmen like Mr Shallal are so anxious to shut potential employers out of city of Washington."

That seems a little disingenuous to me. Walmart employs people with no skills whatsoever, and there will ALWAYS be a pool of unemployed unskilled workers in an urban environment. Structural unemployment alone should be enough to depress wages in the segment of labor that Walmart targets, especially given the ease with which Walmart can handle high turnover (partially: economies of scale in HR and new-worker training) relative to smaller competitors. The people who get hurt are those semiskilled (that sounds insulting but seriously my house would have fallen apart long ago without them) employees of the local hardware store that RA visits above, and of course the owners of those businesses.

Also, RA, in your flourish to finish the article with a zinger you have forgotten the definite article ("the") before "city of Washington" in the last sentence of the post.

@fundamentalist

...which is actually why the local hardware stores are going to do just fine when Walmart moves in. Small hardware stores in urban areas cater to DIYers and people with small home projects that live within walking distance. It's not really the same market. The other benefit is that now instead of driving half an hour to a Walmart in Maryland, DC residents will drive 15 minutes to one in DC and boost the District's tax revenues.

Small businesses don't tend to be able to use tax-havens, or offer jobs that leave workers still on welfare. Walmart has no social conscience. Opposing it isn't somehow stupid and immoral.

I also like the idea that the breadline of Washington occasionally popping by for a coffee will make up for the fact that the majority of value added will be sooked up to corporate HQ.

rewt66 wrote: Mar 1st 2011 8:46 GMT
"No, hedgefundguy is saying that WalMart drives out local businesses, and local businesses pay better. That is, WalMart does not create new jobs, it merely moves them. The choice is not jobs at WalMart vs. no jobs; the choice is between jobs at WalMart and jobs at local businesses."

Funny... soooo... you're saying that Walmart moves into an area that has no unemployment and somehow entices all those workers at small businesses to leave their higher-paying jobs and come work for them at a lower wage?

Or maybe you are saying that Walmart comes into an area with no unemployment, and somehow -- without hiring any workers beforehand -- manages to drive all the small businesses out of business, thus forcing the now-unemployed workers from the small businesses to take lower-paying jobs at Walmart?

Or maybe you are saying that Walmart moves into an area with high unemployment, and sucks up all the available labor into lower-paying jobs, thus starving all the small businesses -- who would pay higher wages -- of available workers, thus driving them out of business?

Somehow, your economic theory seems flawed....

@Lexhumana

Stop throwing up straw men. The situations you list are, as your tone implies, ridiculous, and not what happens in the real world, but that doesn't mean that rewt's argument is impossible.

I believe rewt66 is referring to something along the lines of: "wal mart moves into an area with high unemployment and employs some of the unskilled unemployed for wages lower than the local businesses pay. The local businesses lose customers to wal mart and close down, firing all of their employees." So there you get a minimal change in overall unemployment and a reduction in the average wage.

I'm sure the employees of Walmart, the majority of them renters and barely at substinence level, will be sure to buy coffee and tools for home repairs.

Bernardo O'Higgins wrote: Mar 1st 2011 9:57 GMT
"wal mart moves into an area with high unemployment and employs some of the unskilled unemployed for wages lower than the local businesses pay. The local businesses lose customers to wal mart and close down, firing all of their employees."

Soooo.... you are saying that 1) Walmart first creates more jobs than currently exist, 2) the jobs they offer all pay less than local competition, 3) they start undercutting local competition, 4) local competition is incapable of lowering their own labor costs by hiring any of those surplus workers who were clearly willing to work at a lower wage, leading to 5) because of their inability to lower their labor costs to compete, the local competition all go out of business.

Hmm.... I think the chain of reasoning falls apart somewhere around point #4.

Of course, the local competition MAY at first try to lower their labor costs, but for some OTHER reason cannot compete with Walmart. Now, in a world of internet price arbitrage, the cost of inventory to sell is actually pretty constant... Walmart may get occassional bulk rate discounts they can pass on to customers, but for the most part, the identical hammer will cost the same at Walmart as it does at the local hardware store as it does from an online retailer. So cost of inventory is not going to be the make-or-break reason Walmart has more customers.

To save you, and rewt66 and hedgefundguy the time and effort to puzzle this out, fundamentalist pretty much hit the nail on the head: What kills off many urban, neighborhood retailers is not big-box competition; it is the population loss that plague small town "downtowns" due to cheap, suburban land and the easy accessibility to that land provided by the automobile. Small towns have seen a mass exodus to cheap tract housing developments where they can take advantage of things like newer schools and amenities, lower cost-of-living, and better public services. Businesses like Walmart proactively locate to areas where the customers are, not the other way around.

Here is a real world example: I live in a relatively upscale, urban, downtown neighborhood that has a lot of small retailers -- a used book store, lots of restaurants, a small hardware store, a few bakeries (one that specializes in just pies, in fact), dry cleaners, several banks, etc. They are all surviving even in an economic downturn because the neighborhood itself is still pretty densely populated with a population with higher disposable incomes, and all of that local customer traffic takes advantage of the convenience of being able to walk to do their errands, rather than drive 20 minutes to the nearest mall of big-box stores. However, merely a few miles away, in another (worse) part of downtown, there are boarded up retailers and vacant buildings, because the local residents there have fled to the 'burbs. They have fled because of better schools, lower crime, lower taxes, and better public services.

Businesses go where the customers are, and customers go where their quality of life can be maximized. Far too many downtowns suffer from urban ills that drive away their population base. The existence of a Walmart may be the final straw for some customers, but the reason for the failure of a downtown area has nothing to do with whether a Walmart exists or doesn't exist.

If they succeed in shutting Wal Mart out of Washington, people will hop in their cars and head out to suburban Virginia or Md. and the city will lose both sales and tax revenues. A win / win situation.

LexHumana:

Let's review, shall we? R.A. mocked business people for opposing WalMart. hedgefundguy challenged R.A.'s position, arguing that replacing mom-and-pop businesses with WalMart had some significant negative effects on the community. You then said that hedgefundguy's position was that it was better for the unemployed to stay unemployed. I pointed out that that was NOT hedgefundguy's position. You replied with a bunch of snark, but didn't address the issue. Bernardo O'Higgins addressed what you said at least as well as I could. You replied to Bernardo with more snark.

And, even in your scenario, step 4 plays out differently. The local businesses either lower wages or go out of business. If they lower wages, then whether the workers are at WalMart or at the local businesses, they are still working for lower wages! As far as the employees go, this is a net loss. And it's not a net win in terms of number of people employed, either, because to the degree that business goes to WalMart, the mom-and-pop places need fewer employees.

In three tries, you haven't come close to actually answering hedgefundguy's point. Is there something about addressing his actual point that you're allergic to?

I'm not a fan of Wal*Fart, as we call it in these here parts.

However, efficiency of distribution leading to less expensive goods leads to greater utility, as does more efficient manufacturing, communications, etc.

So, while small shops in downtown or urbanized areas can provide aesthetic utility (among things), I think that's a different conversation.

Does anybody actually know if employees working at "mom and pop" stores earn significantly more than Wal-Mart employees?
My understanding of our economy is that if you lack a high school diploma and you don't have an employable skill (like plumbers, electricians, carpenters, etc. do), you're going to get paid very poorly anywhere you attempt to work.

Millions of working Americans qualify for money from the Earned-Income Tax Credit because their income is so low, and I don't think it's because they all work for Wal-Mart.

My (tepid) support for Wal-Mart stems from the belief that a lot of their workers wouldn't be earning more money anywhere else (hence them choosing to work at Wal-Mart), and the community at large benefits from lower prices (which in effect boosts real incomes for everybody in the area). In other words, I see a slight (if any) decline in wages, slight (if any) positive gain in employment, and a fairly significant gain in purchasing power for Wal-Mart customers (many of whom are poor).

Also, to be fair to Wal-Mart, their average wage is about $10 an hour - not fantastic or even good by any measure, but better than minimum wage. If someone could show me evidence that Mom-and-Pop store employees are earning in the $14 to $18 per hour range, I''d be more open to the idea of a moral case against Wal-Mart.

LexHumana:

Attacking the writer and stereotyping?

I could call you a "business socialist" a "business welfare supporter", but I won't.

Do you have any facts, or just blather?

Don't economists and politician tout small businesses as "jobs creators"?

Regards

Mr horn,

You want small businesses to pay wages that are 40%-80% higher that Walmart? Shouldn't it be the other way around?

Sorry, I forgot that upper management needs those extra dollars.

Regards

Wally World starts unskilled and unexperienced workers at the minimum wage. They hire people that no one else will hire. They train them if possible and give them a chance at higher paying jobs outside of Wally World. They expect those people to leave at some point for a better paying job elsewhere and make room for more unskilled and unexperienced workers.

Other retailers who don't want to train inexperienced and unskilled workers use Wally as a filter and a pool of potential workers to hire from.

That business strategy is followed by many companies. For example, the big four accounting firms take recent grads and work them to death, often 100 hours per week. They expect to have a very high turnover rate because they want cheap labor with little experience. They provide training in return. If accounting grads can stick with public accounting for a year or two they have a shot at better work for more money and fewer hours with major corps.

If Wally didn't hire the people he hires, no one else would, except maybe McDonalds.

PS, I hate to sound like an apologist for WalMart. I'm not. I couldn't care less whether they survive or not. I just hate to ignore all of the socialist propaganda about them.