OKAY - THESE PEOPLE OBVIOUSLY HAVE TOOOOOO MUCH TIME ON THEIR HANDS. . .Kate, Neil and Jumpin' Jim Kelly, a.k.a. Uncle Sam, joined the rest of the lunatic fringe and paraded in downtown Salt lake City on Saturday, Nov. 17th in protest of Big Box Stores and in favor of shopping and spending locally.
The festivities were complete with a police motorcycle escort and live music, hence the dancing in the streets pictures.
8 comments:
k.
you know you posted about this twice, right?
...yeah. *thumbs up*
'Grateful for Walmart at Turkey Time'
I think that I am going to use responding to blogs to get out some of my more controversial opinions without the risk of spoiling family gatherings. I figure some people might still be irritated with me, but no one can say it isn't an appropriate forum; I think blogs are supposed to be a bit edgy, at least the right kind of edginess, which maybe someday I'll master. I would also do my own blog, but I am not sure who would read it.
So I have a few questions for the Walmarers. These questions are earnest, they aren't to pin anyone down or anything, I genuinely fail to understand the reaction to this company that I happen to like very much. And nearly everyone in my family disparages Walmart so I don't feel that I am picking on anyone in particular, because my family are all intelligent, competent people that I care for a great deal.
I am having trouble pinpointing exactly what is the objection. There seem to be several possibilities. One, referred to as its categorization as a 'big box' seems to be its size. The fact that one can find anything under one roof. This seems to be the way people like to shop, and I particularlly with four children and a back problem would not like it if there were a countermovement back away from getting everything in one trip, like having to go to the produce market and the bakerey, etc. I spend way too much time shopping as it is. And I think if BBS's won't be our culture's answer to this common wish, I think the internet will just continue to replace these individual stores anyway so they are probably not destined to be saved.
And someone correct me if I err, but are all the BBS's equally villified? Do people demonstrate against Costco and Target, Kmart or Fred Meyer? Home Depot? It seems that all of these stores offer the variety and the bigness of Walmart, and potentially replace small local businesses, too, without drawing the negative publicity and I am not sure I know why.
One thing I hear is that Walmart drives small businesses OOB. I don' think this is true anymore. It may be the case for some businesses, such as ones which are already offering redundant services. For example, if there is a store on Main street that is bragging about offering the cheapest toothpaste and lightbulbs in town, it is likely that they are already in trouble. Grocery and hardware stores frequently offer loss leaders on these types of items. In my town, No Walmart anywhere, there are only what I would call niche businesses, arty stores, music stores, kids' sports equipment, antique stores, things that Wallmart wouldn't touch. And in fact, if our town gets a Walmart, probably fewer people will need to drive to the next town to go to the BBS they already shop at, and most of our town's businesses welcome that development.
Again, the internet is poised to take any business if Walmart holds back. We could have protected blacksmiths who made horseshoes by hand by outlawing cars, but the benefit to the overall society was clear by not doing that.
One reason could be that Wallmart does what Fred Meyer tries to do, they just do it better. For some reason they are able to offer much lower prices. Success always seems to attract detractors, for some reason, I don't tend to understand that either, but at least I recognize it.
And the low wage thing, while being a very common issue for social activism, would not justify targeting Walmart instead of say Target, because I am very sure that there are minimal differences between one business that heavily draws upon low wage workers and another in this respect. And in fact Walmart's mere size may actually be to employee's benefit.
For instance, say your town had a privately owned and operated shoe store. What are the chances that the receptionist is going to begin at that store at any higher than minimum wage? Do any small retailers on main street areas offer much higher than minimum wage to their stock boys or their cleaning crew? I think it is fairly universal that unskilled labor starts at minimum wage if the job market permits.
And do you think that small employers like the local florist have a medical/dental/ or 401 K plan? Walmart does. If you worked in your local stereo equipment store, could you get a transfer to Pennsylvania if you needed one? You could at Walmart. Could you get promoted to supervisor and then to manager after a few years? Probably one of the other three employees, including the owner, already has that job.
And in general, if Walmart isn't good for its employees, how do they get any? We are experiencing some of the lowest unemployment in history right now, and I think slavery is also outlawed, but it doesn't hinder Walmart's attempt to get staffed. And one of the best things for employees everwhere is competition for them as a resource. If there are four BBS's in an area competing for your services, probably very few of them will be able to offer undesirable terms.
And this doesn't touch on what I think are possibly some of Walmart's benefits not just to their employees but to society at large. People speak of a living wage, as if it would really help the American worker if companies were forbidden by law to pay less than 10 dollars an hour. Would 10 dollars an hour make Walmart a good company in its detractors' eyes? How about 20?
Even if you crank up the hourly wage to the point that the stores would go out of business, I dont really Walmart cashier is one that most of us having this discussion hope to one day get a chance to do for a living. But what Walmart does is give anyone a place to start. And they can give many more of us a place to start if the market, not social activists, or the government, choose the wage. Those of us who show up for work and do our best will very likely be working for minimum wage a brief minimum amount of time. And saving money on jobs that require no skills, like sweeping, enable corporations to have more of their resources in planning, marketing, technology, and the real living wage jobs that most of the people who picket seek as careers for themselves.
That is perhaps what I find a bit hypocritical: some people who march as activists do it suposedly over issues about jobs they would never stoop to perform themselves, while they threaten the jobs of those who are actually glad to have them.
One last thing, no one really considers or even knows the impact of making consumer staples available at such reasonable prices. During times of famine and war when these things were soaring in price and people had to stand in line for a chance at flour or toilet paper I doubt they could imagine a day where people would complain that they were available so cheaply and easily. And what is the net effect of this? We can all get further on the money we are able to make, whether it be minimum or much more 'livable.' IN FACT, WALMART TURNS EVERY WAGE INTO A LIVING WAGE. I know I live better on our salary because of big box stores and am thankful for them.
And I am not so unlike anyone else that I would be considered too fortunate or priveleged to benefit from BBS. We have both worked for minimum wage and our kids will too, we assume. My husband and I have what we have because of working hard and living frugally. Shackeling stores like this would make both of these strategies more difficult, leaving us to beg for others' kindness or be resigned to the sphere we were born in rather than do better on our own. I am also thankful that my country doesn't (yet) sentence me to that fate.
But these may not be the issues or views of these family members in particular, so I do hope to be enlightened. Thanks!
Put It On My Tab Uncle Sam
Since my SUV is now equipped with Wifi, I am responding to your blog on the way back from shopping. So please forgive my typos as I only have two hands - one for typing, one for my starbucks hot chocolate, and one for my Blackberry which is now ringing. (oh, and hold on, I have to stop for gas. . . ok, done.) Sheesh, I wish my personal assistant didn’t have the day off today. Note to self: cancel all vacation for the help.
So, who’s this Uncle Sam character on the front page of the paper? Oh my stars and stripes! Is that the same Jim Kelly who once haggled a 6-year old Mexican street boy down to a buck (or was it down from a buck?) for a shoe shine?? What’s ironic is that I’m pretty sure it was Jim who invented Walmart’s corporate purchasing strategies. I mean, good grief, not even WalMart execs can haggle the 3rd world like Noggie Jimbo used to. ;-) LOL. Good memories.
But seriously, congrats to all on the success of the parade. I think it’s great to get out, express an idea, advocate a point of view, have fun, be together, etc. So, my red white and blue top hat’s off to y’all. (oh, hold on, stopping for gas again . . . ok, done.)
And if anyone is interested in my $.02 (which buys a whole bunch of stuff at Walmart, BTW), I am not ashamed to say that morganspice and I share the same points of view on this whole thing. Alas, the capitalist in me is just too unruly to be caged, and curses on the BYU Econ department for teaching me about that darn invisible hand that governs all supply and demand.
So, like CA, I would really love it if someone could articulate exactly what the argument is, and why it applies to Walmart as opposed to other BBS!?!? I’ve read a bunch of blogs/you-tube rants/etc on the subject, and I just simply don’t get it.
Anyways, gotta stop for gas again, so I am off to the nearest consumption junction.
Hope all is well with you and yours.
jph
Kate and Neil both have many insites on the debate(including their latest post on their website: www.kateandneil.com. I suggest starting there for some answers. :)
This post from my friend Ash is a very factual piece in which you will find many articulate answers to common questions about box stores. While practices and benefits vary, the environmental and competitive arguments apply to all BBStores.
Please also read my article at http://www.kateandneil.com/135/people-before-profit/
"Saturday, November 17th was the International Day of Action Against Big Box Stores, a title that was obviously not orchestrated by anyone with any acronym experience. Nevertheless, and despite my ardor for acronyms, I became the organizer for the Salt Lake action–one of hundreds of actions occurring in sixteen countries around the globe. Instead of doing a traditional march or protest, I decided to host a whimsical, artistic Shop Outside the Box Parade that featured the Four Horses of the Shopocalypse and the Arm-O-Gettin’ and Givin’ (the good arm giveth and and the good arm taketh away). It also featured two floats–one, a big box designed by local graffiti artists, and the other, a float made entirely out of materials salvaged from big box dumpsters (350 Styrofoam penguins, seals, and polars bears harvested from the Michael’s garbage bin). I will write more on the parade later. This post is designed to respond to the hundreds of negative emails I received from people arguing for everything from the innocuousness of big box stores to their savior status in our modern economy. One, from my friend Viper, (not a negative post, just a disagreeing one) prompted me to assemble a list of very important facts that counter the common but severely misguided arguments people make in favor of big box stores. Viper’s comments are included. Please take time to read this fact sheet, especially before you do your Christmas shopping. As always, I will include the actual document but give you a teaser first:
I don’t think I need to mention again that the economy we are supporting when we support big box stores is a mono-economy—or, at very least, would like to be. It is an economy of few options in terms of ethics and freedom that is sold to us in the name of increased consumer options—which, when boiled down, are just options of choosing between different kinds of poorly-made things sold for prices that hide their real costs. The dangers of mono-economies are real; concentrated power threatens the democratic process just when it is needed most: to curb the excesses and extravagances of unchecked big business. The ultimate triumph of an ideology occurs when people use that ideology to justify their own oppression or their own right to oppress. The Wal-Mart ideology (and I use Wal-Mart as a canopy term for all big box stores) has triumphed because it has gotten us to justify our increasing poverty, poor health, lack of freedom, and degraded environment in the name of cheap things. It has also gotten us to defend our right to take these things from others, even arguing that we are doing them a favor in the long run. It has gotten us to use a partial economic language—in which cost only refers to how much something is worth and not how much it harms—to comprehensively endorse excess. We talk about this economy as if it is inevitable, and we talk about people who disagree with it as if they were naïve Luddites with a vendetta against the good life. We say that opposing these market forces is uncouth and extreme. We are wrong. These stores are not inevitable; they depend on us to consume both their products and their rhetoric. We can stop them if we stop shopping at their stores. The people who oppose them are not naïve; usually they are the same people who have looked beyond the sacred cow of cheapness and, at very least, tried to use the term ‘cost’ in its fullest sense. The basic fact is that our lifestyle is not normal. Nor are our justifications for it. Our justifications and expectations are the indirect result of public relations campaigns (started in the 1950’s to justify A&P’s dominance) that convinced us that consuming was more important than justice, responsibility, community, and ethics, and that cheapness was a god that could never be fed enough. We should be utterly ashamed if the best we can do as humans is to invent reasons why we are not responsible for our actions, and to use false dichotomies to pretend that we are forced to harm people or else obliterate our economy. There is a hidden premise: that we should not be asked to do anything for each other but consume, and that freedom means nothing but the freedom to shop. I avoid any argument that tells me that I must do harm in order to do a dubious kind of good—that I must oppress someone else to get them cheaper goods someday. If we don’t want to change our lifestyles to benefit each other, we should just say that. It is a shorter argument and spares people who have read books the task of giving facts to people who won’t care anyway. It is dangerous to use the word ‘rationality’ to hide our desire to be irresponsible; it is akin to saying “Give me the facts that will horrify me into being good,” rather than engaging in a conversation about obligations, ethics, and compassion in a changing world. Economics does not mean facts without humanity (and, in fact, neither does the poor, abused word ‘rationality’). Economists have always understood that we do things for reasons, and that our ultimate ‘reasons’ are emotional and include words that cannot be directly quantified: happiness, care, and even quality of life. We have insulted and misunderstood economics if we turn it into a grim justification for consumer survival. At its most conservative, economics is a description of behaviors based on motive theories. At best, these description should help us to examine and assess our motives; at worst, these descriptions are used prescriptively to argue for fatalism, market relativism, and moral moderation in a time of material extremism. It is not right to abuse a whole discipline to justify our moral mediocrity.
Viper: What’s wrong with Wal-Mart?
So, I was just reading an article in the Salt Lake Tribune about a protest recently in Salt Lake City against big box stores. I’ve mentioned something about this previously, but I am going to mention it again. Can someone please explain to me what the problem with big box stores is? I don’t understand why it’s better to be buying from local businesses. Every time I hear people harping on this issue, they seem to just accept it without explanation that buying local is a good
thing. I for one do not understand why buying locally is a good thing.
Ash: I organized the protest in Salt Lake, and I hope you will believe that I organized it because of the following facts, rather than that I am listing the following facts because I organized it. I believe that very few people have factual information about this topic, and so I will try to offer some facts to your question about why big box stores are bad. But, believing that economic discussions are frequently used to obscure the real discussion—a discussion on ethics and responsibility—I will also include comments about what I believe are better ways to frame the discussion. The ensuing facts are meant to be a kind of fact sheet, and, as such, many are paraphrased from a very informative book, Big Box Swindle, by Stacy Mitchell. While the title might make it sound like a sensationalized bestseller, it is actually an extremely responsible, well-researched book that I think everyone should read. The book does argue against big chains, but I don’t think this is a pre-decided bias; I think it is a well-earned opinion based on the massive research it contains. I would be happy to provide citations for any of the statistics below (I just didn’t want to lengthen my already lengthy response with dozens of footnotes). I would also be happy to provide stats from other books as well; I am on vacation, however, and happened to have Big Box Swindle with me. Since this is a really long comment, and since you asked for rebuttals, you could post it on your site as a guest post so that people can read it and join the discussion. Thank you!
To begin with, many people will say that Wal-Mart is bad because of their health-care policies. There is some definite truth to this argument. Wal-Mart needs to fix this, and the government has started stepping in to make them do something about it. Regardless, I question the sort of health-care that people are receiving working at locally owned businesses. A small business oftentimes can’t afford good health-care for their employees because of the volume issue.
· Let’s start with some simple facts about healthcare and wages at Wal-Mart, and move to stats about small businesses. First: Although many chains provide supposed healthcare plans, the coverage is so meager and the premiums so high that almost none of their employees can afford it. Plus, most stores deny these benefits to part-time employees (while ensuring that as many people as possible work part-time) and require the employee to work a year before qualifying.
· Wal-Mart’s healthcare premium runs at $300, a significant cost for people working under the poverty line. Almost 40 percent of Wal-Mart’s workforce does not even qualify, not to mention the 1/3 that does not enroll because they can’t afford it and because the deductible is a measly $350 without even covering basics like check-ups and immunizations.
· As I’m sure you know, the chains’ deplorably meager healthcare plans (with the notable exception of Costco) cause many employees to depend on food stamps, public housing, and Medicaid. In 2006, for instance, Massachusetts reported that it was spending $212 million annually to pay health insurance for employees of the world’s largest corporations. Thirteen of these twenty businesses were retail and restaurant chains, including Target, Home Depot, Burger King, CVS, and, of course, Wal-Mart. In Arkansas, 4,000 Wal-Mart employees and 1,200 Target employees rely on Medicaid or food stamps.
· I am not very versed in facts about healthcare plans at small businesses, but I know that you are right to say that it’s a burden for these small businesses to provide healthcare. Nevertheless, the answer to the healthcare problem should not be abdicating to big box stores, who have miserable healthcare records and consider their employees as costs and resources rather than assets. We can be more economically imaginative. We could imitate Santa Cruz and transfer city pensions and stocks to local banks as a source of lending capital for local businesses, we could provide incubators to financially support businesses while they develop better business plans and learn the ropes, we could pass laws helping small businesses to provide care, or, of course, we could pass single payer healthcare. All of this money could be converted from the money we would otherwise spend on subsidies (1 billion on Wal-Mart in the ‘90s), infrastructure, and collateral healthcare costs to support big box stores. We do not have to hope for the best of the worst and tacitly or overtly support unscrupulous businesses that demean and manipulate people. We can do better by thinking a little harder. The argument that we should either accept the horrifying practices of big business or agree to the drawbacks of small businesses is a false dichotomy, and therefore fallacious. Many economists (especially students who attend BYU) love to argue by using the false dichotomy, as if the only options were to pay Chinese kids 12 cents an hour in horrible conditions or revert back to the Stone Age. There are always more than two options, provided that we don’t convince ourselves with insidious arguments designed to shrug off our ethical responsibilities in a modern economy.
The wage issue is brought up a lot as well.
· Retail wages are lagging behind increases in other sectors by a margin of 14 percent, a fact due largely to the expansion of a few mega-retailers and their ability to push down labor costs.
· One in five Americans work in retail, a figure that has skyrocketed since big box stores crowded out manufacturing and small business jobs and frequently became the only options in town. Only 16 percent of people working retail in America are teenagers; the majority are over 35. Nearly one-third earn less than $15,000 a year (stats based on supporting a family of three).
· Half of Wal-Mart’s employees quit or are fired within the first year of working. This is not accidental; Wal-Mart does this to keep costs down by hiring new people at entry-level pay. A memo about these practices even leaked to the press: Susan Chambers, executive vice president for benefits, sent out a letter reminding store managers that “the cost of an associate with seven years tenure is almost 55 percent more than the cost of an employee with one year of tenure, yet there is no difference in his or her productivity.”
· In the Minneapolis area, Target pays an average of $6.25 to $8.00 an hour. To contextualize this, a single parent with one child in Cedar Rapids, Iowa, would need to earn $12.60 an hour to meet the most basic transportation, health, and housing costs.
· Wal-Mart ensures lower labor costs by allotting store managers less money than they need to match payroll expenses. The manager, desperate to keep his (almost never her, incidentally) job, will do whatever it takes to make that amount of money work. Those who don’t are routinely fired.
· It is also the store managers’ job to snuff out unions; the National Labor Relations Board has reported sixty complaints of managers spying on, threatening, or firing workers who supported unions. When a group of Wal-Mart’s Quebec employees formed a union, the store responded by shutting down and firing all 200 workers.
· Almost all the big chains (everyone from Albertsons to RadioShack) have faced lawsuits for deleting hours, forcing employees to work unpaid overtime, using undocumented workers, violating child labor laws and discriminating against women and the elderly. Although these chains gain billions for these unethical practices, they are penalized for mere fractions of their gains.
· Big chains frequently use their might to fight measures to increase the minimum wage; in 2004, Outback Steakhouse, Olive Garden, and Publix supermarkets spent $1 million to convince voters to reject raising the minimum wage to $6.15 an hour.
But what sort of wages can a locally-owned business pay? Clearly they can’t compete in this area
for the same reason that they can’t compete when it comes to prices.
· It is obvious that many small businesses do not offer decent wages, either, but they also lack the market power and leverage to push prices to the bottom and to evade authorities and regulations. Additionally, a diverse market full of all sorts of small businesses—even with some that pay well and some that don’t—keeps the democratic power in the hands of the people (who can boycott stores for unethical practices) and also ensures a variety of employment options. That way, if one company is abusing its workforce, its employees can go elsewhere. Because of the glut of mega-retail, there are many cities in America where working for a big box store or chain is the only option. This leaves employees with no place to go if they are mistreated. The chains know this, and use it to exploit and mistreat employees even more than they normally would, knowing that they have the market power to determine prices and a pool of people who are desperate enough to work for them if another person refuses. I shouldn’t have to remind anybody that this kind of market concentration severely threatens the success of a democracy.
· The wages that local businesses pay vary widely from one store to another, but many pay substantially more than big box stores. This is logical for several reasons: One, they are part of their community and frequently know their employees well, which motivates them to provide a basic living for them. Two, they are more beholden to the community and more likely to be punished for bad business practices if they do err. Three, they are beholden to themselves and their employees, not shareholders and the corporate requirement to increase profits every year (it is essentially illegal, thanks to several Supreme Court decisions, to fail to increase shareholder profits). Four, they must compete with other small businesses in their community that pay employees more. Admittedly, much could be done to help small businesses pay a living wage, but the answer is not to concentrate decision-making power in the hands of giant corporations. One answer might be to use the millions of dollars that would otherwise go to infrastructure, subsidies, tax breaks, and hidden costs and use them to provide some breaks and incentives for small businesses to improve wages and provide healthcare.
Small businesses don’t have the infrastructure and pull with suppliers to get the prices that stores like Wal-Mart can pull down. So, maybe I’m wrong on this, but I highly doubt that locally owned businesses are paying them employees any better than the box stores. Also, what sort of job security can they offer? Very little. Small businesses fail all the time because the owners aren’t business people.
· Small businesses from a variety of different sectors are forming alliances, trade associations, and cooperatives to give them the purchasing power that bigger businesses enjoy, without sacrificing the expertise, ethics, and community ties that big box stores do not provide. The National Community Pharmacists Association is one such alliance, as is the Alliance of Independent Media Stores, the Austin Independent Business Alliance, and Ace Hardware. These cooperatives not only provide collective buying power; they also train and mentor new business owners and provide loans.
Though touched on in the previous paragraph, it bares emphasizing, box stores can get better prices for their customers. If you’ve never read “The World is Flat” by Thomas Friedman, it’s worth a read. He explains the whole Wal-Mart supply chain. It is impressive and explains very clearly why Wal-Mart can undercut others on prices. It isn’t because of they are doing anything underhanded it’s simply because they have
an incredible supply chain.
· To say that Wal-Mart and other big box stores do not engage in underhanded economics is a grossly uneducated comment. I could write an almost endless paper about the illegal, unethical, and coercive business practices encouraged by mega-retail. Kate has already posted my comments about Wal-Mart’s practices of strong-arming manufacturers, so I will mention only a little more and then ask you to please be more responsible in your comments—unless, that is, you have read all the things I have and do not find them unethical. If that is the case, then I know of no better argument against you then your own self, since this would mean you have been so convinced by the 1950’s-based PR campaigns that you believe that cheap is worth any human, environmental, or externalized cost, and that our job is merely to consume as much as we can to keep the economy “booming”—an economy that has become a value in and of itself. Our only other job would be to argue for our own oppression, a feat that the chains have somehow convinced us to do in exchange for some cheap vacuums and a bargain pair of Nikes. But back to the strong-arming:
· Big chains have become so powerful that they not only determine what is produced and where, but even how it is produced, who produces it, and for whom. These chains have captured one-third of the market for most goods, and tower over even the biggest manufacturing giants. For example, Wal-Mart alone accounts for 15 percent of Proctor and Gamble’s revenue—$10 billion a year. This gives Wal-Mart such power that they can actually require hundreds of P&G’s employees to work for them for free. P&G, as I have mentioned before, employed dozens of people to do all of Wal-Mart’s research and development for a new brand of washing detergent. When they were finished, Wal-Mart thanked them by taking all their market and product research and producing a new store-brand detergent, which they hid behind another name and which now sells better than P&G’s Tide. This is just one of thousands of cases in which a big box stores passed on its costs to its suppliers and manufacturers and then reaped the benefits. The suppliers and manufacturers, in turn, must pass on their costs to others—in other words, small businesses. This practice is so prevalent that most suppliers have price sheet for chains and a separate price sheet for other businesses.
· Let’s move on to the most erroneous marketing deception: that Wal-Mart and other chains have better prices. This is important because it is what makes it all worth it, all the underhandedness and the waste and the mistreatment of people: the products are cheap! Not necessarily. Since Wal-Mart and other chains have such vast purchasing power and such meager scruples, they can afford to engage in predatory development and loss leader pricing. A big box does not move into a community because of market demand (more on that later); they move in to exercise their size-might and displace pre-existing businesses. They will move into a community and sell at a loss for several years, marking their products far below competitors’ prices and selling common items at the front of the store at a total loss—banking on the fact that these products will draw people in and get them to buy a normally-priced product somewhere else in the store. After a few years of loss pricing, which serves to convince people that chains offer lower prices, big boxes will raise their prices to normal levels. At that point, though, no one bothers to notice; they have already been convinced that big boxes are cheaper and will continue to patronize the store for, if nothing else, the few products sold as perennial loss-leaders: toothpaste, diapers, etc. Studies have shown that Wal-Mart’s prices vary widely from region to region and depend on the level of competition in the area; a cart of groceries in a town with other competing groceries will be much lower than a cart of groceries in a city where Wal-Mart has already driven out the competition.
· Don’t believe it? A comparison between Allen’s supermarket (Hastings, Nebraska) and Wal-Mart might persuade otherwise. If not, there are dozens of similar studies. Wal-Mart opened its Hastings store in 1990. As of 1993, Wal-Mart sold Crest toothpaste for $.62, while Allen’s sold it for $1.89; Bayer Aspirin was $1.56 at Wal-Mart and $4.99 at Allen’s. By 2000, Wal-Mart’s Crest was $1.87 and Allen’s was $2.15, and the Bayer sold for $5.78 and $5.49, respectively. Small businesses sometimes compete in a similar way, but, once again, do not have the dominance and power to sell at a perennial loss or to prey on other businesses. Many do not have even the desire to do so.
Now, people are quick to say that even if buying locally is a little more expensive, it’s worth it. Well, that’s fine for those of us who are doing well financially. But, how about the minimum-wage single-parent home? Wal-Mart is a life-saver for folk like that. Of
course, the claim is that Wal-Mart is the reason they are poor. But that is just downright ridiculous. Wal-Mart has not caused an increase in the poor. Quite the opposite, it has provided jobs to a lot of people. The low prices at box stores are a huge gain for a family on a small income.
· These claims are not factual. Since 1985, the money flowing to the middle class (the middle 60 percent of income) has decreased from 52 to 48 percent, even as the middle class puts in 400 more work hours annually than they did twenty years ago. Additionally, middle class incomes have fluctuated dramatically, and society’s middle often cannot afford even basic things like healthcare.
· As for the poorer classes, poverty is no longer the domain of the unemployed; even people with full-time jobs frequently do not make enough to cover basic living costs. Perhaps this is because 30 million Americans are making less the $8.70 an hour.
· The amount of money reaching the poorest 20 percent of the population has fallen from 5 to 4 percent since 1985, while the rich’s share has increased from 43 to 48 percent. To make things worse, the jobs that are being ‘created’ pay less than before; in New Hampshire, for example, they pay 35 percent less. Social mobility is also declining, and the poor are more likely to stay poor than before.
· Now for the compelling but false claim that mega-retailers create more jobs. Again and again, the jobs that big boxes supposedly create come at the cost of the same amount of jobs somewhere else. An example: When Wal-Mart caused Bob Sowers’ grocery to close in Athens, Georgia, it eliminated 135 jobs—jobs that paid 20 percent more than Wal-Mart and offered healthcare. Once you factor in the amount of collateral economic damage big boxes do (since they depend on their corporation to perform the services that local businesses hire out to local contractors) the losses are astounding. The amount of money people spend depends on how much they have and what they want; a new store does not increase spending power, it disperses it. The chains, therefore, do not create jobs, they steal them from an existing pool. Similarly, they do not create more wealth, they grab it through predatory pricing and opportunism. Since many stores can sell at a loss for years and have the power to saturate markets and obliterate ‘competition’, the promises lose a bit of economic luster.
· Some harder statistics: An Iowa State University study showed that Wal-Mart actually cost Iowa jobs and money. From 1983 to 1993, Wal-Mart expanded from one to forty-five stores. Nevertheless, the state lost 555 grocery stores, 591 hardware stores, 161 variety stores, 88 department stores, 291 apparel stores, 153 shoe stores, 116 drug stores, 111 jewelry stores, and 94 garden stores. It doesn’t take a mathematician to multiply the ensuing job losses. A detailed, comprehensive study by the University of California at Irvine found that, on average, a new Wal-Mart actually eliminated 180 jobs and led to total payroll reductions of $2 million. In other words, the big box store employed fewer people at lower wages.
· The most dire consequence of this race to the bottom is that it perpetuates the very shopping cycle that mega-retailers want: strapped with low-paying jobs, mounting expenses, and few other options, Americans are even more likely to be lured by cheap prices, even welcoming the problem stores as saviors. We can say that all this is worth it as long as we get cheap goods. Even if this unethical consumer philosophy dominates, however, we still don’t get our money’s worth. We will have cheap toasters at the cost of our healthcare, education, jobs and quality of life. We will be dependent on very few chains (themselves dependent on a volatile market) for everything we need—chains that have proven to care nothing for their consumers and employees.
The gains from box stores are many as well. The benefit to low income families has already been mentioned. Another benefit is the gain in efficiency. Rather than drive your car to five different stores, you can go to just one place. Not only do you save time, but you also drive less–which is better for the environment.
· Shopping-related driving has expanded twice as fast as driving for other purposes; between 1991 and 2001, shopping mileage for an average household increased by 40 percent. This is not due to greater numbers of small businesses, but, rather, a glut of chains and big boxes.
· Chain stores serve a wider geographic population than local grocery stores and are thus farther from home; as of 2001, the distance traveled for shopping averaged 7 miles (5 miles ten years earlier, and much less before that). This increasing distance is directly correlated to the rise of big box stores, since their size and scope dictate that they be built on the suburban fringe.
· This extra driving is not due to more shopping trips; rather, it is due to more shopping trips in cars—trips that are necessitated by both the distance, format, and size of a big box store. To illustrate: If the nearest grocery store is seven miles away, about 100,000 square feet big, and surrounded by an enormous parking lot, going to the store five times a week to pick up various items—a common practice when Main streets were thriving and walkable—is almost impossible. The size of the store demands a “big” shopping trip, the distance requires a car, and the parking lot reinforces the need. The format of big box stores is so hostile to pedestrians that even big box complexes located on public transit lines fail to entice pedestrian shoppers. In El Cerrito, California, for example, residents walk to the store 1/3 as often as residents in other neighborhoods with similar demographics due to one difference alone: Despite being close to public transit and most homes, El Cerrito’s shopping district is housed in a large strip mall with several big box stores and lots of parking, whereas other neighborhoods in the study did their shopping on a more traditional Main Street.
Don’t believe it? Researchers at the University of California did a study on this very thing. They tracked shopping patterns in two communities outside of San Francisco. These communities are extremely similar in their distance from SF, their income levels, and even their transportation options. The only difference is that one—Rockridge—has a bustling, compact Main Street with many small stores, and the other—Lafayette—has low-density housing and is served by several strip malls/big box complexes. Researchers found that Lafayette residents used their car for 98 percent of their shopping trips, while Rockridge residents used their car only 20 percent of the time. What’s more, Lafayette residents traveled twice as far by car to get their groceries.
The average adult (under 65) spends 426 hours a year driving; 100 of those hours are dedicated entirely to shopping. This much driving means that an average household spends 1 out of every 5 of its dollars on transportation. If you are keeping track, that is more money than that household spends on healthcare and food combined. This statistic does not represent gradual growth; it is double what the prior generation spent on transportation.
The cost of maintaining the roads that allow for this car-swell is hardly efficient; even after gas taxes it costs us $2 trillion a year in direct costs alone—14 percent of our GDP and two times what other developed nations spend.
And now, of course, the oil stats: The United States is responsible for 5 percent of the world’s population and 25 percent of its oil use. If we are driving an extra 95 billion miles compared to our 1990 level, that means we are emitting 40 million extra metric tons of carbon dioxide each year. Hardly efficient, hardly environmental.
Also, the space required for one box store is far less than the space used by a sprawling downtown.
There are dozens of objections to this argument. I will mention only a few.
· As of 2005, Wal-Mart alone boasted 6,000 stores worldwide. Each of Wal-Mart’s stores is roughly the size of three football fields. There are 3,800 stores in the United States alone, which accounts for 600 million square feet of land. If you can’t visualize 600 million square feet, think of it this way: Wal-Mart could fit every man, woman, and child in the United Sates in that kind of space. This does not include the size of other big box stores. Since most cities include dozens—the Dallas-Ft. Worth area alone has 104 Wal-Marts—the amount of land required is almost unimaginable.
· An average big box store (in its preferred suburban format) takes up 4 acres of land and requires several more for parking. This same store in a 4-story downtown building would require only one acre, and parking would be deliberately limited and then supplemented by public transportation. It is important to emphasize that few traditional businesses would ever be this big in the first place, so downtowns would take up even less space without big box stores in general.
· Big boxes do not expand to meet increases in market demand. They increase in order to drive out competitors, benefit shareholders, send a message of dominance, and increase revenue at new stores. In fact, big box stores depend on unnecessary new stores to meet impossible growth expectations. In 2004, for example, Lowes derived only 1/3 of its revenue from stores that were more than one year old. The rest came from relentlessly constructing new stores that were not dictated by the demands of the market. Small businesses do not have the power or the desire to expand at such a rate, and so a downtown filled with small businesses would be much more compact than a city filled with ever-expanding big box stores.
· From 1995-2005, both Target and Wal-Mart have expanded their total floor space at the rate of 8 percent a year, which translates into 50 million square feet of store space annually.
· One example of wasteful land use in a big box economy: Since the 1960’s, the Cleveland metro’s population has declined slightly. In spite of the declining population, big box development razed and then built up over 9,000 acres of farmland. In 2003, Cleveland added 2.7 million square feet of store space and the region zoned 77 miles of land to house 4,000 new big box stores.
· Between 1960 and 2005, the amount of square feet of retail space per person in the United States jumped from four square feet to thirty-eight. Add to that three feet of paved parking for every one foot of store space, and you have quite the land glut. The amount of land used did not come because of small businesses or market demand; in fact, median family income has increased 80 percent in the last 40 years, while retail space has increased by 850 percent. The increase came from relentlessly-expanding big box stores and their irresponsible land use practices.
· This expansion is not efficient and ends up costing the city enormously in terms of infrastructure, police, and the tax base. The illusion that big box stores bolster the economy is strong because the costs of inefficiency are dispersed, but the price tag has even increased taxes in order to offset the increasing expense of operating local governments. While big box retail costs the city $1,023 per one thousand square feet (shopping centers cost $1,248 and fast food chains cost a whopping $7,284), small businesses cost the city only $786.
Box stores are well funded so they provide security. Rarely do you see box stores going under, whereas local businesses are failing all the time.
· A study by PricewaterhouseCoopers estimated that, at the low end, 140 malls in America are dead and 250 are about to die. This means that only about 25 percent of malls are successful right now, a rate directly influenced by the unnecessary glut of newer big box retail. (If you would counter by claiming that this is a sign of big box success and small business’ or malls’ inability to compete, you would be wrong. These big box projects are usually heavily subsidized by paid-off city councils that believe the sound-bytes about jobs so much that they do not even check the retail saturation in their town before approving projects. In Cleveland, for another example, the city approved 10 million feet of new big box retail without acknowledging that they had 10 million feet of vacant retail already in their city, dealing a second death blow to the small businesses in the city proper.)
· Studies estimate that America is burdened by almost1 billion square feet of vacant retail space, not including the billions of feet of parking surrounding these stores. These vacancies include small business that have folded due largely to big box overdevelopment, but the bulk of the square footage is due to big box stores themselves, as they close smaller sites to open superstores a mile away, or move across the county line to reap more lucrative tax breaks and subsidies. Even conservative firms like PricewaterhouseCoopers are alarmed, and they spell it out in clear language: “The most over-retailed country in the world hardly needs more shopping outlets of any kind.” This is more frightening when you know the growth statistics and projections of the big box stores: Walgreens, for example, plans to open a store every day from 2005 to the beginning of 2010. Wal-Mart has similar plans, and has decided to abandon their old store formats and build only supercenters from here on out.
· Big box stores are so powerful, and their growth so out of step with actual market demand, that they have not only killed off malls and shopping centers but have started to kill off each other. As of 2001, for example, Charlotte, North Carolina contained thirty-one vacant big box stores, while Columbus, Ohio reported sixty-nine. Kansas City had thirty-nine vacant big box stores (about 2.3 million square feet) even as it approved 3 million additional square feet of big box development. These are not isolated statistics; you can find similar numbers for most cities in America.
· As mentioned before, many big box vacancies are often not even due to failure, but to success and to stock market pressures to expand indefinitely. There are dozen such stories, but I will only mention one. Wal-Mart alone has 350 empty superstores in the United States, most all of them deliberate vacancies: 28 stores in Georgia, 36 in Texas, 18 in Arkansas, 19 in Tennessee, and 15 in Louisiana. Many cities are on their third Wal-Mart, as the company abandons stores after only a few years to build bigger and bigger stores in the same local vicinity.
· These abandoned stores invite crime and vandalism and impose huge costs on their host cities. Developers and big box retailers, however, are seldom responsible for any of the costs. Since developers have cashed out long before the store goes defunct, and since many big box stores have an economic stranglehold on the community (a strategic advantage bolstered by threats to pull out and leave the city with an unusable building and a drain on tax revenue) they can coerce the city to pledge even more subsidies or tax breaks. When they leave, as most do eventually, the city is often stuck with contracts prohibiting them from leasing to the store’s competitors, and has to spend millions of dollars to raze or convert the store. Many cities, such as Charlotte, North Carolina, paid $10 million to set up Target in an abandoned Circuit City, even though Target itself had already abandoned two sites in the city. While Main Streets are versatile and can be converted to other uses if tenants move out, big box stores are almost impossible to reuse.
· This information is only the beginning, but should already make it clear that small businesses are not folding because they are weak or cannot compete. They are folding because of grossly wasteful land practices that pull resources and shoppers out of the city and into a suburban ring of big boxes that will themselves go dark and contribute to the bulk of the problem. Even more clear is the fact that big box stores are not at all interested in the economic interests of the community, and have the power and incentive (and outright lack of scruples) to exploit the city for whatever they need, a practice that few small businesses have the power—and, with their ties to the community, the desire—to imitate. Many scholars have compared this practice to the exploitative practices of colonialism, in which wealthy people do whatever is necessary to extract resources and money from a community without any intention of benefiting that place.
Also, since they are well-funded, they can pay for security. So they remain safe places, which cannot be said for a lot of locally owned downtown areas in large cities.
· In Royal Palm Beach, Florida, a big box cluster of Home Depot, Lowe’s, and Wal-Mart resulted in 1,500 additional police calls a year, which, of course, required more officers and even a new police station.
· In East Lampeter, Pennsylvania, judges have added two days to their court calendars to deal exclusively with crimes at the local Wal-Mart, which accounts for 1/3 of the area’s crime—from misdemeanors to felonies.
· After factoring in police costs, big boxes are seen to cost cities enormous amounts of money: In Barnstable, Massachusetts, big box stores cost the city 59,000 more dollars than they add in revenue.
I just can’t see the problem with big box stores. This may come as a big surprise to those who know me as I am generally a bleeding-heart liberal. But before that, I am a rational person. And I can’t find any rational reason to fight the box stores. Ultimately it comes down the issue of paradigm shifts. The world is changing. We can either fight it (and get trampled) or figure out how to work with the changing world. Every new innovation brings joy to many, but unemployment to a few. You can either complain and try to get the government to hold back the whole economy simply because you don’t want to change jobs, or you can accept your fate and move on. Let’s chose to move on.
I don’t think I need to mention again that the economy we are supporting when we support big box stores is a mono-economy—or, at very least, would like to be. It is an economy of few options in terms of ethics and freedom that is sold to us in the name of increased consumer options—which, when boiled down, are just options of choosing between different kinds of poorly-made things sold for prices that hide their real costs. The dangers of mono-economies are real; concentrated power threatens the democratic process just when it is needed most: to curb the excesses and extravagances of unchecked big business. The ultimate triumph of an ideology occurs when people use that ideology to justify their own oppression or their own right to oppress. The Wal-Mart ideology (and I use Wal-Mart as a canopy term for all big box stores) has triumphed because it has gotten us to justify our increasing poverty, poor health, lack of freedom, and degraded environment in the name of cheap things. It has also gotten us to defend our right to take these things from others, even arguing that we are doing them a favor in the long run. It has gotten us to use a partial economic language—in which cost only refers to how much something is worth and not how much it harms—to comprehensively endorse excess. We talk about this economy as if it is inevitable, and we talk about people who disagree with it as if they were naïve Luddites with a vendetta against the good life. We say that opposing these market forces is uncouth and extreme. We are wrong. These stores are not inevitable; they depend on us to consume both their products and their rhetoric. We can stop them if we stop shopping at their stores. The people who oppose them are not naïve; usually they are the same people who have looked beyond the sacred cow of cheapness and, at very least, tried to use the term ‘cost’ in its fullest sense. The basic fact is that our lifestyle is not normal. Nor are our justifications for it. Our justifications and expectations are the indirect result of public relations campaigns (started in the 1950’s to justify A&P’s dominance) that convinced us that consuming was more important than justice, responsibility, community, and ethics, and that cheapness was a god that could never be fed enough. We should be utterly ashamed if the best we can do as humans is to invent reasons why we are not responsible for our actions, and to use false dichotomies to pretend that we are forced to harm people or else obliterate our economy. There is a hidden premise: that we should not be asked to do anything for each other but consume, and that freedom means nothing but the freedom to shop. I avoid any argument that tells me that I must do harm in order to do a dubious kind of good—that I must oppress someone else to get them cheaper goods someday. If we don’t want to change our lifestyles to benefit each other, we should just say that. It is a shorter argument and spares people who have read books the task of giving facts to people who won’t care anyway. It is dangerous to use the word ‘rationality’ to hide our desire to be irresponsible; it is akin to saying “Give me the facts that will horrify me into being good,” rather than engaging in a conversation about obligations, ethics, and compassion in a changing world. Economics does not mean facts without humanity (and, in fact, neither does the poor, abused word ‘rationality’). Economists have always understood that we do things for reasons, and that our ultimate ‘reasons’ are emotional and include words that cannot be directly quantified: happiness, care, and even quality of life. We have insulted and misunderstood economics if we turn it into a grim justification for consumer survival. At its most conservative, economics is a description of behaviors based on motive theories. At best, these description should help us to examine and assess our motives; at worst, these descriptions are used prescriptively to argue for fatalism, market relativism, and moral moderation in a time of material extremism. It is not right to abuse a whole discipline to justify our moral mediocrity."
OK, I am going to quit my job so that I can keep up with which stores are economically/environmentally/ethically pure enough to be graced with my spending. But wait, then I'll be unemployed . . . hence no consuming to be done . . . oh wait! I hear Walmart is hiring!!!
Domestic Diva Donna
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