exactly. This recent editorial by a fine economist at Ohio Univ reports on some of the academic studies on Wal-Mart----including one by Sen. Kerry's econ advisor who found that Wal-Mart's prices on food alone boosted the welfare of US shoppers by $50 billion a year!
Wal-Mart against the wall?
By Richard Vedder/ Bryan O'Keefe
August 27, 2006 Washington Times
A democratic presidential candidate on the campaign trail attacking corporations is nothing new. Oil companies, drug manufacturers, and the tobacco industry have all found themselves on the receiving end of election-year criticism from Democratic politicians. Democratic presidential contenders reportedly are at it again. This time, Exxon and Pfizer's public relations departments can rest easier because there is a fresh corporate punching bag: Wal-Mart.
The Wal-Mart attacks hit a high note last week when Delaware's Sen. Joe Biden was quoted at an Iowa event as saying, "My problem with Wal-Mart is that I don't see any indication that they care about the fate of middle-class people." His criticism has been joined by other Democratic presidential hopefuls, including supposed moderates like Indiana's Sen. Evan Bayh.
But while their anticorporate message might resonate against certain corporate targets, Democratic politicians should think twice about viciously -- and unfairly -- tarnishing Wal-Mart simply to score political points with union leaders. That's because there is a very good chance Wal-Mart-bashing might actually turn off the same voters Democrats are trying to get out to the polls.
Take Mr. Biden's comments. Contrary to his claims, there is enormous economic evidence that Wal-Mart's has helped poor and middle class consumers -- in fact, more than anybody else. Our own data analysis shows Wal-Mart is concentrated primarily in smaller, rural counties with a per capita income far lower than other retailers, like Costco. And, unlike the picture painted by labor activists, when the Wal-Mart moves in, good things happen. Looking at 25 small towns where Wal-Mart opened stores in 2002, we found employment growth was much stronger in "Wal-Mart communities" than in other areas.
Other academics have reached similar conclusions about Wal-Mart's positive effects for the poor and middle class. University of Missouri economist Emek Basker shows Wal-Mart's presence tends to lower prices by varying amounts, perhaps nearly 10 percent in the long run.
Respected Massachusetts Institute of Technology economist Jerry Hausman argues that consumer welfare gains are even larger than those estimated by Mr. Basker, probably in excess of 20 percent of sales. Jason Furman, former director of economic policy for John Kerry's presidential campaign, claims Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. These savings help poor and middle-class consumers disproportionately since they spend a greater percentage of their disposable income on food products. Wal-Mart's ability to help poor and middle-class consumers led Mr. Furman to dub the retailer a "progressive success story."
These academic studies are supported by public opinion research. The Pew Research Center last year found households making under $50,000 rated Wal-Mart most positively and shopped there more frequently. Of those who make $20,000 or less, an astonishing 90 percent had a favorable opinion of Wal-Mart. Minorities were also big Wal-Mart fans, with blacks and Hispanics rating the company more positively than Caucasians. Presumably these demographic groups love Wal-Mart because the retailer has helped them stretch their dollars.
Together, these poll results and academic studies demonstrate why the Democrats anti-Wal-Mart fervor could backfire as a campaign message. Most consumers don't interact directly with typically demonized companies like Halliburton. To the extent they do so, it's usually not positive. People don't like paying $3.00 for a gallon of Exxon gasoline or $300 a month in Pfizer prescription medications, even if they benefit from the company's products.
But nearly everyone has had an experience with Wal-Mart and, for the vast majority, that experience was overwhelmingly positive. Wal-Mart's "everyday low prices" have a real-world effect for many consumers, allowing them to save money on common products and greatly expand their overall purchasing power. This is especially true for those at the lower end of the economic scale.
Mr. Biden and others comments could be seen trying to defend the allegedly "abused" Wal-Mart work force. There is no indication, however, that Wal-Mart employees are treated poorly. They make competitive wages by retail standards, in some states twice the federal minimum wage. They also have access to affordable health care plans for as low as $11 a month and can take part in an attractive employee stock ownership plan, fringe benefits that few retailers -- even the much beloved "Mom and Pop" stores -- offer their employees.
The Wal-Mart attacks can also be attributed to Democrats simply competing for the political backing of union bosses, whose failure to organize Wal-Mart workers has led to their own frontal assault against the company. But Wal-Mart is an issue where union leaders and rank-and-file members are not on the same page. For all of labor's criticism of Wal-Mart, 73 percent of union households told Pew that Wal-Mart was a good place for their families to shop.
Perhaps Republicans should welcome this latest line from Democrats. It might be a way for presidential hopefuls to curry favor with union leaders, but we doubt that it will actually play in Peoria.
Richard Vedder is a visiting scholar at the American Enterprise Institute. Along with Wendell Cox, he is the author of the forthcoming book, "The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy" (AEI Press, 2006). Bryan O'Keefe was a researcher for the book.
