President McGovern (!), Wal-Mart II, Drug Policy

It might seem ungracious to say anything too critical on a day the RTD saw fit to publish most of the letter on Iraq I submitted ten days ago. (Good for them!) So we’ll limit this post to three relatively brief comments.

First, the main news section carried an interesting “big ideas”-type piece on retrospective voting, based on a recent Ohio U. Poll: If they could do it all over, who would Americans have voted for in Presidential elections dating back to 1960, knowing what they do today? The dominant trend is that Americans tend to retrospectively identify with winners, irrespective of party. Kennedy, LBJ, Reagan, and Clinton all “win” by much larger margins in the present-day polls than they did in real life, as do Carter against Ford in ’76 and Bush (41) against Dukakis in ’88. The exceptions to this rule? Richard Nixon and George W. Bush. The poll shows George McGovern actually beating Nixon in ’72, and Al Gore and John Kerry each rather comfortably defeating W in the past two elections. That can’t be comforting news for the president. (Interestingly, despite a well-known liberal backlash against Ralph Nader after the events of 2000, the Green candidate actually pulls much higher support in the recent “votes” than he did at the polls 2000 and 2004.)

Second, over in the business section Bob Rayner serves up a very simplistic defense of Wal-Mart. The core argument goes like this: because people shop and work at Wal-Mart in great numbers, it must be good for society. Well, maybe. People produce and consume tobacco in large quantities too, but I’m not sure that’s so good for society.

The question of whether Wal-Mart’s prices justify its other social costs deserves its own treatment which I’m sure we’ll have occasion to take up in this space before too long. For now it’s enough to note that just because an outlet has low prices doesn’t mean it’s providing a service to society; to take an extreme example, no one (I hope) would say that an outlet store that specialized in selling stolen goods and/or goods produced by slaves at low, low prices is doing a society a favor.

Today let’s look at the labor argument Rayner offers. He writes, “The long lines of would-be workers whenever a new Wal-Mart prepares to open suggests that many American believe it’s a good employer.” Well, not necessarily–those lines are a better indication of how desperate many Americans are for any employment than they are a comment on Wal-Mart.

A better indicator of Wal-Mart’s fitness as an employer is its turnover rate. It’s estimated that 70% of Wal-Mart employees leave within the first year, and that overall annual turnover in the company is around 50%. In addition, Wal-Mart is the target of the nation’s largest ever class action sex discrimination lawsuit and has been charged with violating child labor law in multiple states, forcing employees to work off the clock, illegal anti-union activities, and myriad other violations of labor laws. No wonder so many employees seem anxious to leave.

Rayner also writes that Wal-Mart appears to have good pay and benefits compared to other retailers. Three points here: first, he could only possibly mean compared to other discount retail chains–but this is probably not the right question to ask. Instead, we should compare wages at Wal-Mart compared to wages at the independently owned hardware stores and the like which it displaces. In fact, a 2005 study found that opening a Wal-Mart in an urban or suburban area tends to reduce wages in that area’s overall retail sector; a new Wal-Mart in rural areas has no net effect on local wages (since fewer higher paying jobs are being displaced).

Second, as is well known, the retail chain Costco pays much higher wages than Wal-Mart. It’s not surprising that Costco also has a turnover rate about half that of Wal-Mart, but it might be a surprise that as a consequence of its policies, Costco actually has lower labor costs as a percentage of sales than Wal-Mart.

Third, according to a 2005 UCal-Berkeley study, Wal-Mart’s low wages require its employees to rely on a various forms of public assistance, estimated to be $86 million a year in California alone. That’s not the “free market” at work–it’s a public subsidy to a low-wage employer.

Finally, whatever else you might think about the RTD, be glad that it carries Neal Peirce, one of the best-informed writers on state and local issues out there. Peirce does what a columnist should do: he engages with the best empirical evidence and most creative thinking and practice on a given topic, and focuses on constructive steps as much as on criticism. Today he weighs in on the failures of America’s war on drugs and possible alternative strategies; I’ll add a link to it in this space as soon as it’s available.


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