This article first appeared at The McAlvany Intelligence Advisor on Monday, December 9th, 2013:
When the Rev. Graylan S. Hagler, pastor of the Plymouth Congregational United Church of Christ, saw the two new Walmart stores opening in DC this past week, he admitted that some of his people were going to shop there despite his protestations:
I know some of my congregants are going to be shopping there. I have not called for a boycott or anything like that.
But … when you make this corporation richer, it’s at the expense of making somebody [else] poorer.
Not according to the shoppers, hundreds of whom voluntarily lined up around the block before the stores opened for business on Wednesday. Not according to the 23,000 applicants who applied for the 800 new positions being created at the stores. Not according to all the ancillary individuals enjoying new work as truckers, warehousemen, factory assemblers and packers, farmers, carpenters, plumbers, electricians, day laborers, security officers, steel workers, brick layers – and on and on.
Hagler’s false economic theory is based on the assumption that the economic pie is only just so large, and that when someone wins, someone else must lose. But that isn’t what grew Walmart from the first “Walton’s” store in 1945 in Bentonville, Arkansas to the world’s largest retailer, with over 11,000 stores, employing more than 2 million people, and generating revenues approaching half a trillion dollars a year. Instead, it was the simple free market concept of offering lower prices so that people could improve their standard of living that drove Walmart then, and drives it now.
Shoppers were delighted. Pamela Scott said “I will never go to a Walmart in Maryland again. I live in D.C. and that’s where I want to shop. I’m going to be here at least three or four times a week, as often as I can.” Michael Ferrick, a self-described Walmart skeptic, stopped in for some doughnuts on Wednesday on his way to work and said “This is a brand-new neighborhood … and it’s pretty exciting. I mean, the whole city’s changing in DC … everything’s new.”
What hasn’t changed, at least not yet, is the hoary discredited theory promoted by the Reverend and his friends on the Washington DC city council. Walmart was initially planning on building five stores, but when the council learned about that, some economic ignoramus on the council proposed that the minimum wage just for Walmart’s workers be raised from the present $8.50 a hour to $12.50 an hour. Hagler supported the legislation
When Walmart responded by threatening to stop construction on the stores, Mayor Vincent Gray (who just happened to be running for reelection) vetoed the measure. Happily there was enough common sense remaining on the council that his veto couldn’t be overridden and two of those stores opened last week.
Walmart has not only been promoting low prices all the time for years, but also its employment opportunity. On its corporate website, Walmart explains:
For some, retail is a first job and [the] chance to gain skills to succeed in the workplace. For others, it’s part-time work – [for] students stretching their financial aid [or] a teacher working over the summer.
And for many, it is a chance to build a meaningful, long-term career….
Entry level jobs often lead to bigger jobs. At Walmart, you can climb the ladder from a stocker or a cashier to a department manager, a store manager, and beyond. Depending on the time of year, there are [from] 15,000 to 50,000 job openings at Walmart U.S.
About 75% of our store management teams started as hourly associates, and they earn between $50,000 and $170,000 a year.… Every year we promote about 160,000 people globally to jobs with more responsibility and higher pay.
One of those seeking a summer job back in 1984 was Doug McMillon. He worked that summer and then went off to school to get his MBA. He returned to work at a Walmart in Tulsa and sixteen years later was promoted to president and CEO of Sam’s Club. In February, McMillon will take over as president and CEO of Walmart International.
Not everyone can move from summer intern and stocker to be president of Walmart, just as not everyone can become president. But this is the point missed by city council members still clinging to old worn-out archaic economic theory: if none of the stores opened, there won’t be any opportunity for anyone! As one wag put it: “$12.50 an hour is a lot more than $8.25 an hour, but $12.50 an hour times zero is a lot less.”
Reality showed up in other ways last Wednesday, as well. Even the morally indignant were found shopping at Walmart. Shopper Sarit Lisogorsky said:
Morally, I don’t agree with Walmart’s practices. I wish they were different, but I am here, so maybe I am not a very moral person.
[But] the trip was worth it….
The ripple effect of Walmart’s stores have already started showing up in less expected places as well: their competitors. As one blogger noted:
Walmart provides indirect benefits in other ways, too. Local grocers like Target and Safeway, as well as small mom-and-pop stores, are all disciplined whenever a Walmart moves into the area.
Even consumers who only shop at Target and Safeway receive the benefits of lower prices and better service … because they have to compete against Walmart.
The blogger, long limited to shopping at a local Safeway notorious for poor service, long lines and surly cashiers, added:
Now that Safeway is in direct competition with Walmart for groceries, the service at [my] Safeway has suddenly started to improve. The store has just hired a new manager … in response to the new competitor in the neighborhood.
And that’s how it works. No one is forced to shop at Walmart. No one is coerced into paying extra for the privilege. Each shopper exiting those two stores is measurably better off, or else they wouldn’t be shopping there. The economic pie keeps getting larger. It’s not a fixed economic pie with winners and losers. In a free economy, everyone wins, or else they wouldn’t participate.
Perhaps the Rev. Hagler could be persuaded to bring some of his city council buddies down to one of the new stores and see how the real world works. After all, said the good Reverend:
I’m a believer. Anybody can be healed. Anybody can be redeemed. Even corporations.
Perhaps even the Reverend himself?
Light from the Right: Walmart Shrugs: Pulls Plans to Build Stores in Washington, DC
The Wall Street Journal: Walmart Opens D.C. Stores After Wage Fight