Clean-up on Aisle 8

Q: Dear 100-hour board:
like it or love it, Walmart seems to be everywhere you turn here in America. Advocates say that it is a great American model of, "make it cheaper, get it sooner" big business that not only helps lower the cost of living for us all - but brings revenue to foreign countries and creates jobs. The Walmart haters crowd often counters with the charge that Walmart destroys American business, and exploits foreign (Chinese) workers. So here is the big question: is Walmart a net good or a net evil? Should I feel guilty when I shop there, or should I revel in the low prices? And who does Walmart really help?Pinching my pennies (hopefully not my morals),
Regards,
"The big 3B"

A: Dear Triple B:
This is a tough question, depending on the moral framework in which you evaluate something as good or evil. But I won’t delve into a discussion of philosophic moral concepts. So I begin with some facts regarding Walmart:
The largest company in the world (2007 #’s)
Revenue $351 Billion
Net Income $11.3 Billion
1.9 million employees (4th largest, number one being People’s Liberation Army of China)
Largest US grocer – 20% of the market
“Always Low Prices” company philosophy

Now a “good/bad” discussion. I will first lay out the facts and then the disputed or grey areas:
Good:
Huge employer with benefits
Lower prices for lower-income families
$51 Billion in current liabilities – money they directly give back for doing business
$264 Billion in cost of goods sold – basically business they create with their vendors
6779 stores world wide
Extend luxuries to lower income parts of the population
Vendor product introduction – they can introduce new products easily to vast #’s of people
336% growth in 10 years – huge return for investors and public
In the US they paid out $890 million in retirement plan expenses
$415 million in charitable gifts
Creates new businesses with new vendors

Bad:
Creates pollution, forces smaller competitors out of business
Foreign product sourcing - especially b/c perhaps we should be more distinguishing with our $ to China
Some lower wages and benefits compared to retailers

Grey area:
Low wages and benefits – ~$10.11/hr but generally less skilled people
Opposes labor unions – is that bad? Good?
Child labor, illegal labor – occurrences but not rampant
Complaints of general unsavory business practices (tax evasion, etc.)

OK…generally there are a lot of issues with a company larger than the gross national product of most countries. Some are valid, others not. Studies show that although a Walmart puts some local businesses out of business, many small businesses benefit. But studies are generally inconclusive (either way). Wages may be lower, and they have huge turnover, but they train very unskilled workers and tons of people want to work there.

So, the main questions regarding Walmart are: Do you believe in free, world markets? Do you believe that free markets level the world playing field? If you don’t than Walmart is evil. If you do, it is good. Not the best answer perhaps, but will you find yourself buying something there this Christmas?
100 Hour Board