EVERYDAY JOB GROWTH, WAL-MART-STYLE
July 9, 2009
Wal-Mart does surprisingly well during economic recessions. In fact, shareholder reports show that Wal-Mart employment has grown in each of the most recent recession periods: 1973-75, 1980, 1981-82, 1990-91, 2001 and today, says economist Greg Kaza, executive director of the Arkansas Policy Foundation.
Wal-Mart's current victory is especially noteworthy:
- Since the present recession started in December 2007, U.S. nonfarm payroll employment has declined by 6.5 million jobs.
- During that same time interval, Wal-Mart has expanded its domestic work force by 40,000 (2.9 percent) and announced June 3 that it will add 22,000 jobs in its U.S. stores in 2009.
- Wal-Mart added 34,269 jobs from 2007 to 2008, and the firm has continued to add jobs this recession (June data) in states with the highest unemployment rates: Michigan, 32,664; Oregon, 10,668; Rhode Island, 2,621; South Carolina, 28,891; and California, 74,768.
Price cutting has been central to the growth of Wal-Mart, which terms the policy "Every Day Low Prices," says Kaza. Goods-producing firms, in the old cycle, passed inflationary price increases to consumers, often in line with CPI or labor agreements. The new price structure is deflationary, a strategy explained by ex-Wal-Mart CEO David Glass, who noted when asked about recessions: "Historically, we have prospered during such periods, as our customers become more value conscious."
Wal-Mart's ability to create jobs, even in a recession, has benefited financial markets. The Bentonville, Ark.-based firm was one of only two Dow 30 components (the other was McDonald's) to record a gain in 2008 as the market sank.
Corporations with entrepreneurial roots (think Wal-Mart's founder, Sam Walton) are providing the everyday job creation the U.S. economy needs to escape the worst economic contraction since the Great Depression. Government should resist demands to increase economic regulations and leave entrepreneurial firms alone to prosper, says Kaza.
Source: Greg Kaza, "Everyday Job Growth, Wal-Mart-Style," Investor's Business Daily, July 2, 2009.
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