August 22, 2005
Despite the relentless attacks on Wal-Mart by community groups and labor unions, the local benefits provided by Wal-Mart far outweigh the costs, say Harvard University business professor Pankaj Ghemawat and business consultant Ken Mark.
- Wal-Mart contributed to significant growth in labor productivity between 1995 and 2000.
- When Wal-Mart enters a market, prices decrease by 8 percent in rural areas and 5 percent in urban areas.
- With two-thirds of its stores located in rural areas, as a whole Wal-Mart saves customers about $16 billion a year.
- Wal-Mart's customers tend to be those who could most benefit from low prices; 80 percent of Wal-Mart's square footage is located in the 25 percent of ZIP codes with the greatest number of poor households.
Without Wal-Mart, the rural poor would pay much more for food and other household goods, say Ghemawat and Mark.
Additionally, Mayor Pro Tem Philip E. Mella of Woodland Park, Colo., notes that Wal-Mart pays 25 percent above the average entry-level retail wage, and 70 percent of Wal-Mart's managers begin as front-line workers.
The billions of dollars in savings far exceed the costs that Wal-Mart supposedly imposes on society through loss of jobs, urban sprawl and driving employees to public welfare programs.
Source: Pankaj Ghemawat and Ken A. Mark, "The Price is Right," Dallas Morning News, August 14, 2005; and Philip E. Mella, "Free Enterprise, Choice And Wal-Mart's Virtues," Letter to the Editor, Wall Street Journal, August 16, 2005.
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