How Wal-Mart Serves the Poorest Americans

Regularly lambasted as an enemy of working people and a destroyer of local communities, Wal-Mart isn’t exactly America’s favorite company. Yet if liberals were truly focused on raising opportunity for low-income Americans, they would shower Wal-Mart with praise.

Wal-Mart saves tens of millions of American families hundreds — if not thousands — of dollars every year. This is not a debatable point. Ask any Wal-Mart customer why they choose its stores and you’ll hear variations on the same answer: “affordability.” Reliable affordability forms the core of Wal-Mart’s business model. The company does not pretend to offer the highest quality produce and goods, but it defines its brand by offering low costs. And in this Wal-Mart succeeds. Compare its prices with other competitors.

Last December, the Washington D.C. Consumers Checkbook found that while Wal-Mart scored terribly on quality, its D.C area store prices were on average 14.5 percent lower than the average at Giant and Safeway. Now consider that U.S. government statistics showed the average Washington household spent $4,342 on grocery store purchases between 2013 and 2014. It is imperfect statistical analysis, but if we then apply that average saving of 14.5 percent to the $4,342 average annual spend, we get a Wal-Mart savings figure of $630. That’s $630 extra, each year, for less-wealthy American families to spend on other necessities like gas or their child’s school goods.

Correspondingly, only the most wealthy, socially detached liberal could claim that $630 does not matter. That $630 — and the savings Wal-Mart offers other families all across America — isn’t just a number; it’s a tool of social justice and human opportunity. All those who truly care about making life better for Americans, should celebrate those savings from the rooftops.

The savings Wal-Mart offers other families all across America isn’t just a number; it’s a tool of social justice and human opportunity
But Wal-Mart’s social benefits aren’t just found in its physical stores. After all, the company is now venturing into a cyber-space battle with Amazon. The company this week announced the purchase of online retailer Jet.com. By challenging Amazon, Wal-Mart dramatically increases the likelihood that consumers will soon see downward pressure on prices. At present, offering an easily accessible website, a strong returns policy, and a range of price-good options, Amazon has dominance over the online marketplace. Yet as evidenced by Amazon’s recent minimum purchase hike for free shipping and its prioritization of Amazon Prime benefits, the company is clearly insulated by its effective monopoly. Wal-Mart could change that. And while Amazon may ultimately retain its market dominance; it will only be able to do so by offering better consumer options (most likely by reducing prices). As with Uber’s looming battle with Google, whoever wins the battle for customers, the free market will ensure that customer interests triumph!

Still, Wal-Mart also provides another significant opportunity to less-wealthy Americans: opportunities for social mobility. While Wal-Mart is regularly attacked as a low-wage employer, its critics fail to account for the broader opportunities that Wal-Mart offers to low-skilled employees.

Contemplate, for example, the fact that the vast majority of Wal-Mart store managers began their careers as young hourly employees. These men and women were hired with low-skills and low-productive benefit for the company. But with time, these employees rose up the ranks to earn good incomes. According to Wal-Mart, store management officials earn between $50,000 and $170,000 a year. In addition, over the next few years Wal-Mart is making multi-billion dollar investments in employee benefits and sick-leave protections. Beginning in February, the company will pay at least $10 an hour.

Wal-Mart’s challenge of Amazon’s online monopoly will force prices down, all to the benefit of the consumer
All these calculations matter greatly. Over the last 10 years, Walmart has recorded year-on-year gross profit growth. Nevertheless, digging into the detail of corporate costs — something many liberals fail to do — Wal-Mart statistics tell a different story. Wal-Mart’s net income was $17 billion in 2013, $15.88 billion in 2014, and $16.18 billion in 2015. The variation in those figures illustrate why Wal-Mart must mitigate costs against unpredictable profits: its profits are not defined simply by employees and sales in one year, but also by many other factors such as depreciation of assets, investments in new buildings and ventures over many years. At the same time, Wal-Mart must always retain investor confidence in its long-term business plan. If it fails to strike the right balance, Wal-Mart may cease to exist. Unlike government, the private sector prioritizes reliable success.

Wal-Mart is not a perfect company. It could do more to improve employee promotion schemes. Its customer service and quality record is also very poor when contrasted against other grocery companies. But no company is perfect. And balanced by what it offers to poor Americans — consumers and employees alike — Wal-Mart’s public service benefit is clear.

Note: I own some Wal-Mart stock, but that stock is a reflection of my avowed belief in the above.

Tom Rogan is a foreign policy columnist for National Review, a domestic policy columnist for Opportunity Lives, a panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets.