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Thursday, Dec. 28, 2006 | One question has been bothering me: Why would a City Council talk up “affordable housing” while endorsing “unaffordable groceries?”
Banning Wal-Mart’s Supercenters in San Diego adds a hardship to lower-income residents. It reduces sales-tax revenues. And there’s a loss of new jobs.
History shows what the big box stores do.
Remember when Barnes & Noble came to town? Book selections grew and prices dropped. Some small bookstores disappeared while the public went for better value. Borders came along to provide competition, soon followed by Amazon.com. More books sold.
A generation earlier, Waldenbooks and B. Dalton had opened up smaller stores in convenient mall locations, capturing new readers and causing trouble for the less accessible outlets. Waldenbooks and B. Dalton seized one third of the total business, but within two decades, they both became victims of the “big boxes.” It’s only natural, this thing called progress.
Those little bookstore owners, of course, never coughed up campaign contributions. Therefore, our City Council watched the giant bookstores takeover.
A&P started this whole thing in groceries. Safeway, Ralphs and Vons emerged to doom the friendly corner butcher and his aging meat. And life got better. But those grocers became unionized, so your average food checker now makes more than your average food checkee.
What’s behind this outrage against Wal-Mart? It beats me. So I interviewed several local protesters. They expressed seven objections:
- Small businesses are destroyed
- Parking problems are created
- Employees don’t get enough health benefits
- The buildings are ugly
- They don’t pay employees well
- When Wal-Mart’s are abandoned they go empty and breed crime
- The stores turn people into non-thinking conformists
Let’s examine their criticisms.
Yes, some small businesses are displaced.
As a once-in-awhile author, I notice that my latest book sells today for $21 at Warwicks and requires a special order, is in stock for $16 at Barnes & Noble while Amazon.com promises same day shipment for $7. (But you better buy another book to get Amazon’s free delivery.) Warwicks should survive because it’s convenient for enough locals and some prefer the coziness. But not the masses. So smaller businesses suffer, and they suffer because their choices, prices or locations suck. The consumer wins.
Parking problems are created.
Duh. While the city decides how many spots each building must provide, low prices do bring crowds and I’ve cheerfully parked on Morena Boulevard just to get inside COSTCO Wholesale many a time. This is a pretty weak argument against Wal-Mart, and to the degree it may be true, it only proves how ferverently customers like their lower prices.
Wal-Mart doesn’t give its employees adequate health benefits, and this creates expenses for society.
On a huge scale, this falls into the “healthcare crisis” we’re told we’re suffering from. But since 1975 the average lifespan of all US citizens has gone from 73 years to 78 years. That trend’s been happening for decades. With everybody.
That’s why life insurance premiums have dropped. Everybody’s living longer. White women live longest, but their longevity is growing the slowest. Black males die the soonest, but their life spans are increasing fastest. While wailing about the ER’s being impacted by so many uninsured patients, the wailers forget that this, by itself, is universal healthcare. It’s just not called that.
That’s the big picture. Looking closer, Wal-Mart doesn’t give benefits to match their shrinking competitors, like Sears and K-Mart. (You older readers might remember when Sears was viewed as the evil predator.) Sears and K-Mart, of course, are shrinking today because they can’t offer competitive pricing. And switching industries, McDonalds doesn’t lavish the benefits on their employees the way Starbucks boasts about.
But a curious thing’s happening everywhere. General Motors, several years ago, didn’t talk about cars or sales in the first few pages of their annual report. General Motors preached about the need for our government to provide universal healthcare. Why? That way, you and I, the taxpayers, pick up the tab for all those promises General Motors made to employees and didn’t budget for.
And the CEO of Starbucks is already making speeches about the need for universal healthcare as his business becomes closer to a mass market item. Anytime you hear a corporate leader arguing for more government, which is a strange phenomena in any circumstance, remember that this “compassion” often intends to reach into your pocket instead of his.
Wal-Marts are eyesores.
There’s no way to call any Wal-Mart pretty. Neither are Home Depots, Ikeas, Lowes or my favorite, COSTCO. These stores are pretty inside, for the values and choices they offer. Outside? Butt-ugly.
Wal-Mart underpays their employees.
Maybe. Maybe not. Just don’t tell that to the lines of job applicants Wal-Mart gets when they’re hiring. Do you suppose all those people are seeking lower wages and worse conditions? Remember how Ted Kennedy was reduced to incoherent blubbering when the CEO of Wal-Mart endorsed his proposal to raise the minimum wage?
Poor Teddy buys his suits at Barneys, hangs out in his Hyannis, Martha’s Vineyard and Palm Beach enclaves without realizing that Wal-Mart’s primary competitors, smaller businesses, pay worse. Raising the minimum wage would wipe out Wal-Mart’s competition. Liberals despise efficiency, so this argument shall be rephrased.
Wal-Mart abandons buildings, which turn into ghettoes.
If you do some digging, you’ll find several organizations promoting this idea, without giving a list of examples. Their contorted logic says that it’s bad when Wal-Mart arrives and it’s bad when Wal-Mart leaves. Make up your minds! And the thought that a profit-making enterprise sits on unused assets is another stretch. By the way, it’s Sears and K-Mart, with their generous benefits, that are firing employees, closing stores and peddling products that cannot be called bargains.
Wal-Mart encourages conformity.
Oh please. If low prices are conformity, put me in a mold. We’re talking economics and survival here – and there’s a snobbishness that proves these critics don’t understand how tough life is for the guy who washes their car, the woman cleaning the offices and the kid bussing dishes.
Everybody has biases. Mine are that I’ve only entered a Wal-Mart twice in my life but have been a Price Club and COSTCO Wholesale devotee for decades. I breakfast once a week or more at a Starbucks but haven’t eaten an egg McMuffin for years. When possible I use Trader Joe’s or Henry’s but find Vons to be indispensable for selection when planning meals.
While not eating at McDonalds, it’s nice to know that they provide value for many and give kids their first lesson on work habits, like showing up on time and washing their hands, without benefits and having huge turnover. It’s better stuff than they learn at school. And the Starbucks cranberry and orange scone, hardly healthier than the McBreakfast offerings, has an ambience I prefer with employees who have such great benefits you’ve got to know it won’t last. Their CEO has already tipped his hand on that.
To me, Wal-Mart and COSTCO Wholesale occupy different worlds, and both do it well. Right now Wal-Mart has twelve men’s watches on sale at prices ranging from $41 to $159. COSTCO has four men’s watches on display for over $5000; way beyond my budget. Wal-Mart takes credit cards but COSTCO, a true bargain place that’s somehow snootier, only accepts American Express.
And COSTCO probably pays 50 percent more per hour and has longer term employees with better health benefits.
You’ve got to like what the founders of both outfits have done. Sol Price dumps money into City Heights, trying to improve a neighborhood. The Walton family financed Harborside School, giving San Diego inner city kids a choice. (Choice: there’s a word unions hate.)
As a Price Club/COSTCO loyalist, I’ve enjoyed walking those aisles for decades. Once I needed some WD-40, found it at the Price Club, in something that seemed like a fifty gallon drum – three packed – and got a deal but felt like a distributor. But I’m happy and love the place.
Most years, with a consumer membership, I pay sales tax. There have been times, in small businesses, when we’ve used that membership to duck some sales taxes at COSTCO.
Wal-Mart paid California state and local taxes, both sales and property, of $923,000,000 last year. Apparently our City Council doesn’t want any more of that revenue.
My two, count ’em, visits to Wal-Mart both took place this year. They might be interesting to those folks who harbor strong opinions about Wal-Mart, but don’t lower themselves to observing.
Last fall, the teacher’s unions urged their members to boycott Wal-Mart when buying school supplies. This struck me as strange, so I shopped Wal-Mart, Target, Sav-On and Staples for #2 lead pencils with erasers. For some reason I didn’t hit COSTCO. The average price per pencil at the other stores came in just above a dime. The price at Wal-Mart, for what appeared to be the same pencil, was a nickel.
(While inside Wal-Mart for that virginal experience, I noticed a collapsible beach chair, similar to what I’d just purchased from REI for $59. The Wal-Mart price was $19. Hmm.)
Doing some quick math, it appeared that if our teachers followed the union mandate, schoolchildren would get half as many pencils, or, the schools would shell out an additional $8,550,000 nationwide just for pencils. Imagine what notebooks would add. Or crayons.
So when our television expired last month, we scurried over to our favored place, COSTCO. We saw high-definition, thin-screened stuff everywhere, with terrific pricing. One embarrassment is that our eyesight doesn’t entirely appreciate what these screens deliver.
The cheapest cost $600.
On impulse, we decided to see what Wal-Mart had, knowing that not much is being broadcast yet in high definition, and, that our cable outfit charges extra for this sometimes-available service. So we put on dark glasses, glanced around the parking lot to make sure nobody we knew could see us and stepped inside a Wal-Mart. We found a conventional TV, with a screen larger than the cheapest COSTCO model for $200.
We bought it and snuck out.
Please, can this remain our secret?
The set will probably become a donation to the Salvation Army in a year or two, after the high def stuff gets sorted out, and prices plunge further.
We’re sticking with COSTCO and Starbucks. We’re mixing it up with Vons and Trader Joes, with Barnes & Noble and Warwicks. But we’re not being so uppity that we think the real workers of our city should be deprived of a Wal-Mart Supercenter, just because the unions and the City Council say so. That’s elitism to the extreme.
If you want to sample what union dictates can do for a city, visit Detroit. The unemployment rate there is 7.5 percent compared to our 3.9 percent. Detroit suffers 1,251 violent crimes annually for every 100,000 citizens, leading the nation while San Diego sits at a 469 rate per 100,000. Take an entire country, like Germany, where the social improvements have been mandated nationwide and unemployment just passed 12%.
We have a neighbor who moved here from Detroit. When I asked how bad a beating they were taking on their house sale there, he winced.
“I’ll let you know if I ever get an offer,” he said. “We’ll take any price.”
Hey, unions can help create affordable housing after all. Wanna live in Detroit?
Gary Sutton is a retired CEO. He is the author of “Corporate Canaries?Avoid Business Disasters with a Coal Miner’s Secrets.” Send a letter to the editor here.