The Economic Debate in Don't Blame Wal-Mart, an Article by Robert Bernard Reich

Categories: Economics

On February 28, 2005, Robert Bernard Reich, stirred up quite a dispute with his article “Don’t Blame Wal-Mart.” In his article Mr. Reich brings to consideration the economy and how individual American consumers affect it, causing many Americans to deliberate and ask an uncomfortable question. Is it the corporation’s fault, or is it ours, as citizens? While conveying to the surface effective arguments on both sides of the economical debate, Reich manages to stir up several acceptable questions for modern day consumers.

His article inspires the readers to look within themselves and calculate how they view this debate. He is giving the readers a chance to contemplate their own feelings and thoughts toward the issue, after reading the article. In order to do so Reich must have given factual information rather than his opinion on the debate and if any information was based on opinion then the reader would be basing their views on Mr. Reich himself and not the information he provided.

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In order to check the precision of Reich’s claims an individual could research some of his main sub-claims: Wal-Mart closes down small town businesses, brings less jobs to America due to offshoring, and gives poor benefits to it’s hard-working associates.

Is Wal-Mart Good for Small Town America?

In Reich’s article he makes a bold claim telling his readers “Wal-Mart has a checkered history in turning main streets into ghost towns by sucking business away from small retailers (Reich, 2005).” One can simply check this statement by doing a little research.

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According to Ken Lambert, bringing a Wal-Mart chain to a small-town can have a negative effect on the local community. When a Wal-Mart comes into town, bringing its lower prices, it is forcing its competitors to lower their prices. The wages at these businesses must drop in order to compete. The buyers’ habits are changed, and a once sustainable business is now at risk (Lambert).

In example, I grew up always renting movies and video games from this little video store called Premiere Video, but a few years ago it closed down. I was so upset and shocked when Misty, the store clerk was telling me they would be shutting down at the end of the month. She was telling me that most customers used the Internet sites Netflix, and Hulu for their movies now, or would buy the combo packs at Wal-Mart. I was so upset that a huge part of my childhood was closing down, yet I still to this day pay for Hulu and Netflix every month instead of cable. Americans are cheap, always out to save the most money and purchase the best possible deal. We don’t realize finding lower prices online and at big corporations is harmful because it is saving our own money, but in reality it is crushing our small-town jobs and businesses. Corporations are in a constant competition to get and keep customers and sales, they are constantly searching for the cheapest ways to bring their customers the lowest possible price; this leads to offshore manufacturing, which closes down even more American jobs here in the United States.

Where have all the manufacturing jobs gone?

Wal-Mart began in Arkansas in 1962, and in 2005 had 6,200 facilities around the globe, 3,500 of which are in the United States. Wal-Mart employs 1.6 million, and claims sales of $312.4 billion. Wal-Mart has about 6,000 suppliers and 80% are in China, with manufacturing costs so low in China, those goods can be sold for much less here (Wal-Mart Facts). Yvonne Smith, a spokesperson for the Port of Long Beach, says “36 billion is imported from China each year at this port alone.” You might ask what is exported, and the answer is raw materials. The United States ships out raw materials to manufactures in China and they return as finished products to sell at low prices here in the United States. This contributes to a $120 billion annual trade deficit with China, and Wal-Mart is their number one customer. All because China provides a combination of political stability, sturdy infrastructure, and a labor force willing to work for pennies an hour.

“Sam Walton’s formula: Buy cheap, undersell competitors, and make your profit on high volume and have fast turnover,” says Smith. The free-trade agreements have been more generous to foreign countries than our own. This comes to show once again that Reich brought trustworthy information to his article. (Lambert).

Is The Wal-Mart Employee Set up for Failure?

Informed through Reich’s article is the idea of wages and benefits; one reason that Wal-Mart is able to afford having low prices is by keeping workers wage to minimum and minimal benefits. Reich states, “The easier it is for us to get great deals, the stronger the downward pressure on wages and benefits (Reich, 2005).” This means the low prices engage one to shop there allowing for the job opportunities to be high and easier for the company to offer minimal wage and benefits. According to Reich the average employee earns $9.68 an hour without providing most with health insurance. When checking this fact, you will see that for a typical family, this provides below poverty level. Wal-Mart economy is a place where the jobs are traps: low wages, misery benefits, stultifying work, no respect, and no future (Lambert). In 2004 and 2005 Wal-Mart claimed that it’s full time workers averaged $9.68 an hour. Full time is only approximately 36-40 hours a week; with that annual take home pay is only approximately $19,000.

According to Federal Register, with a typical family of four, the figure is nearly 1,000-3,000 dollars below the poverty line (Allegretto). Many States report that Wal-Mart employees are among the largest groups seeking public assistance with medical and food stamps (Allegretto). Wal-Mart has over 11 violations that were prosecuted just last fall during Black Friday (Dreier). In 2004 Wal-Marts chief Executive Scott Lee Jr. was paid $17.5 Million. That is every two weeks Mr. Lee was paid about as much as his average employee will earn in a lifetime (Krugman). Ms. Susan Chambers, Wal-Marts Vice President, acknowledged that 46% of children of Wal-Marts 1.33 million Unites States employees were uninsured or on Medicaid (Greenhouse). After finding this research the reader can conclude that Wal-Mart is one of the largest companies in the county while employing so many with poverty level shows Mr. Reich was once again correct in his figures.

Is Mr. Reich Qualified to Write About This Issue?

After the reader finishes their own research they can see that they have been provided trustworthy information in Mr. Reich’s article, Don’t Blame Wal-Mart. The reader may then wonder what else qualifies Mr. Reich to write about such an economically debated topic. Robert Bernard Reich was born in Scranton, Pennsylvania in 1946 (Boles). Reich pursued and education in philosophy, politics, and economics through Dartmouth College, University of Oxford, and eventually Yale Law School. Mr. Reich went on to serve as a law clerk, then as an assistant to the United States Solicitor General, and even Director of the Policy Planning staff at the Federal Trade Commission (Boles).

Reich also served as a teacher at the John F. Kennedy School of Government at Harvard University for 12 years, and is a professor at the University of California at Berkeley. In 1992, Reich joined the Clinton administration as the Secretary of Labor. Reich has education, experience, and knowledge that would support him as a writer of economical aspects. Robert Reich has written 13 books and several articles (Boles). A background in education qualified by the highest-ranking Universities standards provides more than enough knowledge to teach and educate on the subject matter. All these accomplishments go on to show that Reich is an extraordinary writer who does a great job at sticking to the facts and keeping his personal opinion out of the debate.

My Evaluation and Reich’s Claim

Mr. Reich’s major claim in his article, Don’t Blame Wal-Mart, states that the problem is, the choices we make in the market do not fully reflect our values as workers or as citizens (Reich, 2005).” Reich argues that the American citizens have a choice to shop at Wal-Mart or at a local market; Wal-Mart does not force one to shop there. It is Wal-Mart’s low price guarantee that engages one to want to spend one’s dollar there rather than at a local market. Reich goes to show that even though Wal-Mart is overruling the economy in a potentially harmful way, it is not necessarily Wal-Marts fault, but ours as consumers. Reich urges the reader to open their eyes and really search for how Wal-Mart has gotten so far economically. Mr. Reich is extremely informative of why Wal-Mart is the way it is, allowing one to see the reasoning behind the success rather than blaming the business itself. Blaming the business is easy, but when one contemplates over how the business got so large and successful, the answer is we, American consumers.

Reich made a tremendously clear and valid point when he exclaims that our society does not reflect what we truly believe or want; we make our choices out of what is the better deal. We go on to claim that we don’t want Wal-Mart or big corporations to take over our local shops and ruin our job force, but yet we still go there and shop their low prices. Wal-Mart is not wrong for offering us better bargains; we are in the wrong for blaming them and continuing to purchase their merchandise. It is argued that we citizens have two sides, our worker side and our consumerist side (Reich, 2005). Like Reich mentions in his article Don’t Blame Wal-Mart, he would love to see Wal-Mart employees receive higher wages and better benefits, but the consumer in him wouldn’t be happy because that would cause a rise on product prices. We lose the “Always Low Prices,” in exchange for a better economy. So the ultimate question is where do we find a happy medium? Reich states the only way for the workers and citizens in us to trump the consumers in us is through laws and regulations that make our purchases a social choice as well as a personal choice.

Conclusion

The article Don’t Blame Wal-Mart by Robert Bernard Reich is primarily about the idea of Wal-Mart that has become so successful and who is to blame: the corporation itself, or the American Citizen. Reich’s writing brought up valid points about our economy, our spending habits, and what we are willing to sacrifice as a consumer. Reich did a fair job of remaining un-biased in his article, and representing both sides of the debate without picking a side. Although while Reich brings into consideration both sides of the debate: he is allowing the reader to be able to come to his or her own conclusion about the issue given.

“Condemning Wal-Mart for not giving its employees better pay and heath benefits, may be emotionally gratifying but has little to do with the forces that have impels Wal-Mart to keep wages and benefits low and bestow good deals on Wal-Mart’s customers and investors (Reich, 2007).” Reich urges us to find our happy medium and come to our own conclusion on how we view this economic debate.

References

  1. Allegretto, S. (2005, Aug. 30). Basic Family Budgets: Wages, Incomes, and Wealth. Economic Policy Institute. Retrieved 2015, Oct. 27.
  2. Boles, R. (2014, Jun.17). Robert Reich: Chancellor’s Professor of Public Policy. Richard and Rhoda School of Public Policy, University of California, Berkeley.
  3. Dreier, P. (2013, Nov. 19). Labor Board Sides With Workers: Wal-Mart Can’t Silence Employees Any Longer. The Daily Call Blog. Retrieved 2015, Oct. 27.
  4. Greenhouse, S., Barbaro, M. (2005, Oct. 26). Wal-Mart Memo Suggests Ways to Cut Employee Benefit Costs. The New York Times. Retrieved 2015, Oct. 27.
  5. Krugman, P. (2005, May 13). Always Low Prices. Always. The New York Times. Retrieved 2015, Oct. 27
  6. Lambert, K. (2008) Is Wal-Mart Good for Small-Town America? Delta Winds: A magazine of Student Essays. Retrieved 2015, Oct. 25.
  7. Making Change at Wal-Mart (n.d.) Fact Sheet: Workplace Conditions. makingachangeatwamart.org
  8. Reich, R. (2005, Feb. 28). Don’t Blame Wal-Mart. The New York Times. Retrieved 2015, Oct. 22.
  9. Reich, R. (2007, Nov. 19) Don’t Blame Wal-Mart, We’re Getting What We Asked for; Supercapitalism. SF GATE. Retrieved 2015, Oct. 25.

Cite this page

The Economic Debate in Don't Blame Wal-Mart, an Article by Robert Bernard Reich. (2021, Sep 28). Retrieved from https://studymoose.com/the-economic-debate-in-don-t-blame-wal-mart-an-article-by-robert-bernard-reich-essay

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