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<p class=MsoNormal><font size=4 color=blue face=Garamond><span
style='font-size:14.0pt;font-family:Garamond;color:blue'>All networks seem to
be colliding on the Walmart controversy. Maybe it’s just my networks?<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=4 color=blue face=Garamond><span
style='font-size:14.0pt;font-family:Garamond;color:blue'>Randi<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=4 color=blue face=Garamond><span
style='font-size:14.0pt;font-family:Garamond;color:blue'><o:p> </o:p></span></font></p>
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<p class=MsoNormal><b><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma;font-weight:bold'>From:</span></font></b><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'> Fred Toledo
[mailto:rexlogico@yahoo.com] <br>
<b><span style='font-weight:bold'>Sent:</span></b> Monday, December 12, 2005
5:56 PM<br>
<b><span style='font-weight:bold'>To:</span></b> Randi Haley; Linda C. Wade<br>
<b><span style='font-weight:bold'>Subject:</span></b> FYI - Krugman on Wal-Mart</span></font><o:p></o:p></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
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<h1><b><font size=6 face="Times New Roman"><span style='font-size:24.0pt'>Big
Box Balderdash<o:p></o:p></span></font></b></h1>
<NYT_BYLINE type=" " version="1.0"></NYT_BYLINE>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>By <a
href="http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per"
target="_blank" title="More Articles by Paul Krugman"><font color="#003399"><span
style='color:#003399'>PAUL KRUGMAN</span></font></a><o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Published: December 12, 2005<o:p></o:p></span></font></p>
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<!--NYT_INLINE_IMAGE_POSITION1 --><NYT_TEXT></NYT_TEXT>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>I think I've just seen the worst economic argument of 2005. Given what
the Bush administration tried to put over on us during its unsuccessful sales
pitch for Social Security privatization, that's saying a lot.<br clear=all>
<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>The argument came in the course of the latest exchange between Wal-Mart
and its critics. A union-supported group, Wake Up Wal-Mart, has released a TV
ad accusing Wal-Mart of violating religious values, backed by a letter from
religious leaders attacking the retail giant for paying low wages and offering
poor benefits. The letter declares that "Jesus would not embrace
Wal-Mart's values of greed and profits at any cost."<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>You may think that this particular campaign - which has, inevitably,
been dubbed "Where would Jesus shop?" - is a bit over the top. But
it's clear why those concerned about the state of American workers focus their
criticism on Wal-Mart. The company isn't just <st1:country-region w:st="on"><st1:place
w:st="on">America</st1:place></st1:country-region>'s largest private employer.
It's also a symbol of the state of our economy, which delivers rising G.D.P.
but stagnant or falling living standards for working Americans. For Wal-Mart is
a huge and hugely profitable company that pays badly and offers minimal
benefits.<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Attacks on Wal-Mart have hurt its image, and perhaps even its business.
The company has set up a campaign-style war room to devise responses. So how
did Wal-Mart respond to this latest critique? <o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Wal-Mart can claim, with considerable justice, that its business
practices make <st1:country-region w:st="on"><st1:place w:st="on">America</st1:place></st1:country-region>
as a whole richer. The fact is that Wal-Mart sells many products more cheaply
than traditional stores, and that its low prices aren't solely or even mainly
the result of the low wages it pays. Wal-Mart has been able to reduce prices
largely because it has brought genuine technological and organizational
innovation to the retail business.<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>It's harder for Wal-Mart to defend its pay and benefits policies.
Still, the company could try to argue that despite its awesome size and market
dominance it cannot defy the iron laws of supply and demand, which force it to
pay low wages. (I disagree, but that's a subject for another column.)<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>But instead of resting its case on these honest or at least defensible
answers to criticism, Wal-Mart has decided to insult our intelligence by
claiming to be, of all things, an engine of job creation. Judging from its
press release in response to the religious values campaign, the assertion that
Wal-Mart "creates 100,000 jobs a year" is now the core of the
company's public relations strategy.<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>It's true, of course, that the company is getting bigger every year.
But adding 100,000 people to Wal-Mart's work force doesn't mean adding 100,000
jobs to the economy. On the contrary, there's every reason to believe that as
Wal-Mart expands, it destroys at least as many jobs as it creates, and drives
down workers' wages in the process. <o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Think about what happens when Wal-Mart opens a store in a previously
untouched city or county. The new store takes sales away from stores that are
already in the area; these stores lay off workers or even go out of business.
Because Wal-Mart's big-box stores employ fewer workers per dollar of sales than
the smaller stores they replace, overall retail employment surely goes down,
not up, when Wal-Mart comes to town. And if the jobs lost come from employers
who pay more generously than Wal-Mart does, overall wages will fall when
Wal-Mart moves in.<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>This isn't just speculation on my part. A recent study by David Neumark
of the <st1:PlaceType w:st="on">University</st1:PlaceType> of <st1:PlaceName
w:st="on">California</st1:PlaceName> at <st1:City w:st="on">Irvine</st1:City>
and two associates at the Public Policy Institute of California, "The
Effects of Wal-Mart on Local Labor Markets," uses sophisticated
statistical analysis to estimate the effects on jobs and wages as Wal-Mart
spread out from its original center in <st1:State w:st="on"><st1:place w:st="on">Arkansas</st1:place></st1:State>.
<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>The authors find that retail employment did, indeed, fall when Wal-Mart
arrived in a new county. It's not clear in their data whether overall
employment in a county rose or fell when a Wal-Mart store opened. But it's
clear that average wages fell: "residents of local labor markets,"
the study reports, "earn less following the opening of Wal-Mart
stores."<o:p></o:p></span></font></p>
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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>So Wal-Mart has chosen to defend itself with a really poor argument. If
that's the best the company can come up with, it's going to keep losing the
public relations war with its critics. Maybe it should consider an alternative
strategy, such as paying higher wages. <o:p></o:p></span></font></p>
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<p class=MsoNormal style='margin-bottom:12.0pt'><font size=3
face="Times New Roman"><span style='font-size:12.0pt'><o:p> </o:p></span></font></p>
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<p class=MsoNormal><em><i><font size=3 color=blue face="Comic Sans MS"><span
style='font-size:12.0pt;font-family:"Comic Sans MS";color:blue'>Fred Toledo</span></font></i></em><o:p></o:p></p>
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