Blog of Q\’s

From the Wall Street Journal, Dec. 3, 2005, p. A9

… An independent study done last month by the National
Bureau of Economic Research says Wal-Mart does adversely affect
employment and wages. Retail workers in a community with Wal-Mart earn
3.5% less, the study says, because Wal-Mart’s low prices force other
businesses to lower prices, and hence their wages. Wal-Mart pays its
employees on average about $9.68 an hour. NBER says it is possible that
lower wages, which result in decreased earnings, could result in a
strain on the tax base if lower-paid workers must seek food stamps and
Medicaid. The study also found that Wal-Mart’s presence reduces retail
employment by 2% to 4%, although there is some evidence that total
employment increases.

Wal-Mart counters with a study it funded from Global
Insight, an economic-forecasting firm. The study found that, since
1985, Wal-Mart’s openings around the country have cut consumer prices
about 3%, saving consumers $263 billion in 2004 alone. While nominal
wages go down about 2% on average nationwide, the study says, prices go
down even further, causing an increase in consumers’ real disposable
income…
Retail
workers earn 3.5% less, according to the first study. Even if they went
down only 2%, are the workers supposed to be happy because they spend
all their money at cheap Wal-Mart stores?