Sunday, June 05, 2005

Wal-Mart Meets Reality (TV)

Wal-Mart has been having a lot of trouble with their image lately. A lot of critics have been sniping at them for various things, and it's affecting business and keeping the company on the defensive. They're constantly trying new things to burnish their image, including aggressive campaign ads, a website to counter the anti-Wal-Mart websites, a big media conference, whatever their PR people can think up.

Wal-Mart's latest move is a new reality show called "The Scholar" that pits 10 high-school senoirs against one another to win the grand prize, a full college scholarship valued at $250,000. Wal-Mart is a major sponsor of the show, Wal-Mart will be integrated into the "plots" of the show, and Wal-Mart is underwriting the cost of the scholarships awarded to the runners-up.

I kind of fall into the gray middle ground on the subject of Wal-Mart. I mostly side with the critics. I deplore a lot of their business practices. I wish they would pay their "associates" more and give them better benefits. I hate how they've drifted away from their "Buy American" campaign and get more and more of their goods from overseas. I hate how their quest for lower and lower prices puts the squeeze on their suppliers, driving many into outsourcing. I wish they would spend a little less time and energy burnishing their image, and a little more time and energy actually improving their business practices. But, I confess, I am an occasional Wal-Mart shopper. It's the place to go to get a gallon jar of pickles for a couple of bucks or to get some toilet paper at one o'clock in the morning.

Wal-Mart has the best prices around, but if you shop there you have to consider the hidden costs that come with the good deal. A while back, Rep. George Miller was trying to keep Wal-Mart out of his state, California, and compiled an interesting report called "Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart." (pdf) One section leapt out at me:

"The Democratic Staff of the Committee on Education and the Workforce estimates that one 200-person Wal-Mart store may result in a cost to federal taxpayers of $420,750 per year - about $2,103 per employee. Specifically, the low wages result in the following additional public costs being passed along to taxpayers:

$36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families.
$42,000 a year for Section 8 housing assistance, assuming 3 percent of the store employees qualify for such assistance, at $6,700 per family.
$125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of households with a child and 50 are married with two children.
$100,000 a year for the additional Title I expenses, assuming 50 Wal-Mart families qualify with an average of 2 children.
$108,000 a year for the additional federal health care costs of moving into state children's health insurance programs (S-CHIP), assuming 30 employees with an average of two children qualify.$9,750 a year for the additional costs for low-income energy assistance."

If Wal-Mart really wants to improve their image with me, they should do something about this. They should stop passing their business costs on to the taxpayers. The above stats don't even include the tremendous financial burden they are putting on state governments by having so many employees on Medicaid rolls. Low prices are good, but Wal-Mart is proving that there is such a thing as too low. If it's a question of money, I'll gladly pay five or ten cents more for my pickles and toilet paper.


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