ANOTHER WALMART EFFECT. Virginia Postrel described here what McKinsey (the management consultants) had described as “The Walmart Effect.” She quoted a McKinsey researcher who wrote that: “”More than half of the productivity acceleration in the retailing of general merchandise [between 1995 and 1999] can be explained by only two syllables: Wal-Mart.” A quarter of America’s increased productivity during the period came from retailing. Postrel’s article quoted McKinsey officials on how surprised Europeans were by this finding. They associate American productivity growth with high tech industries rather than retail operations. Now, in the article I linked in today’s other post, Tyler Cowen cites a study by Christian Broda and John Romalis which asserts that cheap imports from China and discounting by Walmart have benefited America’s poor disproportionately. “In fact,” Cowen says, “for the poor, discounting in stores such as Wal-Mart has offset much of the rise in measured income inequality from 1994 to 2005.” I am always surprised by the scale of Wal-Mart’s activities.
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You should note that the quote says productivity growth “in the retailing of general merchandise” That’s i/8 of overall productivity.
How much of that “productivity” is the result of low pay and a large part-time work force with minimal benefits? How much is from the documented pressure to work long hours at the expense of family time? How wonderful for the American workers to pay less in WalMart for goods from China, Lesotho, etc. resulting from outsourced jobs! True, Bill Gates and company may not buy from Wal-Mart, but what a Catch-22 for the “poor” who do!
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I didn’t really have too bad of an opinion on Wal-Mart until I saw their creepy anti-union propaganda videos posted online. I was reminded of them when a Simpsons rerun had Mr. Burns opening a new power plant in India and showing the fired employees a video about how great outsourcing is.