A Defense of Walmart

Walmart, while not perfect, deserves, from a utilitarian perspective, a three for good ethical standards and especially its benefits towards society. When evaluating Walmart, we should evaluate it by how much good it does. Jeremy Bentham laid out the standard we should use, “the greatest happiness of the greatest number . . . ”. While Walmart does not deserve sainthood, between its positive impact is undeniable. 

Jason Furman, President Barack Obama’s Chair of the Council Economic Adviser, found Walmart saved Americans $263 billion in 2004. At the time, one prominent study put the wage depression rate at 5 billion, tiny in comparison to the positive social benefits of lower prices. The $263 billion figure would translate to $2,329 per household or $3,931.88 in today’s prices.

Walmart also positively affects Americans through higher wages. In 2006, Wal-Mart opened a store in Washington DC with 600 spots open for new employees. It received 23,000 applications or thirty-eight for every open job. This should be no surprise; at $9.41 an hour Walmart beats out J.C Penney, TJ Maxx, Marshalls, Ross, Sears, Dollar Tree and Dollar General from anywhere from thirty cents to almost two dollars an hour. After three months, that rises to ten dollars an hour.  Individuals will choose what they perceive their best options are. Thirty-eight individuals applying for each job suggests that while Walmart does not provide perfect jobs they are preferable to alternative jobs.   

Walmart also has a large effect on government policies. Michael Hicks, an economics professor at Ball State University, found a one percent increase in Walmart employment decreases Temporary Assistance for Needy Families by over three percent. While the same study did find an increase in Medicaid spending, this was a general phenomenon among all employers in the wage level; however, this is more than likely due to the employment screening process which alerts already eligible workers to their eligibility 10. Walmart also puts a significant amount into the US Treasury. Walmart had the eleventh highest income tax bill in 2016, paying about six billion or an amount that would be about forty-five percent of its net income.

Another less traditional way Walmart helps Americans is its overwhelming support for charity. In 2005, after Hurricane Katrina impacted the gulf coast, Walmart responded with “$20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers”. Even critics of the company conceded this was an unrivaled and impressive performance. Walmart’s philanthropy did not end after Hurricane Katrina. In 2016, Walmart was the Fortune 500’s second most charitable organization with over 300 million in cash contributions.

While Walmart does provide broad benefits to society, it is true specific individuals could be hurt. One often cited example is Walmart assisting in the outsourcing of American jobs to lesser developed countries overseas. The problem with this criticism is two-fold. First off, outsourcing provides broad-based benefits through increasing living standards by lowering prices. It is immoral to hurt millions of people to benefit a small group. The second problem with the criticism is an extension of the first problem. Outsourcing is not actually a problem. The US International Trade Commission found, “foreign affiliate employment in low-income countries seems to have no effect on U.S. parent employment.”

Walmart’s positive benefits to society extend beyond American workers. John Tierney, New York Times columnist and contributing editor to City Journal, issued a challenge in October 2006. In a column for the New York Times, he echoed a challenge from Michael Strong which asked someone to name an organization which does more to fight third world poverty than Walmart. While Walmart sweatshops may not pay optimal or utopian wages for Western standards, no one is offering those employees a plane ticket to come to the US and make American wages. To determine the impact Walmart has overseas we need to compare their outcomes against what would have been– not what would happen in America.

In 2006, the economists Benjamin Powell and David Skarbek undertook a massive effort of determining real wages in a variety of sweatshops. One sweatshop they quantified was a Walmart sweatshop in Honduras. This particular shop paid over eighteen dollars a week, based on a sixty hour work week. While employees in this sweatshop were paid over two dollars a day, almost half of Honduras was not able to work for a wage over two dollars a day. As Americans, it is easy to judge these low wages as uncompassionate and immoral but our livelihoods do not depend on them. Earlier I said Walmart should not be up for sainthood. Yes, they could pay higher wages but doing good should not be tarnished by the ability to do more good.

As I said at the beginning of this essay, Walmart is no Saint but we are not evaluating Walmart against St. Peter, Paul the Apostle and Mother Theresa. At the end of the day, Walmart exists to make a profit and the standard it should be held against needs to take that into context. If we use Jeremy Bentham’s utilitarian standard, maximizing happiness, we have to come to a simple conclusion. With the support of overwhelming evidence, Walmart is a company with good ethical standards and an overwhelmingly positive benefit to society.

Note: This is taken from an essay I wrote in my Business Ethics class. I do not nessesarily agree with each individual argument used but I do agree with the broader point.

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