Walmart’s claim of having the lowest prices doesn’t always ring true

By ELLEN RUPPEL SHELL

NEWTONVILLE, Mass. — Last month, a bevy of Richmond, Va., residents joined with preservationists in filing a legal objection to the proposed construction of a Walmart Supercenter within firing range of the Wilderness Battlefield. About 30,000 American soldiers were injured or killed on that field 145 years ago, and while we hope no blood will be spilled in the eventual outcome of the skirmish, the stakes are still fairly high.

On one side are the buffs, historians, concerned citizens and celebrities who argue that the Civil War landmark is both sacrosanct and vulnerable. “The Walmart project would irrevocably harm the battlefield and seriously undermine the visitor’s experience,” declaimed Zann Nelson, president of Friends of the Wilderness Battlefield. On the other side are Walmart executives, who counter that far from besmirching hallowed ground, the intent is to boost the region with hundreds of jobs, hundreds of thousands of tax dollars, and an unbeatable shopping experience.

Neither side of this dispute is likely to see the world through the others’ eyes. But a close look at the evidence makes clear that, historical significance aside, the addition of another 130,000 square feet of Walmart to a region already cluttered with the stores will bring significant collateral damage.

MIT study

Walmart boasts of having the lowest possible prices on the widest possible selection of goods, thereby offering both convenience and value. But a few years ago Massachusetts Institute of Technology-trained economist Emek Basker decided it was time to examine that claim, and engaged in a study of Walmart stores located near 165 cities across the United States. What she found was that Walmart does indeed offer low prices, but not on everything it sells.

In fact, Basker found that Walmart prices were actually higher than average for the region on one-third of its stock. Equally interesting was that on those items for which prices were lower, the average savings was 37 cents, with about one-third of goods carrying a savings of no more than 2 cents.

Research for this study concluded prior to the ongoing recession, thanks to which Walmart — like most retailers — was forced to reduce its prices still further to keep the customers coming. It did so by aggregating the power of millions of individual consumers to gain leverage over its suppliers, the folks who actually manufacture and deliver the goods.

As the nation collapsed into its worst economic downturn in generations earlier this year, former Walmart CEO H. Lee Scott Jr. couldn’t have been more pleased. “In my mind there is no doubt that this is Walmart time,” he gloated. “This is the kind of environment that Sam Walton built this company for.” When the nation is in pain, deep discounters like Walmart gain. They do not have to innovate to gain profit share; they simply squeeze their employees and suppliers a bit harder.

Bargain-basement goods

The power to wring cost out of bargain-basement goods is what makes Walmart so appealing to consumers, and the leverage to do so while maintaining record profits is what makes Walmart so appealing to company executives and investors. Naturally, these “everyday low prices” are not plucked out of thin air — they come at a substantial cost to most of us.

What might one day be called the “Wilderness Battlefield Walmart” will bring jobs, but not necessarily the sort of jobs our Civil War ancestors battled to protect. Walmart is fairly secretive about its pay scale, but what is clear is that most members of its rank-and-file work force do not make enough to build a solid middle-class life.

We’ve been asked to believe that low prices on T-shirts and toilet paper and hamburger compensate for these poverty-level wages, but we know in our hearts that they don’t. Especially when so many of the cheap goods these “associates” stock and sell are manufactured or grown far away, in low-wage countries siphoning off jobs that once made possible the middle-class futures our ancestors sacrificed their lives to preserve.

It’s not just Walmart workers who are suffering under this system. For 90 percent of Americans, wages and benefits have been flat or declined for years: We may be able to afford those cheap T-shirts and toys, but it’s become increasingly difficult to pay for the necessities — fuel, housing, health care, and a decent education for our kids.

Respect

Civil War battlefields deserve our respect. And so do the memories of the soldiers who fought on them. One of the more famous of those soldiers was William McKinley, who later became the nation’s 25th president. It’s impossible to know for sure what President McKinley would have said about the Wilderness battlefield, but we can garner some clues from the historical record. “I do not prize the word ‘cheap,’” he once said. “It is not a badge of honor. Cheap merchandise means cheap men.”

More than a century later, his words ring truer than ever.

X Ellen Ruppel Shell, a professor at Boston University and a contributing editor of the Atlantic, is author of “Cheap: The High Cost of Discount Culture.” McClatchy-Tribune Information Services.