The Cost of Wal-Marts Low Prices Should Not Be Too Costly - Essay Example

The essay "The Cost of Wal-Mart’s Low Prices Should Not Be Too Costly" analyzes the prices of Wal-mart. Wal-Mart helps the poor by providing low prices, but it can do better as an employer by offering competitive wage levels and benefits to its full-time workers, and promoting a culture of efficiency and equal opportunities, not unfair labor practices. Wal-Mart is good for the poor and the working class because it offers low prices and provides jobs, while being at par with other retailers in terms of Medicaid consumption.

Wal-Mart, because of its sheer size, can maximize its economies of scale and scope to offer low prices every day. It is dedicated to driving down prices, so that it can pass its savings to consumers, and the effect is so large that Jason Furman of New York University compares Wal-Mart to a welfare program: “Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year". The savings from shopping at Wal-Mart is significant enough, that consumers are saving billions of dollars every year.

Aside from consumer savings, Wal-Mart is the world’s biggest retailer, so it is not surprising that it is the biggest private employer too. Olsson reports the extent of business and employment of Wal-Mart: “The company is the world's largest retailer, with $220 billion in sales, and the nation's largest private employer, with 3,372 stores and more than 1 million hourly workers”. The sales of the company enable it to hire millions of workers. . Medicaid dependence is a concern for Wal-Mart too, but one which is not far from retailer companies in general.

Mallaby reveals that 5 percent of Wal-Mart’s workers are on Medicaid, but this is a retail industry standard (357). The national average is 4 percent for all firms, so Wal-Mart’s effect on welfare usage is not worse than other firms. Considering these savings, employment, and use of Medicaid, Wal-Mart helps the poor and the working class. Despite these advantages, Wal-Mart has to work on its labor issues, in order to truly help the poor and the working classes, and the first step is improving wage levels and benefits to full-time workers.

Olsson interviewed workers who revealed that Wal-Mart pays $16,000 to $18,000 a year (342). Jennifer McLaughlin, who works at Wal-Mart Supercenter #148, shares that her yearly wages reach only $16,800 (Olsson 342). Health benefits are not covered too. Wal-Mart provides the option of health insurance, but because it would “deduct up to $85 from her biweekly paycheck of $550,” McLaughlin and numerous employees choose to rely on Medicaid (Olsson 342). McLaughlin is already with Wal-Mart for three years, and she deserves a more competitive pay and benefit package.

Wal-Mart earns hundreds of billions of dollars every year, and it can use some of its millions to enhance the pay and benefits of its workers. Apart from low pay and poor benefits, Wal-Mart should be more concerned of the health and morale of its workers by not underpaying and overworking them. McLaughlin and other interviewed employees expose that some Wal-Mart managers force people to work overtime without pay (Olsson 345). Lawsuits are already filed against Wal-Mart for unpaid overtime. Wal-Mart cannot help the poor and the