Thursday, January 06, 2005


It is basic to the Left to envy other people's success. So they have always hated successful businesses -- as Microsoft and McDonald's well know. So their hatred of Wal-Mart is no surprise. The N.Y. Review of Books has a big review of a number of anti-Wal-Mart books and, surprise, surprise, finds not one thing to criticise about any of the books concerned -- despite the inclusion of books that have been heavily criticized elswhere, such as the Ehrenreich tome. Let us just look at just one of the misleading statements in the "Review" concerned.

"One of the most telling of all the criticisms of Wal-Mart is to be found in a February 2004 report by the Democratic Staff of the House Education and Workforce Committee. In analyzing Wal-Mart's success in holding employee compensation at low levels, the report assesses the costs to US taxpayers of employees who are so badly paid that they qualify for government assistance even under the less than generous rules of the federal welfare system. For a two-hundred-employee Wal-Mart store, the government is spending $108,000 a year for children's health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. The report estimates that a two-hundred-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee. That translates into a total annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million US employees".

Wayne Lusvardi has sent me the following comment on the excerpt above:

"The excerpt highlights how Leftists often use statistical fallacies to deceive the public about Wal-Mart. The paragraph claims that Federal welfare subsidies to Wal-Mart employees -- because of their low wages -- amounts to $2.5 billion ($420,00 per Wal-Mart store). The statistical fallacy is one of extrapolation from individual income data while leaving household or family data out of the analysis. Many Wal-Mart employees are retired and have other sources of income that keep them from depending on welfare programs. Many other Wal-Mart employees come from two-wage earner families and also don't require welfare assistance. Many others have two jobs or additonal part time employment to supplement their Wal-Mart salaries. And, of course, many have spouses that have health insurance which covers them as well. The flaw in the Democratic Staff House Committee report cited is the fallacy of extrapolating from one hypothetical Wal-Mart employee living on an hourly wage of $8 per hour with no other income, family, or other non-government support to all Wal-Mart employees, which of course is nonsense. But an unquestioning media will morph this data into a "fact." What did social psychologist W.I. Thomas say? "A situation that is perceived as real, is real in its consequences." So expect this Leftist "factoid" to start showing up in your local newspapers as unions and NIMBY's fight Wal-Mart stores in their local communities."


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