Wal-Mart: Alleviating Poverty Abroad, Lowering Prices at Home

Cite this Article
Thomas A. Lambert, Wal-Mart: Alleviating Poverty Abroad, Lowering Prices at Home, Truth on the Market (October 17, 2006), https://truthonthemarket.com/2006/10/17/wal-mart-alleviating-poverty-abroad-lowering-prices-at-home/

Those of us who defend the right to outsource are frequently criticized for lacking compassion and for being concerned only with the bottom line. I’ll admit that profitability concerns generally motivate decisions to outsource (and most other business decisions), but I won’t concede that outsourcing imposes a net harm on the economically disadvantaged. If we’re really concerned with alleviating the worst instances of poverty and are not focused only on protecting our own kind, we should support the right to outsource.

John Tierney makes this point in today’s NYT. Echoing comments of Michael Strong, the head of “a nonprofit group promoting entrepreneurship abroad,” Tierney observes that the evilest outsourcer of them all — Wal-Mart — can rightly claim to have done more than just about anyone else to alleviate the suffering of the poor:

Making toys or shoes for Wal-Mart in a Chinese or Latin American factory may sound like hell to American college students — and some factories should treat their workers much better, as Strong readily concedes. But there are good reasons that villagers will move hundreds of miles for a job.

Most “sweatshop� jobs — even ones paying just $2 per day — provide enough to lift a worker above the poverty level, and often far above it, according to a study of 10 Asian and Latin American countries by Benjamin Powell and David Skarbek. In Honduras, the economists note, the average apparel worker makes $13 a day, while nearly half the population makes less than $2 a day.

[NOTE: Powell and Skarbek discuss their study here.]

This is not to say, of course, that there are no “victims” of outsourcing. Some Americans lose their jobs. Others find they can’t command as much for their services because of cheap foreign labor.

Yet, that cheap foreign labor produces benefits at home — lower prices. Moreover, Wal-Mart’s job offerings are routinely oversubscribed (there are typically around ten applicants per open position — sometimes many more), suggesting that lots of workers think the jobs aren’t that bad.

This is not enough for many Wal-Mart critics, who maintain that consumer savings don’t justify the economic dislocation caused by Wal-Mart’s cost-cutting and, as Tierney explains, would “rather see Wal-Mart and other retailers paying higher wages to their employees, and selling more products made by Americans instead of foreigners.”

That position, though, is ethically suspect. In Tierney’s words:

[T]his argument makes moral sense only if your overriding concern is saving the jobs and protecting the salaries of American workers who are already far better off than most of the planet’s population. If you’re committed to Bono’s vision of “making poverty history,� shouldn’t you take a less parochial view? Shouldn’t you be more worried about villagers overseas subsisting on a dollar a day?