Wal-Mart (WMT) Becomes The Nation's New Employment Agency

Retail

Published: June 4, 2009 4:46 am

Last Updated: April 28, 2020 9:31 am

Many big-box retailers including Best Buy (BBY), Target (TGT), and Costco (COST) are struggling as the recession beats down their same-store sales. General retailers such as Sears (SHLD) are not faring any better. That means that the layoffs in the retail industry, which have already been extensive, are likely to continue, especially if the 2009 holiday season is weak.

Wal-Mart (WMT) is at the other end of the spectrum, by itself. The world’s largest retailer says it will add 22,000 jobs at US Wal-Mart stores this year. That is down slightly from 2008, but in an economy that is forcing hundreds of thousands of people out of work each month, it is extremely impressive.

Investors in Wal-Mart have begun to voice concerns that the company will lose some of its new customers when the economy recovers. These customers will go back to retailers who cater to the middle classes. They will not be forced to go “downscale” to do their shopping. This analysis may miss the fact that the consumer who has forced to be frugal when he was pressed to keep his expenses down due to the recession will decide to open his wallet as things get better. Analysts who follow the car industry believe that consumers will never go back to buying a new vehicle every year. The same probably holds true for most consumer spending. American frugality could last for a decade.

Wal-Mart is often criticized for paying its workers too little money and prevents them from forming unions. These charges may be true, but it is also true that Wal-Mart is one of the few large U.S. companies that is contributing to an improvement in national employment.

Douglas A. McIntyre

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