David Gura: Your story has generated a lot of listener response. One comment that came in pretty early on is ‘Should we be shocked by this—by the way the system works?’
Krissy Clark: Yeah, and my point isn’t at all to decide if you or any of the listeners should be shocked by this. My point is just to say, ‘Hey, let’s look at what is really going on,’ in terms of how food stamps function as a part of our economic system, in all of these different ways. And maybe that will help us have more informed conversations about like things like food stamp funding, about debates around the minimum wage. Let’s just look at it and all get on the same page about it.
Gura: Your stories focus a lot on Walmart—why?
Clark: Walmart is kind of hard to avoid when you’re talking about things like food stamps and wages, just because they are so big. They are the largest employer in America. They are the largest recipient of food stamp dollars. And they are the largest retailer, full stop, in America. And because they’ve been such a successful company, they’ve really set the tone in a lot of ways for the competition. And I want to give Walmart a lot of credit for being very open to talk about this stuff. They invited me down to their headquarters in Arkansas, they really engaged in the issue. Other retailers that we reached out to—they all declined to be interviewed for this story.
But I also think that the role Walmart plays in the economy, especially for low income families, is a really interesting one. And it’s kind of encapsulated in this phrase I kept hearing at Walmart headquarters. “EDLC leads to EDLP” [Every Day Low Costs leads to Every Day Low Prices]… I think it gets to the heart of the paradoxes of the food stamp economy in America in a lot of ways.
A sign on the wall at Wal-mart headquarters.
Clark: I was at Walmart headquarters in Arkansas, at the visitor center there. And all of the floor tiles in the visitor center, which was actually one of the first stores that Sam Walton, the founder of Walmart, opened—all of the tiles were mismatched. The colors were off. And Alan Dranow, who oversees the visitor center, pointed them out to me, and explained that they were mismatched because Sam Walton got a good deal on the tiles from the contractor. He told me, “I point to that as a very first example of EDLC, which is Every Day Low Cost, which is how we get to EDLP, which is Every Day Low Prices, which is our pricing strategy.”
…I heard it multiple times when I was at the headquarters… And you can look at the equation in two different ways. When I talked to Karrie Denniston of the Walmart Foundation, she sees this as one of the key ways that Walmart helps low income Americans.
She told me “One of the greatest assets that we provide to local communities is often being there, being a grocer that can bring safe, affordable nutritious products in to areas that may not even have had access to them before.”
But of course remember that equation: “EDLC = EDLP.” To get to those everyday low prices, you need everyday low costs, and one of those costs is the cost of labor.
Gura: Some people have argued—and indeed we’ve seen them argue this on the comment section on the website—that Walmart could just raise wages, and I wonder why they haven’t done that—why they’ve decided not to?
Clark: Well, Walmart is a business. They have reasons why they think their approach is the best thing for their bottom line, and their share holders. And then there are questions about well, if you raised wages would that increase prices, and by how much? And then would that hurt low-income Americans in a different way?
There’s also this other point that an economist at UC-Irvine named David Neumark brings up:
“I wish they were more skilled and were worth more in the labor market, but assuming that’s not going to happen in the near future, I’d certainly rather they get those benefits than not get them,” Neumark said of food stamps going to low-wage workers. “And, I don’t personally as an economist, have a strong feeling about somehow there’s a moral obligation for workers to earn from their work, or for employers to make sure they earn that from their work.”
He says it’s not like food stamps are making Walmart and other companies pay low wages. Even if food stamps didn’t exist, they might pay low wages. And so if low wages are part of the service economy right now, and this is the economy we have — maybe food stamps coming in to make up the difference is a good system for low wage workers.
Gura: So he’s talking about the near future and the economy we have right now—where does that leave us? Are things going to change? How would they change?
Clark: The one thing everybody I talked to from Walmart to the low-paid workers who are on food stamps said is, ‘We would love a world in which the food stamp program did not need to exist’– especially for people who are able-bodied and who are working. But the question is how do we get there? How could we kick start the economy so that businesses aren’t even necessarily getting pressured in to raising their wages higher, but that they need to because there are a lot of people with a lot of skills who can demand a lot for the work they’re doing?
Marketplace reporter Krissy Clark talking with volunteers at a Foodbank in Ohio.