The High Cost of Low Prices

Living Wage posterI am trying to wrap my mind around something that continually escapes me. Many, many of my colleagues, friends and students are staunch defenders of living wage movements. These movements call for wages that are sufficient enough for a person to not merely survive but thrive. But many of these same proponents seem to balk at the idea of paying a person a living wage when the money comes out of their own pockets.

Add to this the current view that we Americans do not pay enough for the scarce resources we consume and we come up against our own collusion with the global corporate misbehavior we all deplore.

Two maxims: (1) Americans need to pay more not less for gas, food, clothing, automobiles, homes, land and all forms of energy. (2) Our inability to grasp this fact is the primary reason we sabotage all our good-faith efforts to stem global warming, slave labor, corporate malfeasance, poverty, hunger, pollution and terrorism/war.

With our demand for cheap food, we are driving the small farmers out of business since they cannot compete with the large agribusinesses. Our demand for cheap clothing closes down small manufacturers in the US and ships overseas the very jobs that would lift many out of poverty and unemployment. The overseas factories are the only ones who can produce clothing cheap enough to satisfy the US market. But it is at the cost of fair working conditions and pay. And our trade policies contribute to poverty, hunger and disease in many of the producer countries because we warp their entire economy to meet our needs instead of their own. Our demand for cheap gas is a huge incentive for a foreign policy of war and aggressive tactics to feed America’s oil addiction. We keep plowing under the open green spaces to build cheaper homes instead of rebuilding and revitalizing American cities. We cannot even begin to discuss a universal health care until we get over our obsession with low taxes.

We as a country and the western world as a whole will never make headway into solving the grave issues before us until we admit that it is our addictions that are causing most of the worlds problems. We are addicted to paying almost nothing for everything and then we complain when our deadly habits cost us our jobs, our environment and our health care. We are such hypocrites. Immigrants, legal or otherwise, are not the cause of the problems we face in this country. Our problems are caused by our insatiable hunger for immediate gratification on the cheap.

“ …modern western culture is an offspring of widespread hunger -- both literal and spiritual. You cannot get more primal and now-focused than hunger.”

From Debt, Gratification & the Seduction of the Now

Walmart logoThis addiction produces some startling conflicts. I recently was invited to speak at a suburban congregation about the process of radical change. In that sermon I used the language of myth to get people thinking about new ways to approach some of the changes they wanted to bring about in themselves, their communities and the world. During the talkback after my sermon, we used my technique to brainstorm a few ideas to use in their existing activist campaigns. And it was working like a champ until we got to the issue of Walmart. The technique we used meant we had to first come up with our personal reasons for enacting the change we wanted in our everyday lives. So I asked, “Why would you be willing to pay a higher price for goods?” I was hoping folks would respond with ideas like, “because I was buying from my neighbors” or “because the money stays in the local economy.” But all I received was blank stares. And then it hit me; they were actually unwilling to pay higher prices. And that is exactly why Walmart is so successful.

One of the arguments that Walmart successfully uses is that their low prices make their merchandise affordable for low-income customers. Now this is an interesting argument. It is an argument many small producers such as artists, musicians, craft workers and writers hear all the time. But this argument masks a reality that most Americans are unwilling to acknowledge, much less address. If only it were true that low prices benefited poor people. In reality, low prices benefit no one. The truth is that poor Americans often pay more not less for most of the goods and services they receive. Truth be told, cheap prices actually warps our economy.

It is a reality I came face to face with in the mid seventies, as a student at Howard University working toward a minor in economics. As my professor explained, stores in poor urban areas typically charge higher prices for goods and services because these stores are more likely to serve customers without cars. While at the same store in a more affluent area will charge lower prices, because their customers can always drive to another establishment with lower prices. Wherever a community becomes a captive audience, they are forced to pay higher prices.

Poorer communities are better served by a variety of choices rather then simply lower prices. They will at least have an opportunity to pay the same prices as everyone else. It is also short sighted to suggest that poor communities need the cheaper products, when in order to sell the low price items, the store will be forced to pay lower wages as well. And who do you think works for those lower wages?

Anti Walmart Film Poster2And this is where both the Walmart and the low price argument in general falls apart. What are the invisible costs of low prices? And who pays for them? The low prices in Walmart are paid for by small businesses and their employees, foreign workers and ecosystems and ultimately the entire US and global economy.

I am not suggesting that prices should be so high as to become a barrier or burden, but they should reflect the cost of paying a living wage. And as consumers, if we have a commitment to sustainability and economic justice, we should be willing to pay prices that reflect this cost.

And if we are unwilling to pay a living wage, why should Walmart or anyone else pay them?

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Hecate (not verified) | Wed, 07/12/2006 - 6:39pm

You wrote: In reality, low prices benefit no one.

Actually, they benefit the corporatists, the CEOs, and the white males who own most of the stocks.

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