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December 25, 2006

The discounters’ debate

There has been an ongoing debate about the economic pluses and minuses of the so-called big box discounters. N.C. State's Mike Walden summarizes the two sides.

"And we don’t want to take sides here but we do want to show what the cons and the pros are," says Dr. Walden, an economist with the College of Agriculture and Life Sciences. "On the con side, you will hear one argument that discounters pay their workers not very well. They pay low wages; they don’t have many benefits. And so their workers are earning less than they could perhaps in other occupations.

"One retort to that is that, well, if there are better jobs, the workers ought to go take them," he adds. "So it may be that folks who work at the discounters don’t have many opportunities. But clearly rate of pay is low.

"Another con is that discounters may put out of business many existing companies," Walden says. "And you see this debate when a big box discounter will come for example to a small town and the existing businesses will put up a fight because they know they may be competed out of business.

"Now on the pro side, no question: The biggest benefit, I think, of the big box discounters is they offer lower prices, and they offer a wide variety of products, all of them carrying very low prices. In fact, economists have been able to statistically find that the advent of the big box discounters, say in the last decade, probably shaved a full half-percentage point off the overall inflation rate.

"So like anything, we have got pluses and minuses," he concludes. "The debate over discounters is no different."

Posted by deeshore at December 25, 2006 07:33 AM

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