In my view, here are some of Wal-Mart's economic benefits and costs:

BENEFITS

• Lower prices of consumer goods. Wal-Mart claims that its low price strategy has reduced consumer prices by 3.1% -- saving consumers an estimated $263 billion in 2004;
• Tax payments. Wal-Mart paid about $6 billion in income taxes in the last 12 months; and
• Supplier efficiency. Wal-Mart is a demanding customer that forces its suppliers to become more efficient. This pressure leads to improvements in supplier business processes that push down suppliers' costs -- enabling surviving suppliers to earn higher margins in selling to other customers.

COSTS

• Low wages, poor benefits. Wal-Mart employs 1% of the US workforce, it has blocked unions and its wages are low. For example, in 2001, Wal-Mart paid its employees an average $8.23 per hour, compared with $10.35 for an average supermarket worker. Furthermore, Wal-Mart has been involved in 39 class action lawsuits, involving hundreds of thousands of plaintiffs who charged Wal-Mart with withholding earned wages, either by deleting hours from time sheets or forcing workers to work unpaid overtime hours. Finally, Wal-Mart does not give health benefits to most of its workers. While 66% of employees at large firms like Wal-Mart receive health benefits from their employer, only 41% to 46% of Wal-Mart employees do; and
• Small business failures. Wal-Mart has driven small retailers out of business in the local communities in which it operates -- reducing overall retail sector employment by between 2% and 4%.

Whether Wal-Mart's societal benefits outweigh its costs cannot be reduced to a simple calculation. But all the free publicity Wal-Mart is getting from the political debate -- in which Democratic candidates argue on behalf of Wal-Mart workers -- is not good for Wal-Mart shareholders.

By fanning the flames of anti-Wal-Mart sentiment, Democratic candidates are in effect limiting the company's ability to grow by opening new stores. This places greater pressure on Wal-Mart to sell more through its existing stores -- a huge challenge when one considers that in order to maintain its 11% sales growth, Wal-Mart will need to add $34 billion to its revenues in the next year.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He has no financial interest in Wal-Mart securities.