Making Paradise Affordable
By Brandon Bosworth
The first K-Mart opened in Hawaii, my home state, in 1992. That was the debut for Big Box retailing of the "no membership required" variety (Costco had already been here for a couple of years), and residents were amazingly excited. The day of the store's grand opening, local news outlets interviewed future K-Martians mulling the Big Moment. One woman, in an obvious state of pre-shopping ecstasy, exclaimed, "K-Mart is the best thing to ever happen to Hawaii!"
Now, personally, I believe that the unification of the Islands under Kamehameha the Great, the introduction of written language, the lifting of martial law after World War II, and statehood all rank a bit higher than the arrival of a new store. Yet I'm not scoffing at the thrilled shopper. Anyone who has dealt with the crushing costs of living in Hawaii--or, more generally, anyone living on a tight budget anywhere who watches what happens when a major discounter arrives in the area--can certainly sympathize with her.
I sure do. In 1992, just a few years out of high school, I was working a lousy retail job for lousy pay, living with lousy roommates in a lousy townhouse. Making a shade more than minimum wage, there were times I couldn't withdraw $20 from an ATM because I had exactly $19.90 to my name. When K-Mart opened just a short bus ride away from my house (did you actually expect me to have a car?) it was a Godsend. Evil capitalist swine that they are, K-Mart managers undercut the prices of many local competitors. For me, that meant I could splurge on life's luxuries (food, medicine, shampoo, new socks) without having to worry about paying the rent. While K-Mart didn't allow me to upgrade to a Gatsby-like lifestyle, it at least helped me move further away from the Oliver Twist side of the scale.
Things improved even more when I escaped my evil roommates and moved into a better apartment with a friend from high school. Besides having a car, he also had a Sam's Club membership. Edibles of better quality than the ten-packs-for-a-dollar ramen noodles I was used to eating suddenly became a reality. Granted, the stuff we lived off of wasn't exactly Michelin-Guide quality. We filled up carts with the basic bachelor food groups: frozen burritos, beer, cans of beans, and huge boxes of dry cereal. When in a festive mood, we'd buy a giant frozen Stouffer's lasagna and overcook it until the cheese got nice and crispy.
Though my financial situation is nowhere near that dire any more, I would certainly be worse off if it weren't for the Big Boxes. The same goes for most Hawaii residents. Paradise is amazingly expensive.
Even basic foodstuffs here carry exorbitant prices. Consider the classic American breakfast of milk and cereal: A gallon of milk can cost twice as much as a gallon of gas, and cereal prices are so high there was once a government investigation to determine exactly why a box of Cap'n Crunch costs around $5 or $6. And, by the way, we pay a general excise tax of 4 percent on all purchases, including food and medicines.
A Honolulu Advertiser editorial recently observed that "A buyer with a median household income of $67,750 would have to spend 50 percent of it to buy a median-priced home valued at $600,000." By the time you read this, I'd wager the median home price in Honolulu has probably risen to at least $650,000. And a half-million dollar home in Honolulu is not the same as a half-million dollar home in the Midwest. Single-wall construction, no air conditioning, carports instead of garages, tiny yards, burglar-friendly jalousie windows, wooden construction that attracts annual termite swarms--these are just a few of the charming features of an average Island home.
Condominiums aren't exactly affordable, either. There was a recent news story about plans to build moderately priced condos for average local folks. The costs? They will start at about $300,000 for a 425-square-foot studio, and $450,000 for a one-bedroom unit of about 690 square feet. Of course, you could just rent an apartment. The prices of an average rental unit have only climbed from about $850 in 1998 to nearly $1,400 in 2004, and are still going up.
Pollyanna-ish Islanders smile and call the high cost of living "the sunshine tax" or "the price of paradise." An odd side effect is the phenomenon of reverse sticker shock that manifests itself whenever a longtime Hawaii resident visits family or friends in the mainland. There are obvious surprises ("You paid less than half a million for a one-bedroom apartment?!") and more subtle ones, like going to the grocery store. The last time I went to a supermarket in San Diego, I thought the clerk had not rung up all my items. In Honolulu, I'll often just barely top off one of those small hand-held baskets at the grocery, and it will end up costing me around $60. In San Diego, I filled up a regular shopping cart with all sorts of stuff and the bill was just over $40. I felt as if I was robbing them blind.
A tropical necessity
To ease the pain of paying bills in Hawaii, virtually everyone shops at the Big Boxes. A membership at Costco, or Sam's Club, or both, is an essential part of local living. Residents know the strengths and weaknesses of each store, and shop accordingly. Those who have a clear loyalty to one or the other can be among the most partisan folks found outside of Washington.
Honolulu's Big Boxes attain the sort of mixing of socioeconomic classes that would make Marx swoon. The parking lot of any given Wal-Mart will contain several "island cars"--old import vehicles that have been beaten beyond recognition by sun and salt spray, and are now held together only by rust, duct tape, and strategically placed bumper stickers. But you will also see numerous Mercedes--the favorite of successful resident Chinese, who, still bitter about Japanese imperialism, eschew the Lexuses (Lexi?) and Acuras that dominate the garages of Hawaii's well-off citizens. Inside the stores, you'll notice ladies with Louis Vuitton bags and several Gs worth of gold bracelets draped across their arms competing for cheap toilet paper with newly immigrated Micronesian women who rely on an envelope for their wallet and a plastic bag for their purse.
The Islander fondness for Wal-Mart and its like is readily apparent. In any visit to one of the stores--at any time of day, on any day of the week--there will be crowds. I go in the mid afternoon on a weekday, see tons of shoppers, and wonder, "Do these people have jobs?" (In my case, as a freelance writer, the answer is, "No, not really.")
It's not just local people. Mainland tourists stunned by Waikiki prices seek out the Big Boxes for souvenirs of Hawaii. Older men visiting from Europe, discovering that bikini bottoms on guys aren't the norm here swimsuit-wise (except at the aptly named Queen's Beach), seek out board shorts for lounging at the hotel pool. Japanese tourists arrive by the busload, literally. Several tours actually include the various Marts prominently on their vacation itineraries, allowing hordes of salarymen and women to snap up bargains to their hearts' content. They shop enthusiastically for omiyage, the customary souvenirs given to friends and coworkers upon returning from a trip. And for themselves, they pick up basics like huge bags of white rice, the staple food in the Land of the Rising Sun that is made very pricey by Japan's protectionist agricultural policies and sheltering of small retail stores.
Protests and coexistence
Perhaps the huge popularity of these stores across a wide spectrum of the population is why Wal-Mart hasn't faced quite as many obstacles opening stores in Hawaii as in other Blue states. In fact, there was hardly any opposition until a Wal-Mart/Sam's Club megastructure was announced for the heart of Honolulu. Previously, all outlets had been located in the suburbs.
The Honolulu store brought all the Wal-Mart bashers out of the woodwork. As everywhere else, unions were the most ticked off. Nearly 24 percent of all Hawaii workers are unionized, second only to New York state. The prevalence and power of unions here nearly derailed statehood. During the Cold War there were legitimate fears of Communist infiltration of the Hawaii labor movement.
Not content merely to artificially raise the cost of living through their domination of shipping and construction, Hawaii's unions aimed to rob locals of the option of buying affordable goods by halting the spread of non-union discounters in Honolulu. Local 480 of United Food & Commercial Workers Union, along with their comrades at Citizens Against Reckless Development, tried to stop Wal-Mart construction by suing, complaining of inadequate environmental impact statements, and making dire predictions of increased traffic congestion. It would be nice to think that the United Food & Commercial Workers Union cares deeply about the environment and gridlock, but the suit was really just an attempt by the union to keep out a thriving nonunion firm, using whatever means they could. Luckily for shoppers, the suit didn't succeed.
There have been some other complainers as well. Writers at the Honolulu Weekly--our free quasi-newspaper for geriatric Marxists, pimply Move On-ers, and all that's pink in between--weren't too welcoming to the new store. Nor were the ever-agitated Native Hawaiian groups, and at least a few University of Hawaii professors. There was generalized handwringing and fearful predictions that the Wal-Mart/Sam's Club megalith would destroy small business in the area. (The only time the Left seems to care about the interests of businesspeople is when they can use those interests to attack other businesspeople.)
Most of the concern about eradicating small businesses turned out to be misplaced. Wal-Mart's giant superstore is located in a busy shopping district on Keeaumoku Street. Keeaumoku is often nicknamed "Koreamoku" because of the large number of Koreans who live and work in the area. While Wal-Mart has adjusted its merchandise to reflect the neighborhood, it is still not in a position to out-compete specialized local retailers. For example, the Honolulu Wal-Mart stocks South Korean soap operas (which have inexplicably become very popular among Hawaii residents of all ethnic backgrounds), but the selection isn't large. Cross the street to Samsung Plaza and you will find a myriad of small stores stocking vast caches of Korean soaps with titles like "Conditions of Love," "One Million Roses," and the rather bluntly named "Sad Love Story." This is a product--like kim chee, prawn crackers, and bi bim bap mix--that Wal-Mart is willing to dabble in, but unable or unwilling to corner the market on.
One area of the Honolulu economy that has clearly benefited from the Big Boxes is the restaurant industry. Paradoxically, while Hawaii is an expensive place to buy groceries, it can be awfully easy to get a cheap and tasty meal at one of the small mom-and-pop eateries that dot the island landscape. The quality and quantity of the food in an average, under-$5, local plate lunch mesmerizes (and occasionally fattens) newcomers. The cheap Asian food in particular is the best and least expensive to be found outside, well, Asia. And all these restaurateurs shop at the Big Boxes. You can tell when you stop in for a teri beef plate and notice that the napkins are from Sam's Club and the bottled water is from Costco.
Restaurateurs can easily be spotted shopping for supplies. Who else would buy several five-gallon jugs of soy sauce and sesame oil in one trip? It's not just the Asian eateries either: Several times I've seen the owner of my favorite Greek restaurant stocking up on feta cheese at Costco. Come to think of it, he probably sees me stocking up on feta cheese at Costco, too. We addicts of Mediterranean cuisine notice each other.
There but for the prices at Wal-Mart go I
The Big Boxes have now been in Hawaii for well over a decade, and doom has not befallen the state. The price of paradise is still high, and it will remain difficult for local folks to make ends meet so long as average houses hover around the $600,000 price range. But whether rabble-rousers like it or not, the coming of K-Mart and all fellow discounters, while perhaps not "the best thing to ever happen to Hawaii" has indeed eased the financial burdens of many Islanders, present company included. In my journey from penniless slacker to freelance writer (sometimes the same thing, but not always), the Big Boxes have helped make it possible for me to continue living in my longtime home state. For that I give them my thanks.
And thanks, too, for bringing a little beer and feta cheese into my life!
Brandon Bosworth is a TAE contributing writer.
Nickels and Dimes Change America
Wal-Mart has led a productivity revolution in retailing which has supercharged the American economy, making a vast cornucopia of merchandise affordable to ordinary consumers, thanks to Wal-Mart's much lower prices than in the days when small-town merchants took their 45 percent profit margins. The McKinsey consulting firm best summed up the cumulative impact of the company's influence in a report titled "The Wal-Mart Effect," which estimates that the retailer's focus on low prices and its constant stream of money-saving innovations accounted for up to one quarter of the entire U.S. economy's prodigious productivity gains in the 1990s boom--when inflation held steady despite a soaring economy. Savvy investor Warren Buffett even declared that Wal-Mart--not Microsoft or some other technology company--has contributed more than any other business to the health of the U.S. economy....
Press attacks downplay Wal-Mart's many virtues: that it has never been accused of funny accounting; that it doesn't load its executives with exorbitant salaries or perks; and that despite its market power it doesn't charge vendors "slotting" fees--which are little more than bribes to stock their goods. By contrast with journalists, U.S. executives voted Wal-Mart America's most admired company in Fortune magazine's annual survey last year. Manufacturers, meanwhile, ranked Wal-Mart the best retailer to do business with, according to an annual survey by Cannondale Associates. And nearly three in ten shoppers surveyed by the WSL Strategic Retail consulting firm voted Wal-Mart their favorite store, a higher percentage of praise than any other retailer won.
--Steven Malanga, City Journal, Spring 2004
