Discounting America


Reading Ellen Ruppel Shell’s Cheap: The High Cost of Discount Culture, I felt alternately smug and guilty. I get my cheap fix in thrift stores, not big boxes or outlet malls, and I gladly pay top prices for the convenience and pleasure of shopping at my local hardware store. But I get a special thrill from the dollar store, where I buy socks and wrapping paper and sponges, and I’ve long enjoyed combing department-store clearance racks with my mom and aunt.

Yes, the allure of a low price tag can and does obscure other considerations. I know most consumer products are made by underpaid workers in overseas factories, but it never occurred to me how that influences the quality of our goods and my own wages. The oven mitt I impulsively picked up at the dollar store last month may have cost me a buck, but what was the cost to the workers who made it? How long before the fabric wears thin? Do bargain sundries really make up for middle-class wage stagnation?

Shell is a Boston University journalism professor known for her exposé of the obesity industry (The Hungry Gene). Here she reveals the dizzying connections between price and poverty, using statistics, historical accounts, and scientific and sociological explanations. She spent two years doing research, traveling to Sweden, the birthplace of IKEA, and China, “factory to the world.” For its catchy title and relatively few pages (232, not counting acknowledgments or notes), Cheap is a weighty book. Though it often feels a bit too cram-jammed with insights and analyses (several chapters could be expanded into books), Cheap successfully illustrates the fraught practice of buying and selling cheap goods.

Shell tells the reader right away she is a devotee of cheap, someone who in the not-so-distant past found bargain goods irresistible. In fact, a pair of cheap, uncomfortable, Chinese-made boots triggered her investigative instinct. Her drive to understand our cultural obsession with low-cost stuff, as well as the economic system that supports it, is impressive.

For starters, she points out that Americans fear inflation deeply and constantly suspect they’re paying too much. While cheap goods were at one time stigmatized (in the early part of the 20th century, “shopkeepers who advertised low prices … were derided as ‘common cutters’ and ‘gutter merchants'”), somewhere along the way Americans came to accept or ignore the trade-offs and demand affordability.

Prices of most consumer goods (clothes, food, appliances) have trended downward for decades. Discounters like Wal-Mart cut prices on the things we buy most frequently and in recent years have been hailed as sentries against inflation. University of Chicago economist Christian Broda argues that discounting actually levels the playing field between rich and poor because the poor shop more frequently in discount superstores and the rich spend more on goods less subject to competition. “Deflation in the price of consumer goods may seem like a panacea,” says Shell, “but this is an illusion, because cheap consumer goods do not constitute the bulk of our expenses.”

We spend most of our paychecks on nondurable goods and services, including housing, health insurance, taxes, and child care, the costs of which have gone way up since the early 1970s. While average family income has gone up thanks to the influx of women into the work force, so has household debt.

Retail workers who sell our cheap durables represent another side of the multifaceted issue of cheap. For big-box discounters, their low-paid employees are by necessity also their customers, and that suits the discounters just fine. A Wal-Mart spokesman even went on the record as saying, “Poverty in America is market potential unrealized.”

What about workers who are “working out of our sight and largely out of awareness?” A book about cheap would be incomplete without discussion of the link between the immense factory culture in China (and elsewhere) and the vast array of cheap goods sold in strip malls. It’s a connection most of us are familiar with but perhaps have not considered in depth. Shell devotes a chapter to the influence of China’s factory-based economy on our own economy and suggests that the unrelenting demand for low prices by mega-retailers puts a great deal at stake.

More often than not, Chinese factory workers are migrants who have traveled hundreds or thousands of miles from their villages “ready to take whatever jobs they can find under any conditions.” Room and board are deducted from already pitiful wages, and work contracts may not exist. Occupational hazards often result in illness, injury, and death. All of these factors, Shell explains, contribute to a cavalier attitude about production, and she recalls several instances of tainted Chinese goods that made their way into the American marketplace (Thomas the Train sets “finished with a liberal spraying of lead paint”).

One of the most salient points Shell makes about our dependence on foreign labor is how it has changed the way we view and understand workers. The American labor movement came about in the early 20th century because workplace abuses were visible and offensive to workers and others who eventually forced change. Today, however, “the thousands of … tragedies killing and injuring workers in Cambodia, China, and other low-wage countries happen out of sight—and out of mind—of the American and European consumers who purchase the fruits of their labor.” Hearing about the plight of those workers may disturb and outrage us, but it’s the low, low prices we actually see. As Shell says, “the Age of Cheap has raised cognitive dissonance to a societal norm.”

Shell cites calculations by a labor economics professor at the University of Massachusetts at Amherst that show increasing the wages of apparel workers in Mexico by 25 or 30 percent would raise the price of a shirt in the United States by 1.2 percent. Although surveys show “most American consumers are willing to accept this additional cost without fuss, especially if they understand the reasons for it,” multinational corporations insist on the lowest possible prices from their suppliers, making the profit margin of the suppliers almost negligible. This insistence makes it hard for suppliers to raise wages.

Cheap incriminates big-box stores from Target and Wal-Mart to Lowe’s and Home Depot, but Shell gives special attention to Generation X’s favorite home-furnishings store, IKEA. Fittingly, Shell titles this chapter “Death of a Craftsman.”

Similar to Wal-Mart, IKEA’s mission is to “create a better everyday life for people” but claims it is committed to buying wood from well-managed forests. (The company is the third-largest consumer of wood in the world.) Its team of forestry experts is composed of just 11 people. The team is insufficient to keep up with the numerous suppliers, many in Russia, where illegal logging is rampant. When Shell questions IKEA President and CEO Anders Dahlvig, she explains his reply: “Hiring more inspectors would be costly, adding to the price of his company’s products.”

Shell notes that IKEA “designs to price, commissioning its suppliers to build … not a kitchen table and two chairs, but a custom-designed kitchen table and two chairs for less than one hundred euros.” After describing the inner world of IKEA, Shell recounts the devolution of craftsmanship in America, with the implication that IKEA represents the ultimate anti-craftsman.

We too often accept “the easy birth and early death of objects.” Retailers like IKEA have changed our expectations: “It is not a great chest of drawers, it is a great cheap chest of drawers,” and when it breaks, we shrug, because we saw it coming.

Shell ends the book by invoking a bloodless consumer revolution in which we “set our own standard for quality and stick to it.” This involves investigating the true costs of what we buy and being mindful of sustainability, disposability, and humanity. It means “knowing that our purchases have consequences.” I, for one, won’t be getting my kicks at the dollar store anytime soon.

C.B. Evans is a freelance writer based in Austin.