Bodegas (24 August 2006)

UN Ambassador turned Wal-Mart shill Andrew Young got himself fired from his spokesperson job by making these comments to the Los Angeles Sentinel, which had asked if he was concerned about the megaretailer putting mom-and-pop stores out of business: "Well, I think they should; they ran the 'mom and pop' stores out of my neighborhood. But you see, those are the people who have been overcharging us, selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they've ripped off our communities enough. First it was Jews, then it was Koreans and now it's Arabs; very few black people own these stores." The racial stereotyping in these comments have earned few defenders, but Matt Yglesias wondered in this American Prospect story whether anyone should bother defending bodegas themselves.

There’s a reason, after all, that mom and pop are so perpetually under threat of being driven out of business by large retail chains -- mom and pop sell sub-standard goods for somewhat premium prices. Not because they’re bad people, but because they’re stuck with an intrinsically difficult business model. Lacking substantial economies of scale, mom and pop can’t beat the big boys on price. So they take advantage of convenience. They are, metaphorically speaking, everywhere -- their stores dot a city’s landscape like oases in the urban retail desert. And if you don’t own a car, sooner or later you’ll find yourself in need of something or other and lacking the time or energy to make it to a far-off supermarket. You’ll find yourself overpaying for fairly crappy wares. Not, again, because mom and pop hate you -- it’s just the only business model that works for them.

Yglesias seems to imply that as a "market exchange" bodega shopping is purely voluntaristic, but that's true only for those with reasonable alternatives. But in fact bodegas are not "everywhere." In most cities, those outside the poorest of areas have reasonably responsible, corporate-owned chain convenience stores to choose from (like Wawa in Philadelphia) with brand reputations at stake, if not 24-hour grocery stores. The rotten-milk-and-expired-food style stores seem to survive only where there's poverty. If you are too poor to afford a car, you may find yourself living in a neighborhood that supermarkets won't deign to do business in, and the bodega will be your only option. It seems unfair to suggest it's lazy to shop in bodegas under these circumstances. People in these areas aren't looking for anything more convenient than not having to spend several hours to make a grocery store trip.

Subtract the racism and Young's point seems to have been that if Wal-Mart moved into these neighborhoods and purged them of price gougers, everyone might be better off. The bodegas get away with raising prices in those instances because they are willing to do business in places larger corporations have deemed too risky, not necessarily because people are too lazy. As Ezra Klein writes, that bodegas "survive at all is not a commentary on immigrant greed but on the lack of decent supermarkets and food suppliers willing to open into impoverished areas." So bodegas are the unfortunate place where all the misery of the impoverished neighborhood is quantified and tacked on to life's necessaries as a kind of survival tax, helping things continue to spiral ever downward. I'm sympathetic to Yglesias's point that mom-and-pop stores (like independent bookstores) are unduly romanticized. There is nothing romantic about life on razor-thin margins in last-resort neighborhoods.

And it's not as though bodega owners have a full panoply of business options among which they are free to choose, either. Klein links to this extremely informative post by Steven Teles in which he explains why immigrants end up running corner stores.

A number of folks commented on Mike's post about Andrew Young, essentially asking why African-Americans don't run corner stores and coffee shops. I don't know much about coffee shops, but let's take three categories of small businesses that immigrants tend to concentrate on: corner shops, dry cleaners, and doughnut shops. What do all these have in common? First, they are very low margin enterprises. They are only profitable if you can drive hourly wages down very low. This is possible if you engage in what I call (and refer to in my co-edited book called Ethnicity, Social Mobility and Public Policy in the US and UK) "self-exploitation." These are enterprises that work mainly if you can make yourself and your family the labor pool, and make up for low average hourly wages with extremely long hours, both on the part of the owner and their family (whose labor is not directly compensated and not taxed). These type of enterprises don't work for African-Americans for two reasons. First, their reserve wage is above the (very low) effective hourly wage that these enterprises provide. Second, given their family structure, most African-Americans don't have recourse to uncompensated family labor. There's also a third factor, which is access to capital--many of these enterprises are originally capitalized through rotating capital arrangements, which depend on the high level of social trust that comes from fairly tight-knit immigrant communities. A more speculative fourth factor is that these enterprises often work because consumption among the relevant immigrant groups is often highly suppressed -- closer to the level of their countries of origin than the US norm.
One way of summing up the reason that African-Americans aren't found in substantial numbers in these sorts of niches is that they are so thoroughly assimilated, in their expectations of return on labor, family structure, individualism, consumption patterns, etc. One doesn't need to explain the phenomenon under examination by recourse to the peculiar character of African-Americans -- in fact, it is the phenomenon of low-margin immigrant businesses that has more of a cultural grounding. This can be seen in the fact that very few second-generation immigrants are found in such jobs. They "work" in providing an economic bridge into the American market economy, but they are almost always transitional -- the second generation moves into the mainstream economy, typically through education. This is true both in Britain and the United States.