why is walmart bad for the economy
Credit: Walmart Image via It s more bad news for Walmart. After a New York Times story alleged that Walmart bribed officials in Mexico to allow the company to open stores in that country, another new report reveals exactly how much it costs a community in dollars and cents when Walmart comes to town. The research, done by a Northwest community group, estimates that one Walmart store, which is set to open in a Washington neighborhood, will decrease the community s economic output over 20 years by an estimated $13 million. It also estimates the Walmart will cost the community an additional $14 million in lost wages over the next 20 years. We know now the true economic impact a Walmart store has on a neighborhood when it moves in, Christopher Fowler, who conducted the research for Puget Sound Sage, said. The research shows that the negative impact is due to the use of the Walmart business model. A new generic grocery store does not equal economic harm, but a new Walmart does. When Walmart comes to town, it is going to reallocate sales and its impact is going to be a function of the difference between what is currently being paid in wages at the existing stores and what Walmart pays, Fowler said. That redistribution in sales is estimated at $25 million annually, according to the research. This means that nearly $660,000 in wages is lost annually. Walmart may say they help people Live Better, said David West, executive director of Puget Sound Sage, a nonprofit public policy organization that looks at regional economic issues. But this study shows that communities will be much worse off, with lower wages and less money in the community, after a Walmart opens. The losses are tied mainly to the low wages Walmart pays its employees.
These impacts stem from the low wages Walmart pays to its hourly associates compared to the wages earned by comparable employees of existing retail grocery stores, the researchers said. The difference in wages, which we estimate to be at least $3 per hour, has the capacity to impact not only the workers themselves, but also the people from whom they purchase goods and services. One important caveat to this research: It applies only to areas where consumer demand for products is already being met. In areas where demand is not being met, however, there is a benefit to having a Walmart since it makes more products available to consumers, Fowler said. Walmart is able to offer lower prices than other small retailers and we would expect that to have an additional effect with both costs and benefits, Fowler said. In some rural areas, it can be argued that Walmart is fulfilling unmet demands. The number of places in the country where people are currently unable to purchase groceries is limited, though. This is not the only negative news about Walmart in recent weeks. There is the recent Mexico scandal, in which the paper alleges that officials at Walmart s Mexican stores group, Wal-Mart de Mexico, had been involved in bribing local officials to gain access to their regions for Walmart stores and that the parent company knew about it and covered it up. That s in addition to another report earlier this month that made the assertion that the presence of a Walmart and other big box stores breeds hate groups. That research, conducted by professors at Penn State University, New Mexico State University and Michigan State University, argues that local businesses are pillars of the community and promote civic engagement and foster community values.
When Walmart comes to town and puts those companies out of business, it creates a business vacuum which weakens the community s civic backbone and creates an atmosphere ripe for hate groups to form and gain power in the absence of strong leadership among local business owners and community leaders. Reach BusinessNewsDaily staff writer David Mielach at. Follow him on Twitter @D_M89.
Listen Apr 12, 2017 Customers outside Walmart. Walmart is the country's largest private-sector employer. Which has made it a target of both praise and criticism. Does the big-box retailer push out small businesses and use cheap foreign labor? Or does it provide lots of American jobs and sell affordable goods to consumers? Experts took on these questions in an using the motion: 'Long live Walmart. ' For the motion: Contributing Editor at the City Journal and an economist and author of "The Wal-Mart Revolution. " Against the motion: Associate Director of Policy and Research at Demos and a professor at UC Santa Barbara and author of "The Retail Revolution. " In a New York Times column, John Tierney challenged readers to name an organization who has done more than Walmart to help the world's poor. "I still haven't heard a plausible candidate," he said. By selling its products at low prices, Walmart saves a typical American family approximately $2,500 a year, Tierney said. Walmart is also a pipeline for redistributing wealth to poorer countries, providing factory jobs for those living in poverty around the world. "Now, since 1990 when Walmart became the largest retailer in America, the global rate of poverty has been cut by two-thirds," Tierney said.
The reason people don't like Walmart boils down to snobbery, its size making it a target for lawyers and its tendency to challenge special interests, he said. Local stores don't like Walmart because they don't want to match prices, and unions are challenged by the competition it presents Walmart employees make comparable wages to these workers but don't have to pay dues. "So, don't believe all the propaganda you've heard against Walmart and don't assume that all its critics have pure motives," he said. "Walmart's business model is pretty simple," said Amy Traub. "The company pays its workers poverty wages. It offers few benefits and it manipulates workers' hours and understaffs its stores. " That model is expanding the gap between the extremely wealthy and everyone else in America. Walmart's workers bear the brunt of these low wages, but it also has an affect on tax payers, Traub said, because these workers don't make enough to support themselves they often have to rely on government programs like Medicaid and food stamps. Other big retailers, like Costco, have proven that it is possible to pay your workers livable wages and still provide competitive prices, she added. Economies thrive when people have money to spend on the basics. Walmart's business model will not be sustainable in the future, and isn't worthy of one, Traub said. "If you agree that there's a better, more equitable way to operate a business in this country, you should vote no, against the proposition. " To listen to the debate, click the audio player above. MPR News presents offers speeches, documentaries and debates airing weekdays from noon to 1 p. m.
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