Wal-Mart’s Economic Impact

Wal-Mart’s Economic Impact

   Wal-Mart is a massive multinational retail corporation that has a big economic impact on the United States’s economy. According to USA Today, Wal-Mart is the largest employer in the United States of America which has 1.3 million employees(Hess no. 1). Wal-Mart is becoming a larger company by adding more jobs to the United States. The 2017 Walmart annual report stated Wal-Mart is projected to create 250,00 manufacturer jobs and an estimated 750,000 jobs in the support and service sectors(​ Walmart 11​ ). In this paper, I will tell you the effects Wal-Mart is having on the United States economy.

    In order to understand how Wal-Mart became a massive economic force, you have to understand how it became successful. Wal-Mart’s founder ​ Sam Walton​ said “we exist to provide value to our customers, which means that in addition to quality and services, we have to save them money. Every time Wal-Mart spends one dollar foolishly, it comes right out of customers’ pockets. Every time we save them a dollar, that puts us one more step ahead of the competition – which is where we always plan to be”("The Next Generation Customer" ). This is a good summary of how Wal-Mart operates its business. Wal-Mart will try their best to make as much money as possible. Wal-Mart is able to achieve this by destroying small businesses, crafting federal and state policies, low wages for their workers and improving their image.

    Small businesses have a hard time competing against Wal-Mart. From 2006 to 2008, the Center for Urban Research and Learning Publications And Other Works did a study that focuses on how Wal-Mart affect businesses within a four-mile radius of West Chicago. This study included 82 businesses that eventually went out of business. The study found that "theprobability of going out of business during the study period was significantly higher for establishments close to the Wal-Mart location. This probability fell off at a rate of 6 percent per mile in all directions from the Wal-Mart store"(Davis et al.). This leads to more people not having their jobs. The National Bureau of Economic Research found "Wal-Mart store opening reduces county-level retail employment by about 150 workers, implying that each Wal-Mart worker replaces approximately 1.4 retail workers"(Neumark et al. 124). From these two studies, we can make important conclusions. The obvious conclusion is when the small business no longer exist Wal-Mart becomes more economically powerful and have less competition. This is a good thing for Wal-Mart because they will make more money. When enough people lose their job that will result in people trying to change the economic system.

    At the state level, Wal-Mart is trying to influence minimum wage and benefit laws. By doing this, Wal-Mart is improving their cost advantage. Wal-Mart helped craft was Maryland’s Fair Share Health Care Act and Chicago’s City minimum wage bill. Wal-Mart was the only company that would not have been affected by Maryland’s Fair Share Health Care Act. The Chicago’s City Council has approved a minimum wage bill that would have affected stores that had at least 90,000 square feet owned by retailers and at least $1 billion in annual sales. If this minimum wage bill was put into effect Wal-Mart could very easily make business decisions that other businesses don’t have the options. For example, Wal-Mart can shut down their stores, reduce workers hours, and or open new stores at a rate that would be lower than other business. Since Wal-Mart has a huge effect on the labor markets they have a lot of influence on the United States government (Basker 193 - 194).

    The United States's economy would improve if more people were giving higher wages. Wal-Mart is trying to make more of a profit by reducing workers hours. The United States's economy relies on people spending. If people have low wages that can't go out and spend. (“The Case For A Higher Minimum Wage"). Also, more workers are working part-time. The book named The Economics of Imperfect Labor Markets says that the “average working hours go down not only through a reduction of standard working hours but also through part-time work. Part-time work has been increasing in most countries, especially for females”(Boeri, Tito, and Jan C. van Ours, 124).

    Wal-Mart is mostly viewed as negative. Despite this view, Wal-Mart is doing some good things for the economy. The Washington Post reported that Wal-Mart would be willing to pay for their workers higher education in exchange for 1 dollar a day. At the time of this paper, they are only willing to pay for degrees in business and supply-chain management (Bhattarai). Wal-Mart is also helping save the environment. Wal-Mart will be half powered by clean renewable sources. Also, Wal-Mart will be reducing their emissions by 18 percent by the year 2025. (Press). Wal-Mart is not being forced to make these changes. Wal-Mart is taking these actions because they want to be viewed positively. It is very hard to make a profit when you are viewed negatively.

    In conclusion, Wal-Mart is staying true to ​ Sam Walton’s words​ . Wal-Mart is using their economic power to become more powerful. You can see this in the way they destroy small businesses, crafting federal and state policies and low wages for their workers. However, there is a growing perception that views Wal-Mart as bad. At the end of the day, Wal-Mart is just a big business that is mainly trying to make more of a profit.

Works Cited

    Basker, Emek. "The Causes And Consequences Of Wal-Mart's Growth". ​ SSRN Electronic Journal ​ , vol 21, no. 3, 2007, pp. 193 - 194. ​ Elsevier BV , ​ doi:10.2139/ssrn.950882. Accessed 20 July 2018

    Bhattarai, Abha. "Walmart To Offer Employees A College Education For $1 A Day". Washington Post ​, 2018, https://www.washingtonpost.com/news/business/wp/2018/05/30/walmart-to-offer-employees-a-college-education-for-1-a-day/?utm_term=.fe85e51b12f9​ .

    Board, The Editorial "The Case For A Higher Minimum Wage". ​ The New York Times , ​ 2014, https://www.nytimes.com/2014/02/09/opinion/sunday/the-case-for-a-higher-minimum-wage.html

    Boeri, Tito, and Jan C. ​ van​ Ours. ​ The ​ Economics Of Imperfect Labor Markets . 208, p.124.

    Davis, Julie et al. "The Impact Of An Urban Wal-Mart Store On Area Businesses: An Evaluation Of One Chicago Neighborhood's Experience". ​ Center For Urban Research And Learning: Publications And Other Works ​, 2009, Executive Summary, https://ecommons.luc.edu/curl_pubs/3/.

    Hess, Alexander. "The 10 Largest Employers In America". ​ USA Today , 22 Aug. 2013, https://www.usatoday.com/story/money/business/2013/08/22/ten-largest-employers/2680249/.

    Neumark, David et al. "The Effects Of Wal-Mart On Local Labor Markets". ​ National Bureau Of Economic Research ​, vol 67, no. 1, 2005, Abstract. ​ 10.3386/W11782, ​ http://www.nber.org/papers/w11782.

    Press, Associated. "Wal-Mart Sets Environmental Plan As People Seek Green Items". Los Angeles Times , 2018, http://www.latimes.com/business/la-fi-walmart-environment-20161104-story.html. Accessed 26 July 2018.

    "The Next Generation Customer". ​ Corporate Walmart ​, 2011, https://corporate.walmart.com/_news_/executive-viewpoints/next-generation-customer.

    Walmart. ​ Walmart 2017 Annual Report Financial Information ​ . Walmart, 2017, p. 11, http://s2.q4cdn.com/056532643/files/doc_financials/2017/Annual/WMT_2017_AR-(1).pdf.