Grimm 1 Daniel Grimm Ms.

Park English 106 22 April 2014 Walmart is Slowly Destroying the American Economy There are 4,838 total retail units of Walmart in the United States alone (Our Business 1). It seems as if no matter where you go, there will probably be a Walmart there. Over the past decade, there has been a hot debate as to whether or not Walmart is good for America. There are some benefits to having a Walmart readily available, but the cons outweigh the pros when it comes to the overall effect of having Walmarts in America. I am studying the effects of Walmart on America, and I have done extensive research to come to the conclusion that there are a few crucial reasons why Walmart is having a negative impact on Americans lives in the long run. The management of Walmart is questionable, and the decisions made by the executives of the company can have an impact on a whole country. Walmart is bad for America because consumers are just hurting themselves when they shop at Walmart, the workers at Walmart are seeing an overall decrease in salary and benefits, and it destroys local economies and businesses. Walmart prides itself on their everyday low prices, that can guarantee consumers lower prices than most of the stores competitors. According to a Delta College study, The presence of a Walmart does not have the detrimental effect that some people thought it would. In fact, consumers probably benefit from the larger variety of merchandise and lower prices (Lambert 4). The one stop shop is convenient for people because they can get their groceries, clothing needs, appliances, and many other goods at one location. This causes less of a headache for consumers, because they can stop at Walmart as opposed to making multiple trips around town. For most American households, a trip to Walmart every two weeks is a norm. In the short run,

Grimm 2 the shoppers at Walmart can save money on the goods they buy at the store, but what they do not know is that shopping at Walmart can actually come back to hurt themselves. As one would expect, consumers are more likely to shop at Walmart due to the availability and cheap prices. The company moves into towns and takes over the local economy. Small businesses in the town get run out of business and people lose their jobs due to the lack of revenue at the business. When a person gets laid off or gets their wages cut, then they are more likely to shop at Walmart because of their loss in income. This then causes the cycle to continue and even more people are losing jobs. The consumers are only helping Walmart drive other businesses into a downward spiral. The cheap prices seem to help the consumer in the short run, but in the long run they are contributing to job losses in the community, which could even be their own. While consumers are shopping at the store, they can be tricked by the low prices. A study done by Courtemanche and Carden, who are both professors at the University of North Carolina, concluded that consumers can be more likely to buy more goods than they need. The consumer can subconsciously spend more money than they planned on. The study found that this can be a real issue with the low prices of groceries in the store. Consumers discovered that they could buy more food for less money at Walmart than at the local grocer. As a result, people would end up buying more food and eating more food. The study concluded that, The presence of one additional Walmart Supercenter per 100,000 residents can cause an increase in the average body mass index of 0.25units. This results in the increase of the adult obesity rate of 2.4% (Bonanno 294). This goes to show that people would benefit from shopping at a local grocer because people would not buy excess foods and they would be supporting the local economy.

Grimm 3 When a Walmart first appears in a town there is a spike in employment in the area. With more people employed in the community, the local economy will rise and businesses will thrive in the short run. In Indiana alone, Walmart has approximately 36,934 employees working for them, which sounds like a lot of jobs. The large store offers many people jobs that maybe did not have a job before Walmart moved in. A job at Walmart can be a fresh start for some people, and it gives them hope for the future. The standard of living for the new workers rises, because now they have money to spend and save. At first, it seems as if there are not cons to working at Walmart, but the employees are actually catching the short end of the deal. As mentioned before, when Walmart moves in to a community it creates jobs for people, but this actually hurts the community in the long run. Sure the actual stores are creating jobs, but Walmart accounts for much of the loss of manufacturing jobs in the United States. A study done by Amy Traub, a senior policy analyst at Demos, shows that Walmart has eliminated 133,000 U.S. jobs with its trade with China from 2001 to 2006. This accounted for 11.2 percent of the nations job loss in relation to trading (Traub para. 3). Walmart decides to send all of their manufacturing work over to other countries because they can pay workers less and give them much fewer benefits. This saves Walmart a lot of money, and this allows them to sell their products at a cheap price. With Walmarts cheap prices, its competitors such as Kmart and Target are forced to lower their prices as well, which encourages them to send their manufacturing jobs overseas. With all of these huge corporations moving their manufacturing jobs overseas there is huge decrease in American manufacturing jobs available. Daniel Neumark, a professor of economics at the University of California Irvine, found that for each Walmart put up in a county, there are 1.4 jobs lost for every one job created by Walmart (Bonnano 290). Traub explains that even if manufacturing jobs are kept on American soil, then the jobs slowly

Grimm 4 get eliminated due to Walmarts demand for low buying prices. The suppliers have to sell their products at a low price, and end up having to lay people off due to a loss in income (Traub para. 6). The workers at Walmart are falling victim to their own employment. People might be making more money than they ever have by working at Walmart, but some studies have shown that the current wage people are making at Walmart is not enough. According to the Federal Registrar a full time employee at Walmart does not make enough money to support a family of four (Ritholtz para. 6). Due to the lack of financial stability for a lot of Walmart employees, many states have reported that Walmart employees are among the largest groups seeking public assistance (Lambert 3). The public assistance money just comes right back out of the pockets of the people who lost their job because of Walmarts presence in the community. In 2009 Walmart lowered the cost of their Health Care insurance to make premiums as low as eleven dollars. This sounds like a great deal, but the quality of the insurance is said to be poor (Jordan 4). The local economy sees a significant boost when a Walmart is planted into the community. The increase in the employment in the area leaves more people with the ability to purchase more goods. The small businesses in the community will see an increase in business in the short run. On a country wide scale, Walmart has introduced new methods for manufacturing, marketing, and sales that other large corporations and small businesses have benefited from. Walmart has developed cost-cutting techniques, such as cutting out waste in manufacturing supply lines, which others adopt and use to help advance their business (Lambert 4). Although there are some positives that come out of Walmarts presence in America, the company hurts the development of local economies across the United States. Every kind of business can suffer due to Walmart moving in town, including grocery stores, restaurants,

Grimm 5 newspapers, banks, mass merchandisers, and drug stores. These low prices attract consumers away from the smaller stores and over to Walmart. The small business then feels pressure to lower their prices too, and ends up having to lay its workers off just to stay in business. Eventually, the small store cannot support itself anymore and is forced to shut down, leaving even more people without a source of income. Walmart has come up with an advertising strategy that involves taking over all of the ads in the local newspaper. The ads then convince the consumers to shop at Walmart. Once Walmart has a large number of consumers in the community, then they stop the advertising. Local businesses are out of business by now and are not putting ads in the newspaper. As a result, the newspaper can no longer make money off of local business ads (Lambert 3). Mass merchandisers take the biggest hit out of all businesses affected by Walmart. A study done by the American Marketing Association discovered that most mass merchandising stores that are within fifteen miles of a Walmart average a 67% decrease in total sales. Now that Walmart is building up more Supercenters, which also provide groceries, the grocery stores in communities are seeing an average of 21% decrease in total sales. Specialty stores, stores where the products are focused on one area, are also seeing a decrease in sales. Stores like Best Buy and Media play are seeing significant decreases in total sales due to Walmart (Bonanno 228-289). It seems as if Walmart is slowly taking over every kind of store, and slowly running every store out of business. Walmart has also caused many American companies to be unable to innovate. The company squeezes everything they can out of their suppliers, which in turn leaves other companies with no resources to make new investments in development and research. These other companies then become dependent on Walmart to purchase their products, and leaves them with

Grimm 6 no incentive to even try to innovate. The companies usually become stuck and end up going out of business due to the lack of diversity in their products (Traub para. 9). Walmart is negatively affecting America, because consumers are shopping at a store that only hurts themselves in the long run, workers are Walmart are receiving low wages and poor benefits, and the company is destroying local economies and businesses as a whole. Studies have been done, and there is proof that Walmart causes damage in more than one area of a community. Walmart can be a good resource for people, but in the long run Walmart can negatively affect their lives. The consumers that shop at Walmart are getting the benefits of low prices, but they end up supporting a company that causes local job losses. It sounds like a good thing that people are getting jobs at Walmart, but the workers are underpaid and the available healthcare is insufficient for the worker. There has been a lot of research done to determine whether or not Walmart is good for America, but until further evidence of the pros outweighing the cons, Walmart will be bad for America.

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Grimm 7 Works Cited Bonanno, Alessandro , and Stephan Goetz. "WalMart and Local Economic Development: A Survey." Economic Development Quarterly. (2012): 1-14. Web. 2 Apr. 2014. Jordan, Timothy . "The Good, the Bad, and Wal-Mart." The Year in Workplace Fairness. Workplace Fairness, n.d. Web. 2 Apr. 2014. Lambert, Ken . "Is Wal-Mart Good for Small Town America?." Is Wal-Mart Good for Small Town America. San Joaquin Delta College, n.d. Web. 2 Apr. 2014. "Our Business." Walmart Corporate - Walmart Corporate: Our Business. Walmart, n.d. Web. 2 Apr. 2014. Ritholtz, Arry . "How Walmart's Low Wages Cost All Americans, Not Just Its Workers." The Huffington Post. TheHuffingtonPost.com, 18 Dec. 2013. Web. 2 Apr. 2014. Traub, Amy. "NOT Made in America: Top 10 Ways Walmart Destroys US Manufacturing Jobs." An Equal Say And An Equal Chance For All. Demos, 2 July 2012. Web. 3 Apr. 2014.