Impact of Wal-Mart on the Us Economy

Topics: Wal-Mart, Retailing, Discount store Pages: 8 (3441 words) Published: December 14, 2012
Impact of Wal-Mart on the US Economy

With over 5,300 stores in the United States, Wal-Mart has become one of the fastest growing retail chains in the United States (Rossi, 2005). Their many stores are not hard to find as you travel along many of the highways in the United States. With low prices and great deals it has become very difficult not to resist the inviting people greeting you at the door and massive signs that draw you to buy from their stores. Since the opening of its first store in Bentonville, Arkansas in 1962, Wal-Mart has gradually spread from its starting point in the South and Midwest to dominate the suburban and rural retail market across the United States. Having effectively taken over these markets, Wal-Mart’s most profitable opportunities for growth are now outside the United States. However, the company has also begun to move aggressively into those more densely populated cities that have so far been off limits, either for lack of space or due to local policies, which do not allow large companies like Wal-Mart to build new stores in these areas because of its negative impact on small businesses and the local economy (Wal-Mart, 2010). There has been plenty of research done on the impact of Wal-Mart stores on local and national economies to including jobs, taxes, wages, benefits, manufacturing and existing retail businesses. Most of the research has shown that Wal-Mart lowers area wages and labor benefits contributing to the current which have made good middle class jobs decline. With lowering wages Wal-Mart pushes out retail jobs more than they actuality create and the results also show more retail store are closing their doors. There has been no indication that smaller Wal-Mart stores scattered throughout a dense city will in any way diminish these negative trends. Rather, such developments may actually result in more widespread economic disruption (Wal-Mart Facts Sheet, 2010). Every time a new Wal-Mart store opens it kills three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter. While Wal-Mart’s entry into a new market does not increase overall retail activity or employment opportunities, research from Chicago shows retail employment did not increase in Wal-Mart’s zip codes, and fell significantly in those adjacent. Wal-Mart’s has also had a strong negative effect on existing small business owners. Supermarkets and discount variety stores are the most adversely affected sectors, suffering sales declines of 10 to 40% after Wal-Mart moves to a new town (Wal-Mart Facts Sheet, 2010). Stores near a new Wal-Mart are at increased risk of going out of business which is killing the small business world and American dreams of owning a small business. After a single Wal-Mart opened in Chicago in the fall of 2006, eighty-two of the three hundred and six small businesses in the surrounding neighborhood had gone out of business by spring of 2008. The value of Wal-Mart to the economy is likely be less than the value of the jobs and businesses that they are shut down. A study estimating the future impact of Wal-Mart on the grocery industry in California found that, “the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year” (Martin, 2009). Chain stores, like Wal-Mart send most of their revenues out of the community, while local businesses keep more consumer dollars in the local economy for example: every $100 spent in locally owned businesses, $68 stayed in the local economy while chain stores only left $43 to re-circulate locally (Civic Economics, 2004). Another big problem that they have had is with their employees. There has been big debate over the power for which Wal-Mart has over their employees and how they have miss treated them over the past years. Some people would say that the lower prices are good for most American shoppers but others would have disagree...
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