Is Wal-Mart Good for the Economy?
In 2004 the LAEDC (Los Angeles County Economic Development Corporation) conducted a study on the economic effects that Wal-Mart would have on entering the Southern California grocery market. In the report, the LAEDC was able to determine that if Wal-Mart was to introduce their supercenters into the Southern California market that it would ultimately be beneficial to the consumers. With the entry of Wal-Mart one of the best known low price retailers into the market consumers would be able to purchase products at a lower price. In this market, other grocery chains would be forced to lower some of their pricings on items in order to stay competitive and in the end the consumers benefit. Since Wal-Mart would be competing with markets that have unionized workers they have an upper hand because they do not have unions and are able to pay lower wages. By paying lower wages, the consumer is able to receive this benefit as well because it is reflected in the low price of the products they purchase.
In reference to wages and employment the argument could be made that grocers who are unionized would lose sales and therefore have to fire some of the employees and would create a higher unemployment rate. However, the introduction of Wal-Mart in the market creates more jobs than lost jobs; the LAEDC reports a net gain that for at least every seven new jobs for every one lost. The LAEDC also considered tax revenue based on location. Initially, the comparison of grocers would not have an effect on taxes because food staples are non-taxable. But since Wal-Mart is a large retailer that also carries other household items that are taxable the consumers would be able to shop in a more convenient method but only visiting 1 retailer for the majority of their purchases. The location that the supercenter is located in will receive an increase on sales tax revenue based on these purchases. Finally, the LAEDC said that the...
Please join StudyMode to read the full document