Is Wal-Mart Good for America?
Since its inception in the 1960s, Wal-Mart has grown tremendously making consistent profits even in the contracting economy including during the great recession of 2008-2009 (Banerjee 204). Today, the company boasts of a workforce of more than 2.2 million people around the world and 1.5 million in the U.S alone. It also operates more than 11500 stores in 27 countries in the world (WalMart Inc.). The company owes most of this success to its strategy of offering the lowest prices in the market for which it is popular. Although the company is mostly known for its abnormally low prices that benefit buyers across the country, most people do not realize that it hurts the country’s economy and communities. This paper argues that by under-compensating workers, forcing retailers out of business through low prices, importing cheap products, importing cheap labor, and mistreating workers at the expense of low prices, Wal-Mart’s harm outweighs its benefits in America.
THE LOW PRICES
One of the greatest strengths of Wal-Mart is the ability to offer goods at a very low price all across its stores (Brave New Films). It uses techniques that allow it to lower both the cost of purchases, supplies, and operational costs which enables it to make profits even when it sells goods at a comparatively lower price. However, most of those techniques used by the company to lower the cost of inputs are dubious and dangerous for the country. The company’s techniques have very high costs that include causing unemployment and depriving employee’s dignity.
THE COSTS
Denying welfare to American employees: Wal-Mart offers very poor welfare terms for its employees. Despite the knowledge that its employees have personal needs such as families to support, the company offers very little outside the salary. It does not offer health insurance or pay for the health care costs of their employees. Instead, the company’s employees rely on government plans such as Medicaid which are meant for poor and funded by taxpayer’s money. According to a report published in Forbes Magazine, Walmart employees cost the government public assistance programs $6.2 Billion every year (O’Connor 1). The company employees also need to give their children a good education but the company does not offer any help. Additionally, the company is opposed to the idea of joining unions by its workers, denying them the opportunity to have a larger influence in bargaining for rights. This has resulted in massive demonstrations and strikes by its workers demanding their rights. One demonstrator described the company as “largest but mean” (Brave New Films).
Overworking and Exploiting employees. Wal-Mart also keeps its prices down by exploiting its employees. Research indicates that its stores are grossly understaffed due to its bid to keep salaries low and not because the company cannot get qualified people to hire (Brave New Films (BNF). The shortages of staff force the available employees to work for more hours while getting the same pay. Similarly, staff shortages cause employees to work fulltime without vacations. Such a technique is demeaning and deprives dignity to employees.
Causing Unemployment. The fact that Wal-Mart offers very cheap prices for its good may seem advantageous to the country but it is not. Although customers enjoy reduced prices for products purchased, discounts come at a greater loss to the economy for several reasons. First, it creates unemployment among American retailers who are committed to offering their employees adequate compensation to afford a decent life. It does this by offering products at prices lower than what smaller retailers offer while adequately compensating workers drawn locally (Basker 186). Consequently, whether small retailers operate rum hardware, eyeglass, or household items, they are forced to close down after operating at a loss whenever Wal-Mart opens an outlet in the area (Brave New Films (BNF). When a small retailer closes its doors, the owner and his or her employees have to look for other jobs scarce.
Importing labor. One might argue that although the company causes unemployment to the retailers by forcing their businesses out, it also creates employment by hiring staff to work at the store. According to Brave New Films, Wal-Mart employs millions of employees across its branches. However, a lot of its workers are drawn from outside the country. In Germany, the company was sued for not only hiring immigrants to clean its stores but also mistreating them by offering minimal compensation and subjecting them to unfavorable working conditions. As such, the overall effect of the company is to render American retailers and their workers jobless and replacing them with immigrant workers at their store. This results in many Americans becoming unable to acquire basic needs for their families including a good education.
Weakening the manufacturing sector. Another technique that Wal-Mart uses to lower its cost of inputs to allow it to offer goods at ridiculously low prices is importing the products from other countries, hurting local producers. By importing cheap products from countries such as China, Wal-Mart reduces the profitability of local companies producing the same goods imported causing them to hire fewer people (Brave New Films (BNF). According to a 2007 report about 200,000 U.S workers had been displaced by Chinese in Wal-Mart dealings (Scott 3). As a cumulative effect, more Americans are denied the chance to be employed and afford a decent life for their families. A recent survey found that a significant number of Americans are now living in their cars because they do not have jobs to pay for their housing, thanks to unscrupulous companies such as Wal-Mart. At the same time, importing the products promotes other countries such as China by allowing them to get more taxes from the exports, enabling them to develop their infrastructure at the expense of America.
CONCLUSION
In brief, Wal-Mart is not good for America. Although low prices help consumers to save money, the discounts come at a greater cost to the economy. Wal-Mart’s continued operation in the U.S forces thousands of small retailers to close down drives million of its employees to poverty due to under-compensation and denies employment opportunities to thousands more Americans by importing cheap goods and labor. Lack of proper welfare is also costing the country’s taxpayers millions of dollars every year as its employees rely on government programs such as Medicaid.
Works Cited
WalMart Inc. “Our Business”. Walmart, 2020, https://corporate.walmart.com/our-story/our-business. Accessed 20 July 2020.
Banerjee, Deba. “Walmart Stores Inc.-A Strategic Analysis.” International Journal in Management & Social Science 3.12 (2015): 202-225.
Basker, E. (2007). The causes and consequences of Wal-Mart’s growth. Journal of Economic Perspectives, 21(3), 177-198.
O’Connor, Clare. “Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance”. Forbes, 2014, https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/#27bdcede720b.
Brave New Films (BNF). Walmart: The High Cost Of Low Price. Youtube, 2014.
Scott, Robert. “The Wal-Mart Effect”. Economic Policy Institute, 2007, https://www.epi.org/publication/ib235/. Accessed 20 July 2020.