The Wal-Mart Effect

Gabriella DiMarco

Dr. Iain Ellis

English 102: Critical Reading and Writing

November 30, 2011

The Wal-Mart Effect

Few companies can say that a consumer can drive 15 miles away from his or her home and find almost all of life’s necessities at one store, but almost 94% of people can travel less than 15 miles and find a Wal-Mart (Fishman 1). These stores offer some of the lowest prices around, but in order to cut costs Wal-Mart has to lower its own costs. By limiting the amount of time employees can work, Wal-Mart management continually keeps workers out of full time employment, which forces American taxpayers to subsidize the Wal-Mart employees. There have been multiple complaints about the corporations labor practices that are slowly starting to bubble to the surface. In the local community, Wal-Mart lowers property values by leaving empty stores that it single handedly put out of business. Additionally, due to the low wages that its employees work for, Wal-Mart increases the amount of people living in poverty after a store’s opening due to the reduced wages people in the community work for. While charging low prices has some obvious consumer benefits, growing evidence from all over the United States indicates that these benefits come at a price for American workers, U.S. labor laws, local property values, and community living standards.

On March 29th, 1918 in Kingfisher, Oklahoma Thomas and Nancy Walton gave birth to their son, Samuel Walton. Sam and his brother Bud opened the first Walton’s 5 & 10 in Bentenville, Arkansas in 1952. In 1962, Walton opened his first Wal-Mart with his own money because he could not find enough investors that would willingly back his new venture (Walton 32). He then went on to open 16 other stores in the Arkansas, Missouri, and Kansas area. Originally, name brands did not want their products in Wal-Marts because these stores were associated with low grade goods, but after some time the companies saw many benefits associated with selling to Wal-Mart (Doyle 6). Walton’s death in April of 1992, which led to his family taking over the operations of the company, started the decline of the image he created.

Due to the treatment of the company’s workers, consumers tend to look down upon Wal-Mart. For one, the workers are not allowed to form unions (Miller 2). If unions were allowed the wages would need to increase, benefits would be demanded, and strikes would occur. The average associate gets paid between $7.50 and $8.50 per hour. When this is compared to the average grocery store worker, who is paid $10.35 per hour, it is easy to see that Wal-Mart does not treat their workers fairly (Miller 9). If both the workers were to work about 40 hours a week, every single week of the year, the average grocery store worker would make about $21,528. Compare that to a Wal-Mart associate who would make $15,600. Moreover, the poverty line for a family of 3 in the US is $19,417 (“Poverty” 5) . Therefore, the majority of workers at Wal-Mart are under the poverty line, a situation which cannot continue. Additionally, about a third of the employees are part-time, which makes them ineligible for benefits (Hall 12). Wal-Mart encourages their employees to seek government help which uses money that US tax payers are giving to the government. A former Wal-Mart co-manager claims that store managers are told to "Keep the number of associates from being full time, as many as you can, keep many of them part time, as much as you can" (Doyle 7). Less than half of Wal-Mart's employees are insured by the company's health care plan, compared nationally to 66 percent of employees at large firms like Wal-Mart who receive health benefits from their employer (Miller 14). Although many believe unions are bad for business, at Wal-Mart, establishing unions would drive wages up, which would result in less workers living under the poverty line, but hinder the company’s ability to keep prices down. George Miller, author of "Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart," contends that U.S. taxpayers subsidize wages at Wal-Mart because its underpaid employees seek government assistance to help with their housing, food, and medical costs (20). All of the services provided by the government costs tax payers around $1.5 million a year. (Miller 20) These subsidies should be used for individuals who are not capable of working, rather than given to employees of one America’s wealthiest companies. If Wal-Mart employees could unionize then there would be extra tax money freed up which could fund other government projects.

By neglecting its workers through low wages, lack of benefits, and protection of rights, Wal-Mart is also damaging the communities where its stores are located. The typical number of retail related jobs eliminated in a community five years after the opening of a new Wal-Mart Super-center is 450, while the number of jobs that are created by a new store is only 500 (Fishman 1).This means that the net jobs created for a new Wal-Mart is only 50 jobs. Additionally, the goal of new Wal-Marts is to shut down all of the competition in the area at whatever means necessary. However, not everyone agrees that Wal-Mart has the responsibility to concern itself with the success of the local mom and pop store. Tucker Carlson, in his article supporting Wal-Mart’s actions in order to generate business asks, “do small businesses - the fabled ‘mom and pop’ stores... have a right to remain in business even though they charge people more than Wal-Mart for the same product?” (Carlson). Considering every citizen has the right to own and operate his or her own business, it seems unfair to say that because this entrepreneur cannot compete with the volume sold by the retail giant, the owner has no right to stay in business. Moreover, this swing in jobs occurs because a Wal-Mart shuts down lots of the “Mom and Pop” stores that are in the area (Hall 5). The closing of these local stores filters down into the retail market as well which many individuals who live in these communities are starting to discover. One retailer realized the startling impact Wal-Mart had on his building’s appraisal.

‘How can this be?’ I say, you know, ‘With inflation and, the economy's not great but it still should be at least holding its value.’ And the appraiser replied, ‘No,’ he said, ah, ‘Any time a Wal-Mart's coming in to a town they, they knock the values down because sooner or later there's going to be a bunch of empty buildings and none of them are going to be able to sell.’ (Greenwald)

Robert Greenwald, the director and producer of Wal-Mart: The Movie, clearly demonstrates that a new Wal-Mart negatively effects every part of a community. Due to this trend in job loss and property depreciation, the percentage of people living in poverty in the community increase when a new Wal-Mart opens. This increase results from a troubling fact: employees of businesses displaced by Wal-Mart must find new work for minimal wages (Hall 30).

            Although these facts are somewhat alarming, it seems that the majority of the population disregard these statistics and continue to shop at Wal-Mart because of its low prices. However, the perception of Wal-Mart has begun to decline over the past decade. After many years of more lawsuits filed on behalf of the workers, customers have become increasingly vocal about the conditions of the stores and the quality of the workers. These issues affect the company’s image in the eyes of many and also stop more people from shopping at Wal-Mart than ever before (Doyle 14). While, the company’s current annual revenue amounts to 2.5 percent of the U.S. Gross Domestic Product (Hall 4). On the contrary, Wal-Mart's success has meant downward pressures on wages and benefits, rampant violations of basic workers' rights, and threats to the standard of living in communities across the country. Although many understand the negative effects that a Wal-Mart has on a community, costumers continue to shop there due to the extremely low prices that the competition just cannot match. The problem with these low prices is that the company must undermine its employees in order to bring its prices down and beat the competition. Due to this fact other stores can only try to compete by having a cleaner atmosphere and providing a better all around shopping experience.

While Wal-Mart provides a cheaper way to buy common goods, the negative effects the store brings to a community and the people who live in it are unmistakable. From the workers who are forced to survive on incomes that are significantly less than what is considered necessary for a healthy lifestyle to the people who choose whether to shop at Wal-Mart or not, all are affected by this company. A new Wal-Mart not only eliminates jobs, but it also lowers the prices of properties due to the increased amount of vacant locations that are available after the opening. Additionally, Wal-Mart eliminates all of its competition by providing goods at prices that local companies are not capable of dropping below. Through all of this, Wal-Mart has managed to maintain a cliental that continues to return to its centers, but with products becoming increasingly more expensive to produce maybe other stores will start to slowly catch up to Wal-Mart’s low standard.

Works Cited

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Doyle, Mona. “Wal-Mart Weak Spots.” The Shopper Report, 1 Sept. 2006. Gale, Cengage Learning. Web. 26 Nov. 2011. <http://www.thefreelibrary.com/>.

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