New research suggests that Walmart makes the communities it operates in poorer
theatlantic.com
theatlantic.com
It might be true that in an area with established retail, Walmart tends to put those businesses out of business. But in areas like my hometown, those businesses were already out of business. We used to have a little Sears store. It had a few things in stock, but mostly it was a place you could walk into, peruse the Sears catalog, and order with free shipping. It went out of business years before Walmart got to town. There was, at some point, a small department store as well. It had been boarded up in the 1970s.
Literally the only businesses in town that survived through the 1980s were the feed store, the gas station, the pharmacy, and an independent grocery store. The grocery store went out of business when Food Lion came to town, and nobody cried because Food Lion had a much wider selection of food products.
I think Walmart is a very mixed bag. But we aren't poorer because of Walmart.
Farmers and rural dwellers everywhere made regular trips to the largest city near them (sometimes a two hour drive) just to get selection. Mail order only filled some of that need (online is just mail order on the internet)
What Walmart represented was really just a kind of acceleration of the cancerous growth and metastasis throughout the body of the economy, spreading to the bloodstream. The likes of Amazon only made things that much worse, a far more aggressive and parasitic malignant cancer, or maybe even HIV of humanity that spread even faster and harder, and was able to even overcome foreign immune systems that had previously been able to hold the Walmart cancer at bay.
I fully understand why people would see Walmart coming to a town that was likely also suffering as an early indicator and outlier to the de-industrialization /globalization that wouldn’t impact more consequential lower-middle class until a bit later and would largely be experienced as benefits by the upper middle class that you also likely occupy now and for a while now.
For context, this same process seems to be unfolding at an even more rapid pace in Germany right now as the industrial small business base is being massacred and that will have the same kind of devastating effects on the dependent small, family owned businesses and retail companies that have been a moat to the likes of Walmart, Amazon, and even by extension, the Ubers and Food delivery services and digital services that serve a deracinated and shattered population in the USA currently.
My town never recovered economically after the US Civil War. It was a fairly wealthy place before then because the main economy was tobacco plantations, which slave labor enabled. It literally had more residents in 1860 (including enslaved Americans) than at time since then.
A lot of the economic woes in the American South have very deep roots. A significant amount of wealth, pre-Civil War, was in the form of slaves. That was incredibly immoral, of course, but the economic effects of that "wealth" disappearing after the war was still a real thing. There were basically no large white landowners left, the farmers who remained were small landholders. And blacks ended up being a permanent underclass. They were also mostly farmers, but they were continuously undercut by de facto exclusion from the banking system. Also, public education as a whole was never great, even for whites, and for blacks it was pretty abysmal. The county next to mine actually closed its public school system for a generation instead of segregating, and the money that would have gone to the schools was instead embezzled by the county commissioners and funneled to a private white school instead.
Kneecapping your population like that has generational effects. The lack of investment in public infrastructure has two root causes: a significantly reduced tax base, and racism. Public services being available to everyone, that means you were taking money out of the hands of whites and using it to benefit blacks. And even though that is largely gone (imho), the effects of zero investment in public infrastructure isn't something that can be fixed quickly. We mostly missed out on the post-WWII economic boom for those reasons.
Even in the face of all of that, my county was doing okay up until the Carter-era agricultural reforms that incentivized large agricultural conglomerates and crippled family farmers. That, plus the interstate not going through town, pretty much doomed the place.
Growing up, the nearest Walmart launched about 17 miles south of the town I lived in, and we slowly saw a drop in stores locally. Then the interstate was completed about 5 miles west of our town, then all the "tourist" traffic bypassed our town.
There is basically nothing left of my little hometown anymore.
The fact that “people didn’t cry” when a business arrived is totally meaningless when it comes to assessing the impact of a business and its model on a community.
Walmart pay subsistence wages and below. They survive via exploiting governmental support for low income individuals while funneling profit to their billionaire owners. When they become a major part of the local economy the locals lose out.
That's why I avoid many automations that could save me time. Some menial work can actually bring some insight into what I'm doing (like reading over a document manually instead of using Grammarly to correct it for instance...)
As for exercise: you get more exercise walking through walmart than driving from small store to small store and parking in front of each - which is what really happens with small stores in small towns. (tourists will walk the street, but locals don't - they park in front of the one store and then are gone - though more likely the locals drive the the big city mall for their shopping and again get their exercise, leaving those local stores for tourists who don't realize this isn't how locals live).
> This consolidation is the root cause
Think on it for a second: if you could work a better job than small grocery store employee, wouldn’t you have already? Why would you wait on walmart to exist?
you picked a bad example, in other places walmart is more efficent.
again though you failed to figure what those people do instead - there are still plenty of jobs they are just not retail and probably in a bigger city.
If government benefits are set at a level higher than the prevailing market-clearing wage, perhaps the benefit level should be reduced, perhaps the minimum wage should be raised, or perhaps that Walmart should close its doors, which surely would increase rather than decrease government benefit expenditures.
Wishing that there were more high-paying jobs than currently are able to be supported in a local economy rarely works.
Walmart Local Town would still be the big employer in some towns. (And, to the extent that Walmart Local Town is providing better jobs than the next best alternative for town employees, they should be lauded rather than vilified, IMO.)
With big retail, you get the smallest possible wages and all the profit sucked out to somewhere else.
Each time a customer needs to travel to big city or order remotely because town shops don't carry what they need they suck profit out of town.
If Wallmart can come to town and employ enough people it might help keep profit in town rather than suck it out.
How much money stays when Walmart is there relies on bargaining strength of employees. With weak labor laws it may suck out more. With strong labor laws they could suck out less.
Wallmart being net negative for community as this research seems to indicate is clear evidence that labor laws are too weak.
What business do you think they're in?
FYI, Sears acquired Western Auto and most of it was put into Advance Auto Parts. The headquarters in Kansas City was converted into 101 condos.
https://www.apartments.com/western-auto-bldg-multi-family-ka...
“But if Walmart’s example reveals anything, it is that, in the long term, low prices can have costs of their own.”
The scale of corporation can pull many levers in the pursuit of profit and can have longer vision because it has economic means to persist, the individual consumer is weak and short sighted in comparison, always.
They would be glad for the area to be poorer if it's better for them.
I.E. They don't get poorer, but other people do, and they're purchasing power increases.
But are they short sighted because they are taught to be short sighted, or is this some irrevocable aspect of the human condition?
If you grow up in a society that emphases the virtues of individuality and deemphasises the impact of the social/group condition upon your own lived experience, it's not really surprising that you'd rate "immediate personal issues" above "communal" ones.
I think "the tragedy of the commons" isn't universal. It's an argument for enclosure. But the commons can be run over by people who don't believe in communal good and instead want to be doing the enclosure.
Think about the difference it would make if everyone was more aware of the personal cost to them of poverty, homelessness and so forth? In the current world, living in a place that doesn't do things the way the US does can accomplish this (at least temporarily).
Relatively wealthy people in suburban or rural areas (who are by no means actually wealthy by American standards).
Poverty isn't going to affect their neighborhoods. You don't go from having a $750k house on the outskirts of a suburb of Atlanta or Dallas or a $500k house in Montgomery Al or Jackson MS to suddenly being overwhelmed with neighborhood poverty because Walmart comes in or a bunch of unions in town get busted.
The affects will be felt in the suburban center where the lower middle class and poorer renters live.
The crime that follows will almost exclusively be problems for OTHER people.
If they have this thinking, they couldn't care less about crime in YOUR neighborhood.
You can bet, for sure, if crime makes its way to THEIR neighborhood, they'll immediately get more police force - probably paid for primarily at YOUR expense.
Walmart will gladly import it for you from elsewhere.
If you're talking about services, if you're purely greedy, it's better for you to have more people without good jobs so you can take advantage of them having to work undesirable service jobs at lower and lower wages.
Additionally, Walmart has extremely well-established multinational supply chains, and probably won't need to source much of its stock from the local community. If they do need to buy anything locally, they can pay absolutely rock-bottom prices once they've pushed out competitors and they are the only buyer.
If you shop at Walmart but otherwise have no other exposure to the retail sector, then as an individual you are probably financially better off. But looking at a community as a whole, the negative effects on retail employees and local suppliers apparently outweigh these individual gains.
https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...
https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
https://laborcenter.berkeley.edu/a-downward-push-the-impact-...
American tax payers are paying billions to make up the difference and subsidize Walmart's substandard wages.
Walmart privatizes its profits and socializes its costs.
One upside of Walmart in my area is that they have their cheap pricing up front.
Every other grocery chain here has a gamified points program that involves activating "offers" through their phone app and then hoarding points until you're able to redeem during a bonus redemption event that coincides with a sale on a product that you actually need.
So... 10 years after Walmart opens, poverty is 3% higher, and annual household earnings decline by $4,230. Is this a huge effect? This is something like a 10 point difference on the SAT (https://www.cs.jhu.edu/~misha/DIReadingSeminar/Papers/DixonR...).
Yes. Median household income is something around $70K, and rural households are not making anywhere near median household income. If we don't think it's a big effect, then we shouldn't mind sending them $4.5K checks every year to make up for it.
It's an effect large enough to drive 3/100 people affected into poverty.
I'm sure the local community that hates Walmart will prefer to shop at your stand, supporting the local community.
> "Indeed, Walmart’s many defenders argue that the company is a boon to poor and middle-class families, who save thousands of dollars every year shopping there. Two new research papers challenge that view. Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers. On net, they conclude, Walmart makes the places it operates in poorer than they would be if it had never shown up at all. Sometimes consumer prices are an incomplete, even misleading, signal of economic well-being."
Walmart privatizes its profits and socializes its costs: https://news.ycombinator.com/item?id=42505420
I once toured Washington's home Mount Vernon. He was probably the richest man in America at the time.
I wouldn't prefer his lifestyle, at all.
Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
If you define poverty as being in the lowest 20% of income, then you can never eliminate poverty.
> Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
You wouldn't have an internet phone without big business. Nor a car. Nor a washing machine. Nor indoor plumbing. Nor oranges in winter. Nor a hospital. Nor air conditioning. Nor electricity. Nor sanitation. Nor fertilizer.
In fact, getting rid of business would result in the death of more than 90% of the population. And likely much more.
Either the economy hasn't grown in any significant way over the last century, or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
And the ancient Romans had indoor plumbing.
Only a handful of rich Romans.
> or clearly it was possible to purchase cars and washing machines, and transport goods, and have hospitals and air conditioning without "big business" of the scale that the context of this thread is clearly referring to.
Nope. It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Railroads were big business, too. You cannot have much of an economy with just horses.
Yes. And therefore, they didn't need modern industrial capitalism with global corporations to do it.
And, just noting the moving goalposts here, your claim wasn't that such amenities weren't affordable without modern capitalism, because even with it, many people struggle to afford them, it was that they were impossible at any scale other than "big business."
>It took Ford's big business to be able to make cars cheap enough for the masses. Before Ford, it was a luxury item for a handful of wealthy people.
Ford at the time of the Model T wouldn't be considered a "big business" in the modern context. Again, you seem to think any business counts as "big business." Using the same term to refer to Ford in 1910 and, say, Amazon or Wal-Mart today is ridiculous.
Obviously Ford would become "big business" but just as obviously Ford is one example of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
You could also make artisan steel before the big steel industry. About all you could do with it was make swords and a suit of armor at terrific expense.
> of it being possible to manufacture goods at what would be far closer to "mom and pop" scale today.
Before the industrial revolution, 90% of the population worked on the farm, and famine was still a regular occurrence. There was no available work force to create artisan cars and artisan indoor plumbing for the masses. Nor was there food to feed them.
Some years ago, I toured Jefferson's Monticello mansion and estate. In the back yard there was a nailery, where the slaves operated a small forge and hammered out nails, one by one. Today you can just buy a box of nails for a few dollars, thanks to big steel and the nail making machining requiring little additional labor. I don't know how many nails could be made in a day's work by an artisan, but I doubt it is that many, and it's cost you at least $150 for that box of nails.
Nails were so valuable in those days people would burn houses down just to get the nails.
I had my roof replaced a year ago. After the roofers left, I spent a fair amount of time combing the yard to get all the discarded nails out of it. The nails were so cheap it was not worth anyone's time to pick them up. (I picked them up because I didn't want to step on them. I did anyway, driving the nail nearly through the sole of my shoe.)
Merry Christmas, or whatever.
The problem with Walmart isn't just that it's a big chain store.
It's that it's a staggeringly, unchallengeably huge chain store, that can afford to operate a given location at a loss effectively indefinitely in order to drive out competition—including competition from other big chain stores, if they want to.
https://www.linkedin.com/pulse/italian-smes-small-pretty-str...
[easy] Echo devices: where the UX just keeps getting worse as well. Prime Video: now has ads as well. Washington Post: firewall so never read it Prescription drugs: I use a Walmart-branded drug plan serviced by a local Safeway. Better than Amazon directly, I suppose
[moderate] Kindle: I don't really need paid ebooks vs. the library etc. but do have a Kindle library. Kindle Unlimited: library used books sales now for cheap reads. Amazon books: Barnes & Noble for shipping, so far so good. Amazon Prime: do I really need more stuff, quickly?
[hard] Whole Foods: the UX of Safeway stores is surprisingly worse
I find this a healthy exercise as it makes me less of an impulsive consumer. I haven't decided if Target, Walmart etc. should also be avoided.
The limiting case is telling: an alien race comes and offers all of our goods for 1/10th of their Earth price, made possible by their insanely advanced technology. Is that a good thing?
1. below the competition - predatory pricing, dumping
2. same as the competition - collusion, price fixing, cartel
3. more than the competition - gouging, profiteering
All three are illegal. There's no legal way to set a price.
> then jack up the price when the competition dies.
That never happens, for good reason. Think about all the money a big corporation would lose trying to sell below cost to drive out a mom and pop.
Here's more detail on her thoughts, which I think are kind of silly but are interesting nonetheless:
"It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault.
A job exists because a business needs it to perform a business function, and that's really the only reason it should exist. But for various non-business reasons, jobs are often favors to be given out and it makes the economy less efficient when you have jobs that don't really need to be done, or could be done better, but exist only as favors to people.
Putting the puritan work ethic on a pedestal directly contributes to this and harms our economy as a result. UBI and some form of guaranteed housing (or guarantee against losing your current housing) would be much cheaper than all the fake jobs needed to deliver favors."
There's another point, which is even more sinister. The unemployed offer liquidity in the employment pool, which offer more flexibility for the growth of the machine. Local communities that are more self-sufficient would want to take care of their own. The emergent properties of the anonymous machine see unemployment as a variable to be optimized.
I'd agree that most workers are not particularly efficient. But I have never seen efforts to make them more efficient succeed.
So, the fact that there are eight employees doing the work of three at the grocery store does not count, because the missing efficiency is not available to the employer.
She really believes any business with more than 50 people has at least 1 or 2 employees of this type, and more so if the culture of the firm tends to skew towards government contracts or older people--but when pressed for data, she said that was just her gut feeling.
> the fact that there are eight employees doing the work of three at the grocery store does not count
If you know three people could do the work of eight then fire 5 people or modify a process. The business is choosing to be inefficient, or there may be other factors. It may not really be inefficient if the cost of the 8 people is lower than the cost of automation or whatever is needed to improve the process. People are expensive in the U.S. so I tend not to assume that but it is possible.
She says a reserve army of labor is great, and that if lawyers and other professionals can receive money for being on retainer and doing nothing, then so should anyone who can be considered a laborer.
I hope you have a response that will make her be quiet. I really need some peace in this house.
Minimum wage laws, on the other hand, mean a lot of employment possibilities are simply out of reach.
Minimum wage laws would not stop you from selling your services as a programmer at any rate you want to.
[0] and yes, current minimum wages in most places in the US are actually far below even this threshold.
I.e. minimum wage produces more of a burden on social services to take care of the unemployed.
My cousin's lovely response:
"So the business paying the insufficient wage and the landlord are not the same entity. The business's job is to run a business, not worry about if landlords are getting paid. It's unfair and inefficient to make businesses submit to the demands of greedy landlords in this manner. Maybe governments could step in and protect businesses but I'm unsure of the best way to do that."
Personally I think if we have a system of private ownership then charging whatever I want for rent is my right and the government should not be able to force me against my will, otherwise all property is really the governments. But I think there are grey areas when we talk about corporate/institutional property owners.
Your own response is similarly simplistic. The meaning of "property" is defined by government, at all times and in all places. The precise meaning varies, but there being limits on what rights it comes with is not a violation of your "property rights" - it is actually the very definition of what property means.
Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
More prosperity but often at a cost to local environments and commons that are not priced into the market. And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
I don't know anyone who prefers to be less prosperous.
This is wildly misleading. Free trade in the 21st century generally refers to trade across national boundaries. Nations represent markets that are not subject to the same basic conditions as each other. Moreover, free trade (the international kind) almost always seems to involve a lack of restriction on the movement of goods, capital and profit, but rarely allows labor the same benefit.
The 21st century version of "free trade" is about expanding the scope and scale of capital markets and the movement of goods and profits across national (and thus market-jurisdictional and -conditional) boundaries. It has almost nothing to with the "old" notion of free trade within a given market.
> It has almost nothing to with the "old" notion of free trade within a given market.
The Law of Supply and Demand has never changed, and never will.
"The Law of Supply and Demand" was unknown to the Romans or various middle Eastern empires (just two examples), whose economies worked in entirely different ways from those that followed the mercantilist period in Europe, and became canonized by Smith et al.
So was the law of gravity, but gravity still ruled their lives.
> whose economies worked in entirely different ways
The Law of Supply and Demand applies to all economic systems.
I expected a better response from you.
> The Law of Supply and Demand applies to all economic systems.
False. Well, false for some well known versions of whatever "the law of supply and demand" is.
There are all kinds of reasons why the retail cost of goods are not an inverse linear function of their supply; ditto for the retail cost of labor.
Why do you feel this need to reduce complex systems to vapid platitudes?
“Free trade” here refers to inter-country globalized trade across borders, not free markets within a confine.
There’s a much stronger case to be made that industrial policy has resulted in prosperity for Asia, ironically the opposite of free trade :)
It's so bizzare that making things more efficient and in effect saving humans from the burden of inefficient labor is seen as negative. Tying people's survival to their ability to sell their labor is such a terrible idea in this day and age.
If your productivity is producing $100 in value for $10 in pay, other businesses will line up to offer you more money.
If your productivity is $9, expect to get laid off.
The Law of Supply and Demand is in effect, as always.
As always, don’t confuse textbook theory with real life!
1. worker pay
2. so-called employer's social security contribution
3. stock purchase plans
4. 401k company benefits
5. employer provided health care
6. retirement plan contributions
7. paid time off
8. other employee benefits
This adds usually around 40-60% of wages.
Another factor is the increasing share of the productivity is extracted through government taxation and deficit spending. Big government is expensive.