Economic Impacts of Wal-Mart
Since Wal-Mart provides tremendous number of job opportunities to American labor market, household’s income relatively become stable given that many workers starts to have decent jobs in Wal-Mart. As household’s incomes improves, domestic consumption also gets better since consumers, also the workers, have enough disposable income to buy more products and services in the market, and so with the GDP of the United States. In other words, domestic trading will boom given the most of the consumers have decent jobs like what Wal-Mart is offering to the U. S. labor market.
Various industries start to experience higher sales and profitability leading to the impressive economic development...
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... of the United States. To make things short, Wal-Mart serves as the source of income of many households in the market; without Wal-Mart there will be economic instability that will happen in various industries and domestic consumption as well as GDP will decline, so with the entire U. S. economy. Another economic benefit that Wal-Mart has been providing to the United States would be its role as the main “market” of many manufacturing industries in the U. S. market.
Sealing a deal with Wal-Mart means everything to most manufacturing businesses since Wal-Mart purchases millions of volumes of a given company’s product to be displayed on more than 300 Wal-Mart stores all over the United States, and this is the main reason why manufacturing companies are very much eager to become a supplier of Wal-Mart Manufacturing industries already find ease with the existence of Wal-Mart in the market, and other giant retailers in the retailing industry like Costco and Target, since these manufacturing companies do not have to have hard times in finding a large market for their products.
At the end of the day, Wal-Mart compliments the operation of manufacturing industry and provides an avenue for the latter to attain higher sales and profitability in the market. Wal-Mart attracts significant number of foreign investors in the U. S. market which offers enough infusion of foreign funds to the money market of United States to stabilize the financial sector. The said foreign capitals can further be used for the expansion of Wal-Mart’s operation especially in the rural areas where Wal-Mart provides less concentration for the past decades.
This potential market expansion of Wal-Mart using foreign capitals/investments would improve the social and economic incomes of households in the rural areas through providing more job opportunities and cheaper products to their market. Foreign investments could also lead to the development of other industries since most investors of Wal-Mart also capitalize to other business venture based in United States.
At this point, one could say that Wal-Mart serve as the bridge towards the influx of foreign investment to United States and this role is very crucial especially at present wherein the U. S. economy suffers from instability and lack of sufficient funds to cover up the losses incur of many industries in the market. Wal-Mart also provides large amount of government revenue to the federal government in a form of taxes. Around 30 percent of Wal-Mart’s revenues go to the hands of the government as tax payment.
In 2007, Wal-Mart was able to reach $379 billion revenue with a net income of $12 billion. In this regard, the federal government earned tax collection from Wal-Mart roughly equal to $114 billion enough to finance some of the programs of the federal government and build few buildings for public schools all over the United States. Furthermore, the taxes that the federal government collects to Wal-Mart is relatively higher compared to other retailers in the U. S. market and this only suggests how important Wal-Mart is on securing the revenue of the federal government.
Without the tax payment of Wal-Mart, it would be very hard for the federal government to find other ways to generate government revenue equal to $114 billion. Therefore, the existence of Wal-Mart in U. S. market presents benefits to the government in a form of government revenue’s source. The last but not the least economic impact of Wal-Mart would be its influence to put enough pressure for inflation to remain low as this retail store maintains relatively cheaper products in the market.
Driven by price competition, retail industry would be a good starting point for the federal government to have control over the inflation rate in the U. S. market. Wal-Mart’s competitors like Costco and Target has been forced to maintain as much as possible low prices on their products as the Giant Retailer continues to successfully penetrate its target market by offering the cheapest products in the market. Due to this, at the end of the day, there will be an artificial depreciation of inflation rate as retailers are forced to align their prices to Wal-Mart in order to maintain reasonable margin for competition.
Lower inflation rate means having enough room for the consumers to consume more and buy more of products and services that they want leading to higher domestic consumption and GDP. Conclusion In this regard, it is clear that Wal-Mart provides economic benefits to the United States yet serves as the main factor for the welfare of the society, specifically workers, to depreciate significantly. In reality and theoretically, Wal-Mart proved that it can help the federal government in attaining impressive economic growth and sustainable development of various industries of the domestic market of the United States.
But on the other hand, due to the eagerness of Wal-Mart to minimize the cost of its operation, it has been committing various legal violations concerning its management and treatment of its employees. It would be very hard to determine, after accounting all the economic benefits and the social losses that Wal-Mart has been provided to the United States. In this regard, further research on this topic, determining the overall impact of Wal-Mart to United States after accounting its effects on the society and economy, is recommended.
All of the arguments presented in this paper are only limited on the published statements of Wal-Mart’s workers and other published articles.
Armour, Stephanie. “Wal-Mart Takes Hits on Worker Treatment. ” 10 February 2003. USA Today. 11 May 2008. <http://www. usatoday. com/money/workplace/2003-02-09-wal-mart-cov2_x. htm>. Elliott, Stephen. “Wal-Mart: Outsourcing the Crime, Owning the Police. ” 20 November 2005. The Huffington Post. 11 May 2008. <http://www. huffingtonpost. com/stephen-elliott/walmart-outsourcing-the_b_10968. html>.