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Walmart Economic Impact Analysis

America shops at Walmart to save dollars in their pockets. Paying lower prices at first seems like a good idea but there is always a back side that most consumers fail to understand. Walmart has many pro’s and con’s. For every con there can be a contradicting pro. Overall the Walmart company donates to many charities, employs disabled workers, lowers medications and so on. All these are great acts of philantrophy but I believe that in the long run Walmart is bad for America right now during this economy crisis.

According to the article “The Walmart You Don’t Know” by Charles Fishman, Walmart is using it’s muscle from being the world’s largest company and retailer to bully it’s suppliers. Yes, Walmart buys from American companies but at the price they choose. Walmart is dedicated to providing customer with the lowest prices possible. The company is so large, and such a valuable client to their suppliers, that when Walmart dictates what prices they need a supplier is forced to comply. Walmart is notorious for penalizaing their suppliers when demands are not met. Often times the low prices will make the suppliers lose money, or devalue their once prestigious brand.

Many American companies are

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forced to sell their products at the Walmarts low prices, and in doing so many of theses companies are forced to shut down their American factories. Overseas labor is much cheaper than the US, and in many ways they just can’t compete. Walmart will offer two brands of the same item, a cheaply priced Chinese brand (for example), next to the more expensive US brand. A typical cutomer who goes to Walmart is obviously more interested in cost savings, so will probably choose the less expensive item. This in turn forces the US company to be cost competitive. The only way to do that quickly, would be to outsource labor. US factories have been shut down, to build factories in other countries. Costing many Americans to become unemployed.

And if a company chooses not to lower the prices, Walmart will cut them off and go to an overseas company who is willing to their bidding. This is devasting on suppliers who, when agreeing with supplying to Walmart, need the business from their number one supplier. Walmart is so focused on providing their customer with the lowest prices possible, they are not willing to negotitage with their suppliers even if their demands are damaging to the suppliers business. For example, if Walmart needs a company to sell examply XX for YY amount of dollars, and the company even attempts to negotatiate because YY amount of dollars will make the company operate at a loss and go out of business, Walmart will drop the company and the they will go out of business any way from losing it’s number one client. It’s almost a lose-lose situation. I feel that Walmart, while being the largest US company and providing jobs to US citizens, is misusing its power as the worlds largest retailer against American companies and driving these US companies out of business.

Many Americans are unemployed in the United States right now. According to the Brueau of Labor Statisics,”13 million Americans are unemployed and the employment rate is at 9.0-9.2 percent.” Although walmart is not the main cause of unemployment in the US, it does contribute a lot to the employment rate. In the book “Walmart: Everyday Low Prices- At What Cost?” by Peter Singer and Jim Mason wrote, “People in China, Bangladesh, and Indonesia need work too, and since they are in general poorer than Americans, they probably need it even more then Americans do”. I disagree with that statement because I feel that Americans need jobs right now in todays economy more then ever. American companies such as Walmart should contribute to America’s economy by not out sourcing or causing other companies to outsource to other countires.

On top of costing Americans jobs, Walmart is also reported to treat the employees they fdo have very poorly. An average full-time store assistant makes less then 20,000 a year and has inadequate health care. Singer and Mason pointed out,” Walmart’s impact on wages and benefits was most clearly shown in 2002 when it announced plans to open 40 Super centers in California over the next 3 years”. (523) This cause three of the largest grocery chains to force wages and benefits down. Walmart’s way of cutting prics through cutting their own employee wages and benefits is causing a domino effect on competitive companies. It is unfair for the employers who have been working for many years to have to take a pay cut all of a sudden just because a Walmart is opening nearby. It makes you wonder if this could be Walmarts big plan to make Americans poor so they will have to shop at their stores.

According to Sheldon Richman’s article The Chutzpah of Walmart’s crtitcs, “walmart is the biggest corporate dodnor in the country. The Foundation Center says the Wal-mart foundation is second to none in contributing money ti charitable cause”. (526) I feel that just because a company is donating tons of tons of money , that doesn’t take away from the fact that it so also destroying the us economy. It is almost like a rouge that Wal-mart is trying to pull to distract consumers from seeing all the harm they are actually causing. I think that it is great that Wal-mart employs handicap people and Vetrans but that doesn’t account for the thousands and thousands of people that are getting layed off due to factories being shut down.

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