The Walmart Effect | New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices
The Walmart Effect | New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices
New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices.
Summary
Two studies reveal that Walmart’s entry into communities lowers household incomes by 6% over 10 years and increases poverty by 8%, even when accounting for cost savings.
Its practices, such as undercutting competitors, suppressing wages, and squeezing suppliers, harm local economies by reducing employment and forcing smaller businesses to close.
Walmart’s “monopsony power” enables it to pay lower wages and dominate suppliers, compounding these effects.
The findings challenge the idea that low prices alone benefit communities, emphasizing long-term economic harm.
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I just despise this, the deck is stacked against us so hard that a normal life feels so.... Utopian in how impossible it is to acquire.
11I thoroughly enjoyed this article. It was full of cited information and even the sources led to interesting reads.
12The Walton Family are terrorists
11For the morons out there: No, this does not mean high prices are good. It just means low prices can sometimes be bad if certain principles aren't in play. You're welcome.
31- lower prices until other small businesses close down
- increase the price back
- everyone needs to buy from you because you are the only supplier
- profit
32It's even more insidious:
- Lower prices to drive out all competition
- Become largest local employer
- Keep wages low, people don't have many other jobs to choose
- Everyone has to buy from you, and those working for you are stuck in their low-wage jobs
- Excessive profits
22
This just in, studies rediscover basic functions of an economy. Again.
A few more studies bro, just a few more. We are sure to figure this stuff out if we just do another study.
37The frustrating thing is: Sometimes the same economists who do these studies tend to magically forget their own findings a week later when they are interviewed by some news channel about what the government should do about x or y. Because they can't live with the fact that some of the base principles and beliefs of their own school of thought are deeply flawed.
1Or, more likely the economic incentives that they are exposed to (academia, grants and the politics of both) reward this behaviour.
The principals are understood, I remember reading about similar issues with the Dutch East India Company (you know that recent company that just went under in 1799) back in school. The reason we are where we are is that people (economists often try to say otherwise, but are included in this set) in the system we have are incentivised to not actually change things, but to come up with reasons why they should stay this way.
1
Someone should look into this capitalism thing and see if its creating any problems, surprised noone has thought about it till now
15Oh yeah, we should do a study....
Wait a minute, I am on to you grant boi.....
4
Another quality-of-life lowering thing caused by Walmart/Amazon that's obvious but they didn't go into, is that once Walmart and Amazon have eliminated so many local businesses, everyone is forced to shop at them. Even if we don't want to, we have nowhere else to go--we can't just boycott them and still get stuff we need.
Walmart decides what you will and won't have access to buy. They've pared down the variety of brands and offer a subset of items by those brands minimum, for their efficiency of ordering and stocking items, including groceries. Then the brands stop making the items that Walmart decided not to stock, so they're gone. There are still a few other grocery stores but most have them have merged into a few mega-grocery chains with the same issues as with Walmart.
So even if you're OK with going to Walmart your choices are limited (those of us old enough to remember things we used to be able to buy that are long gone these days may notice this more). So what it's come down to is you get what Walmart offers you, or you order it from Amazon or Temu. There are still a few places to get real things of good quality, but they're harder to find, never local stores, so you have to order online sight unseen, and of course it's an expensive and time-consuming process compared to being able to just go to the store and grab something.
23Their stores extract local spending dollars and transfer them to shareholders who live in gated communities.
If they paid more in wages than a store made in profits they would close the store.
20Yes to the first part, but the second part is just how businesses work? If your gross income is lower than your expenses you're operating at a loss and it's not sustainable. Wages should absolutely be higher, though. Quick back-of-the-napkin math shows that last year Walmart made a net profit of over 11 billion dollars and employed just over 2 million people. They could boost every single employee's pay by $5000 annually and still make a billion dollars in profit.
1They could boost every single employee’s pay by $5000 annually and still make a billion dollars in profit.
Except for the corporate employees / managers, which get stock options that are much higher than $5,000 annually ofc
3Yes it is exactly how corporations work. That is the root cause of the problem.
It should be no suprise that the corporations are sucking the country dry.
The need is for an economic implementation that does not lead to death by parasite to most of the land.
6
Walmart encourages their employees to apply for federal and state programs like food stamps because they don't give their employees enough hours and give them weird shifts making it hard to even have another job.
And then they want them to use them at Walmart.
It's disgusting.
48Walmart is one of the largest welfare queens in the country. They profit off of poverty, and are actively incentivized to not only keep communities poor, but to make them poor.
19You get a 10% employee discount!*
*Limited items, only available for employees who work 40+ hours/week (which is almost nobody). All grocery items are ineligible.
21When I worked there a long time ago we couldn't even use the discount on food.
3
Hard to start a business when your competitor is Walmart.
Hard to make a living when the main employer is Walmart.
Hard to move when you don't have any money.
136Hard to start a business when your competitor is Walmart.
It's also hard to maintain an existing business when your competitor is WalMart.
They can afford to undercut you until you go out of business, then they can charge whatever the market will bear.
37
This was proven decades ago.
34I wonder what an ideal structure is that does the opposite. I know the obvious "small business" etc, but like as policy what structure would make a populace more wealthy?
5Just going for small business doesn't work, either. You need some greater percentage of employees than you do business owners. There has to be a point where you reach a critical mass where there is no longer a sufficient labor pool if everybody is trying to be an entrepreneur / small business owner.
1Mixed zoning would probably help.
3
5Stop vertical integration (ban the fuck out of it) and give anti monopoly laws teeth. The reason Walmart at the like can do this is by making themselves the only real choice for the poor (and then making everyone poorer).
Edit: also to add things like walmart hold suppliers over a barrel so if you ban the vertical bullshit you also give the companies supplying walmart more ability to ask for more.
4
No fucking shit.
This was news in like 1990.
117Unfortunately dipshits will still argue about it to this day
31Ya, I remember it being mentioned when I worked for them about 25 years ago. Unfortunately I cannot find any articles. All local news at the time, probably. Towns that had citizens who banded together and successfully combatted Walmart moving in, etc.
18
I was buying camping equipment from walmart. They were out of some of my supplies and a new tent I wanted. I ordered alternative items from a online store and they were so much higher quality than the ones at walmart. Walmart squeezes its suppliers so much you end up with items that are more cheaply made. I've tested this on several different items and have discovered that walmart sources many of their brands straight from china. You can buy the same cheap shit from temu.
41Theres literally documentaries from 2010 about manufacturers who make a "Walmart version" because Walmart demands these factories make them at a specific price.
Like in one documentary, the same toaster from Target and Walmart, the Walmart one had different cheaper parts inside. TVs, furniture, lamps. Even the plastic storage containers like totes and Tupperware had "Walmart" versions that were real flimsy.
48Snapper Mowers actually pulled from Walmart in 2006 because they wanted to focus high quality products rather then moving quantity.
Selling Snapper lawn mowers at Wal-Mart wasn’t just incompatible with Snapper’s future – Wier thought it was hazardous to Snapper’s health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn’t in the price, it’s in the performance and the longevity.
Later in 2013, Briggs & Stratton decided to start selling Snapper in Walmarts again. 2014, Briggs & Stratton closed a Snapper plant. They then had to restructure and other corporate BS, so fuck around and find out. Publicly traded company garbage.
21
Isn't this obvious?
If an outside Corp comes in displacing local business, the profits that would cycle back into that community now get taken out. It doesn't matter what the prices are, when the community as a whole has less money with each transaction.
60Thank you for pointing this out. When you shop small locally-owned businesses, the money is often directly reinjected into local economies. The money you spend at locally businesses puts a girl through ballet lessons instead of putting dollars towards a new yacht. And the ballet company is owned by your neighbor.
If people really want to fight income inequality, stop giving your money to billionaires everywhere you can.
9I'm not sure it has been empirically proven.
Hypotheses that make sense at face value are dime a dozen in economics. Some of Milton Friedman's hypotheses on inflation made sense but were proven wrong. Nevertheless they were used for decades to drive policy with horrible impact on the working class. Lots of people still believe they're true, because they make sense at face value.
12It's trade balance and it's very well proven. If the money coming into a community is less than the money going out then that's going to affect everything from road repair to groceries bought.
This is why at the international level there are balance payments in trade deals.
8
So tariff math might be a thing
1In part.
That's one of the long term goals. But tariffs have short term economic effects, and political effects that also need to be taken into account.
Tariffs are more complicated.3
It should be illegal to pay people wages that require them to take public assistance
64If your employees have to use public assistance then you should be on the hook for the assistance and the administrative cost of that assistance.
And when that hits 10 percent or more of your workforce then the government forces a union.
We've let the corporations fuck around long enough.
15Don't worry, they will fix the issue by eliminating piblic assistance
33
Wastes vasts amounts of urban land on parking instead of housing or more businesses
Is often so deep in parking lots and strip malls its impossible to walk to
Cheap prices and cheap chinese manufacturing to help eliminate local competition
Massive corporation has more bulk buying power than local competition
Designed to be a one stop shop, fix your car, buy a tv and grab some food
Self checkouts pays robots instead of people in the community the store is in
The people who do work there are paid shit wages for life, often not even keeping up with inflation meaning they actually get paid less every year
Probably paying less taxes than they should be for the amount of space the business takes up and the amount of traffic generated
Helps promote car centric design which is a terribly ineffecient and expensive way to move people within an urban area.
76All profits are exported out of the community, instead of staying/swirling about the community.
43More than half of Walmart's employees are on food stamps or some other form of government assistance. So along with everything else, our tax money goes to pay their employees because they won't.
I call that a tax break, paying shit wages, AND ruining the local area by making everybody more poor all rolled into one because Walmart employees often shop at Walmart for their employee discount (because they can't afford to shop elsewhere on their poor wages), meaning that their wages go right back into the company's coffers right alongside our tax dollars.
25I agree with all points. I just wonder how much the robots get paid.
7I guess technically they pay the company that designed the self checkouts then pay their upkeep in electricity and maintaince. But just you wait for the AI self check outs. It will become self aware and start taking a cut for itself to buy memecoins.
7
Walmart is bad for small town America. And the rest of America too.
15Low prices AND low value. The cheap ass shit they sell is intended to break and be replaced as quickly as possible. E.g. cheap clothes that wear out quickly. Those who can't afford better are thus trapped in a cycle of repeat buying.
25Indeed. And worse, wealthy get a discount on everything - an obvious example being that f you have lots of money you don't need to get a car loan or even a mortgage. More likely you are the one, indirectly, making the loans and earning interest for the huge effort you expended being wealthy.
5
Sounds like a national security threat. More directly threatening on a daily basis than many other things they claim are threats.
52More threatening than Luigi?
12Companies failing to properly protect the foodchain have killed hundreds. But you don't see any CEOs in chains.
13
Makes sense. Take 10 small businesses with a owner/manager and say 5 employees. 50 employees. Local convenience store, small grocer, whatever. Not all at min wage, the owner/manager are going to be making a bit more. WalMart rolls in, kills those businesses, now you have four overworked managers managing 40 overworked employees at bottom dollar wages. The other 16 had to go find something else or get welfare services or whatver.
A very simplified version, but I could see how this brings down wages.
16Okay for Walmart. Now, is it the same or worse with Amazon ?
4I can see their sharp vampiric teeth in their big W.
Communities greatly adapt to these big stores, and when they leave, there's only a vacuum left.
You can see articles about that dating back to at least 2014 (that's from 2018): https://www.nprillinois.org/illinois-economy/2018-12-13/when-walmart-leaves-town
10I get the sentiment but this guy is really naive for someone that’s been around so long:
Glenn Schneider, the former Walmart maintenance worker who also serves as a Pana alderman, says he’ll be pushing to help revitalize downtown. And he has a suggestion for Walmart when it comes to making decisions for other places: “Talk to the community, get their input, not just in the boardroom,” he said. “If they’ve got a store that’s losing money, well they need to figure out what they can do, what the community can do.”1
If the majority of Walmart shoppers and employees are MAGAts, then carry on shopping there and I hope they stay loyal while Mango Mussolini drives prices through the ceiling fan with shit spraying all over the place.
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