Wal Mart And Its Affect On The American Economy

1579 words - 7 pages

Wal-Mart has been a huge debate subject in the news since it began to pop up in large quantities across the entire United States. The majority of that conversation focused on the negative impacts that Wal-Mart has on the communities and economies in which its super stores are located. Richard Vedder and Wendell Cox take a different approach and while they recognizes the downfalls and negative impacts that Wal-Mart can have, he focuses more on proving that the positives that Wal-Mart has on economies and communities outweigh those negatives.
The main criticisms of Wal-Mart involve: low labor compensation, loss of jobs, impact on competitors and communities, contributing to the trade deficit, as well as insensitivity to the environment. Wal-Mart has been publically accused for its mistreatment of workers, these claims mainly including low wages and lack of benefits. Critics argue that these force Wal-Mart employees to rely on public assistance programs, making the local economy worse off than before. It is also argued that this carries over to other stores who are forced to compete with Wal-Mart and lower their own worker’s wages and benefits in response, thus making the impact even larger. Another major criticism of the Wal-Mart superstores is that they cause local companies to go out of business because they do not have the necessary resources to be able to compete with Wal-Mart’s everyday low prices. As a result, the workers that were employed by these local companies become unemployed, thus having a negative affect on the particular local economy in which the Wal-Mart moves into. In addition, Wal-Mart opposers state that since Wal-Mart imports a lot of the goods in which it sells, that they are directly contributing to the country’s growing trade deficit. Also that this importation of goods means that the demand for high-paying manufacturing jobs goes down and those jobs will move overseas to foreign workers. Thus increasing the unemployment rate. American companies, that are in the same industry as those foreign manufacturers in which Wal-Mart imports goods from, are often unable to compete with the low wage rates that overseas companies can utilize. In some cases this causes those American Companies to go out of business. An organization from the Seattle area composed a report on the negative impacts Wal-Mart can have on a community and concluded the following, “…each new Walmart store opening in a Puget Sound neighborhood will result in a net loss of $13 million of net economic output and $14 million in lost wages over the 20 year life of the store”(Puget Sound Sage). This is just one example of numerous reports that have been conducted in order to show the negative effects that a Wal-Mart can have on a community in the long run. Often times however the positive impacts that Wal-Mart has on economies are ignored. Richard Vedder and Wendell Cox look at and acknowledge these criticisms and refute them with positive impacts that Wal-Mart has...

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