The Walmart Effect

I have never shopped at Walmart.  I have taken my mother there several times as she refused to heed my advice about why she should not shop there.  She pointed out that I never heeded her advice either, so I guess we are even.

I refused to shop there because of the abysmal factory conditions under which their products are produced and because of the negative impact on the local economy, especially in the small towns from which I came. I am also not a gatherer of “stuff.”

While in the library looking for something else, I stumbled across “The Wal-Mart Effect:  How the World’s Most Powerful Company Really Works – and How it’s Transforming the American Economy,” Charles Fishman, 2006.  At the time of the writing, Americans were spending $35 million per hour at Walmart every hour of every day.  In 2004, Walmart profit, not gross but profit, was $19,597 per minute. Ninety percent of Americans live within 15 miles of a Walmart. An equal number of Americans had shopped at Walmart at least once in the previous year.

Walmart is the number one corporate employer in the U.S. and since 1999 in the world. At the time of the book, Walmart was the #1 employer in 27 of the 50 states. It was also the largest corporate employer in Mexico and Canada and the second largest in England. As of March 2020, the collective worth of the Walmart family was $190 billion.

What effect does Walmart have on employment?  Studies show when a Walmart comes into a community it provides 6 new jobs a year.  Six.  However local businesses lost half its retail trade and many small businesses have been driven into bankruptcy.  Even local service providers suffer because it’s cheaper to buy a new one than fix the old one. Because of those business closures and the low wages of Walmart, one study found that when a Walmart comes into a county, it increases poverty.  Americans are paying to drive themselves into poverty.  Who needs Big Brother or 1984? Consumerism will do us in.

Because of the low pay, many workers are on state benefits i.e. health insurance, food stamps, or school lunch programs.  Thus taxpayers are subsidizing Walmart through corporate welfare.   Today (1/8/24) I stopped to pick up some groceries from a brand-name store.  The check-out clerk mentioned that the avocados were good there and that she would never buy them from Walmart or another place she mentioned because the quality was low.  She said she worked at Walmart for 12 years and hated it. One day she walked out. She told her boss; you treat us like crap and pay us shit. He told her that if she walked out, she would never be hired back. She said I’ll never come back.  She never did – even to shop.

The suppliers of all this stuff to Walmart are no better off.  Because of Walmart’s relentless requirement to cut costs, many suppliers cannot continue to manufacture in the U.S. but must move to a country with cheaper labor costs. This not only costs American jobs but lowers quality. I recently bought a bathroom faucet to replace mine that had worked since 1989. It broke in two weeks. When I went back to ACE Hardware, they agreed it was cheap crap from China, but it was all they could get. That is one Walmart effect – driving down the quality for everyone. 

The factories that the suppliers must offshore have no power against Walmart and are also driven to cheaper prices.  So they must cut quality and abuse workers to meet Walmart’s demands.  Much research has shown that the conditions in these factories are not legal in their own country let alone ours. It’s not only the pay but also the conditions such as hours, no toilet breaks, no water, being locked in, and physical assault and sexual violence, especially against women.  Even U.S. stores engaged in these practices of locking employees in and forcing them to work off the clock. After scandals about sweatshops, Walmart claims it has a code of conduct that all suppliers must adhere to. But it has a minuscule number of inspectors, and they do a minuscule number of unannounced visits. The abuse continues. Successful suppliers focus on quality and get out of supplying Walmart early by distributing through other channels. Only recently have the environmental harms been on the radar and they are likewise negative.

Walmart has been very secretive about the company and little research has been done on it. They now have a “walmartfacts.com” website with 120 “facts.”  Most are simple things like openings and when new services started.  Some is braggadocio. But to their credit they do list the Kenneth Stone study showing how local business lost half their trade when Walmart moved in, the criticisms about wages and employees being on public welfare, and the in-store shootings. They did not mention the protests about the ammunition and gun sales of Walmart especially after 2016 and after mass shootings.

According to the book, there was a union group that had a “Wal-Mart Watch.”  It then merged with WakeupWalmart but both groups are now defunct. The current group working on the issue is a UFCW-funded group, Making Change At Walmart. 

Are there good effects? Walmart saves consumers money. But that does not include driving costs or what consumers throw away because of overconsumption. One of Walmart’s early success stories was to get rid of the cardboard boxes that deodorant used to come in. Deodorant is already in a hard case so why do we need a box too?  Getting rid of it saved 5 cents and lots of trees. Walmart has been responsible for other such sensible savings. By saving money, it also lowers inflation.

But at what price? Workers in the U.S. and abroad pay the price in low pay, hard work, and mistreatment. The environment pays the cost when regulations are not followed and with all the discarded packaging and short life span of items. The community suffers from the loss of local businesses and better-paying jobs which impacts the local culture, poverty rate, and sustainability, especially in rural areas.  Some economists argue that Walmart has destroyed capitalism because there is no longer a market – no one can compete with Walmart. Walmart has created a monopoly through its purchasing and market power.

Walmart could use that power for good but don’t hold your breath. One of the articles on their own website says that Sam Walton did not believe in philanthropy or social causes. So it’s up to us. Do we really need all that stuff? What effect does that $3 t-shirt or the newest kitchen gadget have on our professed values? For those of us who can buy higher quality or already have all we really need, we can put our values before the Walmart effect.