The Economy of Wal-Mart

Twenty-four hours a day, one can drive by and see the brightly lit sign for Wal-Mart. You might be surprised at the size of the store. According to Forbes magazine, Wal-Mart currently has the 30^th largest economy in the world (Walmart). That lands Wal-Mart right behind Saudi Arabia. It must take a lot of people to run a business as successful as the economy of a country. The Wal-Mart stores, Supercenters, Sam's Clubs, and neighborhood markets employee a lot of people; "as of December 2002, these stores employed 1,383,000 people" (Walmart). Other businesses find it very difficult to compete with such a large business. Yet one does not think of these larger issues while shopping for the best deal on clothes, electronics, and groceries at their neighborhood store.

Wal-Mart first opened in 1962 and in 1969 the company incorporated as Wal-Mart Stores, Inc. By 1972, Wal-Mart was listed in the New York Stock Exchange. In 1988, the first Supercenter is opened. By 1990, Wal-Mart is the nation's number one retailer and the following year starts to branch out to other countries. Wal-Mart was the largest employer in the country by 1997 and the largest employer in the world by 1999 (Walmart). They seem to grow faster and faster over the years. In a relatively short time, Wal-Mart has become extremely powerful.

However, many communities are no longer allowing Wal-Mart in, and with good reason. Wal-Mart often drives out the community businesses since they can easily beat the prices. To keep the prices low, Wal-Mart barely pays employees a wage high enough to live in that city. People may get discouraged and quit, but according to one of Barbara Ehrenreich's coworkers,"Wal-Mart would rather just keep hiring new people than treating the ones it has decently" (Ehrenreich 184). No wonder fewer cities would like to see a Wal-Mart built in their area. As James Goldsborough of the San Diego Union Tribune said of those in Inglewood who rejected the building of a Wal-Mart Supercenter, "[p]eople are catching on to this company, to its tactics, business philosophy and impact on communities" (Goldsborough). People will still only go so far in wanting lower prices. However, many cities have let Wal-Mart in and may now be regretting that decision.

Wal-Mart is an extremely powerful business. They have the power to buy in bulk and save money that way. By taking advantage of their employees, they save even more money. Low prices attract people to Wal-Mart, although Wal-Mart can put smaller stores out of business and then raise their own prices as well later, if they so desire. It seems as though there will be no competing with a company so large that they could be a leading world economic power as a country. However, the consequences of the success of Wal-Mart are many.

The practices of Wal-Mart have many harmful effects. To provide cheap products, the associates of Wal-Mart are not well paid. Since the employees are not well paid, they often must work two jobs or risk being unable to make ends meet. Yet, Wal-Mart likes to think that they are a family held together by commitments to their guests. According to Ehrenreich, "you'd need a lot stronger word than dysfunctional to describe a family where a few people get to eat at the table while the rest - the 'associates' and all the dark-skinned seamstresses and factory workers worldwide who make the things we sell - lick up the drippings from the floor: psychotic would be closer to the mark" (Ehrenreich 185). Not only are the associates unable to make a living, but those people working in surrounding businesses may soon by out of a job. Providing these products at such a low price also makes it impossible for surrounding businesses to compete. Without competition, Wal-Mart could eventually become a monopoly, if it were not regulated by government anti-trust acts. The practices of Wal-Mart may even result in foreign frustration with American corporations. To provide their products so cheaply, Wal-Mart most often sends jobs outside of the United States to companies in foreign countries. However, these workers are poorly paid and often work in appalling conditions. There is a high cost involved so that Wal-Mart is able to be so powerful.

Entire communities are affected this corporate giant. Having a Wal-Mart in their area negatively impacts all the workers of Wal-Mart, the surrounding business owners and the citizens of that community. Some say that Wal-Mart provides so many jobs for the community that it is an excellent place. As the citizens of that community take advantage of doing their one stop shopping at Wal-Mart, they often do not realize that this is putting their community at risk. These citizens may even lose their job due to their place of work going out of business. Beyond that community, communities in other countries are affected by the type of factory jobs their workers are required to perform. Because of a single corporation, the lives of many are drastically changed.

It is important to recognize the consequences of such business practices. While Wal-Mart tries to keep up morale in the workplace with the Wal-Mart cheer, this work environment is far from ideal for anyone. Eventually, workers are made to feel as if they are only worth a low wage. These workers often cannot even afford to buy the products at Wal-Mart on their meager wages. Ehrenreich jokes about how Wal-Mart wants the employees to feel like a family: "we're a family here, we 'associates' and our 'servant leaders,' held together solely by our commitment to the 'guests'" (Ehrenreich 185). Yet the workers suffer greatly. It is important to remember that many workers overseas suffer even lower wages in the interest of keeping prices low. Overall, Wal-Mart is not a very ethical corporation.

Next time you are shopping in a Wal-Mart, think about those smiling associates who might be living out of their truck. Remember that those shoes you are buying were probably made in some poor country in a substandard factory. Take a look around at the local businesses, for they may not be there in a few months. Until either the prices raise or the company lowers its profit margin, there will be continued problems. In order to pay the factory workers and the employees more, the company must have more money to pay them with. However, this is where the general public contributes to the problem; most people do not want to pay anything more than they absolutely have to. Without the demand from the shopping public for change, change is unlikely to occur.

Works Cited

Ehrenreich, Barbara. Nickel and Dimed: On (Not) Getting By in America. New York: Henry Holt and Company, 2001.

"Encyclopedia: Walmart." NationMaster.com 4 April 2003. 20 May 2004 http://www.nationmaster.com/encyclopedia/Walmart.

Goldsborough, James. "Yet another challenge to Wal-Mart." The San Diego Union-Tribune 12 April 2004. 20 May 2004 .