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New research suggests that Walmart makes the communities it operates in poorer
- petermcneeley 2y agoOne can apply the exact same logic to free trade.
- dehugger 2y agoAn excellent point! Perhaps unregulated free trade isn't the ultimate means of production?
- vouaobrasil 2y agoWell, there are good arguments that free trade is not always a good thing, especially when there exists actors (e.g. corporations) who are the main beneficiary of the differential in economies to extract more profits. Free trade implies YOU getting a cheaper price sometimes, but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market. The limiting case is telling: an alien race comes and offers all of our goods for 1/10th of their Earth price, made possible by their insanely advanced technology. Is that a good thing?
- WillAdams 2y agoOr gives the product away --- a certain shoe company's gifting of footwear destroys the business of local cobblers.
- norir 2y agoYes and once they have destroyed the competition, then they start charging.
- vouaobrasil 2y agoYeah, predatory pricing and its logical extreme, giving the product away, is another common strategy of big business.
- WalterBright 2y agoThere are three kinds of prices: 1. below the competition - predatory pricing, dumping 2. same as the competition - collusion, price fixing, cartel 3. more than the competition - gouging, profiteering All three are illegal. There's no legal way to set a price.
- vouaobrasil 2y agoBelow the competition ins't predatory if you can make a profit off of it. Predatory specifically means that you price it at a serious loss and then jack up the price when the competition dies.
- WalterBright 2y agoCompanies have sales at a loss all the time. Would you rather they put the merchandise that doesn't move into the landfill? > then jack up the price when the competition dies. That never happens, for good reason. Think about all the money a big corporation would lose trying to sell below cost to drive out a mom and pop.
- BadHumans 2y agoI'm assuming this isn't a random hypothetical but I don't know what shoe company you are talking about.
- kevvok 2y agoI’ve heard this about TOMS
- RiverCrochet 2y agoI have to share this. So my cousin says we need to stop treating jobs as solutions to social problems. Here's more detail on her thoughts, which I think are kind of silly but are interesting nonetheless: "It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault. A job exists because a business needs it to perform a business function, and that's really the only reason it should exist. But for various non-business reasons, jobs are often favors to be given out and it makes the economy less efficient when you have jobs that don't really need to be done, or could be done better, but exist only as favors to people. Putting the puritan work ethic on a pedestal directly contributes to this and harms our economy as a result. UBI and some form of guaranteed housing (or guarantee against losing your current housing) would be much cheaper than all the fake jobs needed to deliver favors."
- vouaobrasil 2y ago> "It's hard when the overarching belief is that the unemployed is unemployed 100% because of their own free will. Bad business conditions mean no jobs, and that's often not a worker's fault. There's another point, which is even more sinister. The unemployed offer liquidity in the employment pool, which offer more flexibility for the growth of the machine. Local communities that are more self-sufficient would want to take care of their own. The emergent properties of the anonymous machine see unemployment as a variable to be optimized.
- quesera 2y agoWhat percentage of jobs does she believe are fake/unnecessary? I'd agree that most workers are not particularly efficient. But I have never seen efforts to make them more efficient succeed. So, the fact that there are eight employees doing the work of three at the grocery store does not count, because the missing efficiency is not available to the employer.
- RiverCrochet 2y agoShe tells me that she's seen the situation most often with older people who "have kids" or "have a family to take care of" - they either keep them in the role despite substandard performance, or covertly or overtly adjust the role expectations, and sometimes they get promoted into roles that seem to have been created for them (like "director of project management") or roles they aren't specifically qualified for (like a manager/team lead role). She really believes any business with more than 50 people has at least 1 or 2 employees of this type, and more so if the culture of the firm tends to skew towards government contracts or older people--but when pressed for data, she said that was just her gut feeling. > the fact that there are eight employees doing the work of three at the grocery store does not count If you know three people could do the work of eight then fire 5 people or modify a process. The business is choosing to be inefficient, or there may be other factors. It may not really be inefficient if the cost of the 8 people is lower than the cost of automation or whatever is needed to improve the process. People are expensive in the U.S. so I tend not to assume that but it is possible.
- WalterBright 2y ago> there are good arguments that free trade is not always a good thing Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market.
- vouaobrasil 2y ago> Arguments are one thing, results are another. Free markets always result in more prosperity, from top to bottom. Free trade is just one aspect of a free market. More prosperity but often at a cost to local environments and commons that are not priced into the market. And prosperity itself, measured purely in terms of economic gains, is not always a good thing either.
- WalterBright 2y ago> And prosperity itself, measured purely in terms of economic gains, is not always a good thing either. I don't know anyone who prefers to be less prosperous.
- vouaobrasil 2y agoProsperous can be measured in different ways. For example, right now, I am "less prosperous" by an economic measurement, but much more prosperous in terms of free time. And I'm much happier being "less prosperous" by the economic definition.
- PaulDavisThe1st 2y ago> Free trade is just one aspect of a free market. This is wildly misleading. Free trade in the 21st century generally refers to trade across national boundaries. Nations represent markets that are not subject to the same basic conditions as each other. Moreover, free trade (the international kind) almost always seems to involve a lack of restriction on the movement of goods, capital and profit, but rarely allows labor the same benefit. The 21st century version of "free trade" is about expanding the scope and scale of capital markets and the movement of goods and profits across national (and thus market-jurisdictional and -conditional) boundaries. It has almost nothing to with the "old" notion of free trade within a given market.
- scotty79 2y ago> but it also implies that SOME workers will no longer have jobs due to their inability to compete on a global market. It's so bizzare that making things more efficient and in effect saving humans from the burden of inefficient labor is seen as negative. Tying people's survival to their ability to sell their labor is such a terrible idea in this day and age.
- pessimizer 2y agoWe do. We just enjoy it when wages are driven down, because as investors and owners, we are the beneficiaries of that.
- hooverd 2y agoIt's a situation where we want everyone else's wages to be driven down. But not our own of course.
- WalterBright 2y agoThe way to increase one's pay is to increase one's productivity. If your productivity is producing $100 in value for $10 in pay, other businesses will line up to offer you more money. If your productivity is $9, expect to get laid off. The Law of Supply and Demand is in effect, as always.
- deepnotderp 2y agoOnce again nonsense, productivity has been increasing in America over the last 20 years but real wages have not. As always, don’t confuse textbook theory with real life!
- WalterBright 2y agoComparing with real wages is erroneous. One has to look at total employee compensation, instead. This includes: 1. worker pay 2. so-called employer's social security contribution 3. stock purchase plans 4. 401k company benefits 5. employer provided health care 6. retirement plan contributions 7. paid time off 8. other employee benefits This adds usually around 40-60% of wages. Another factor is the increasing share of the productivity is extracted through government taxation and deficit spending. Big government is expensive.
- piva00 2y agoNow look at corporate profitability and CEO pay vs total paid per employee over the last 30 years.
- dpflan 2y agoThis seems to always be the issue, the visceral experiencing of prices now at the cash register versus long term effects. “But if Walmart’s example reveals anything, it is that, in the long term, low prices can have costs of their own.” The scale of corporation can pull many levers in the pursuit of profit and can have longer vision because it has economic means to persist, the individual consumer is weak and short sighted in comparison, always.
- onlyrealcuzzo 2y agoDoesn't matter to many people. They would be glad for the area to be poorer if it's better for them. I.E. They don't get poorer, but other people do, and they're purchasing power increases.
- dpflan 2y agoYes, that is why the problem continues.
- tgv 2y agoPoverty often comes with crime and other problems. I don't think anyone likes that in their neighbourhood.
- campbel 2y agoSure, but as OP said, consumers are short sighted. Communal issues will always be secondary to immediate personal issues.
- PaulDavisThe1st 2y agoConsumers are short sighted. On this we can agree. But are they short sighted because they are taught to be short sighted, or is this some irrevocable aspect of the human condition? If you grow up in a society that emphases the virtues of individuality and deemphasises the impact of the social/group condition upon your own lived experience, it's not really surprising that you'd rate "immediate personal issues" above "communal" ones.
- xnx 2y agoI doubt the studies accounted for the time and cost savings of having a single location for purchases which would've reacquired multiple stories previously, or the benefits of having access to many items that would not have been available at all without a large store like Walmart.
- vouaobrasil 2y agoBut is having more items always a benefit? I'd argue not. Sometimes, people flourish with fewer choices. And in terms of going to multiple locations: that also can create opportunities, and give people some exercise too. Unlike the myopic view from computer science, saving time is not always a good thing. That's why I avoid many automations that could save me time. Some menial work can actually bring some insight into what I'm doing (like reading over a document manually instead of using Grammarly to correct it for instance...)
- bluGill 2y agoThat depends on the choice. When my recipe calls for coriander substituting cinnamon because that is what is available isn't close enough. I don't need 4 different brands of coriander, but I need one. There are many many other odd things that people want in life and there is no substitute. As for exercise: you get more exercise walking through walmart than driving from small store to small store and parking in front of each - which is what really happens with small stores in small towns. (tourists will walk the street, but locals don't - they park in front of the one store and then are gone - though more likely the locals drive the the big city mall for their shopping and again get their exercise, leaving those local stores for tourists who don't realize this isn't how locals live).
- vouaobrasil 2y agoFair enough but that only means that cities should be modified to be more walkable with more green space and cars should be discouraged as is done in some european cities.
- deleted 2y ago[deleted]
- Mathnerd314 2y ago> we find that poverty is still 3 percentage points higher in treated counties 10 years after the Walmart opening. So... 10 years after Walmart opens, poverty is 3% higher, and annual household earnings decline by $4,230. Is this a huge effect? This is something like a 10 point difference on the SAT (https://www.cs.jhu.edu/~misha/DIReadingSeminar/Papers/DixonRoman13.pdf https://www.cs.jhu.edu/~misha/DIReadingSeminar/Papers/DixonR...).
- pessimizer 2y ago> annual household earnings decline by $4,230. Is this a huge effect? Yes. Median household income is something around $70K, and rural households are not making anywhere near median household income. If we don't think it's a big effect, then we shouldn't mind sending them $4.5K checks every year to make up for it. It's an effect large enough to drive 3/100 people affected into poverty.
- WalterBright 2y agoWhat if that decline is more than offset by lower prices at Walmart?
- bluGill 2y agoIf you are one of those who remain employed - that is you work a better job than retail in the first place you are much better off. We need better training for those who currently are working retail, but the community is overall better off.
- WalterBright 2y agoYou can always drive to a further store, buy a bunch of stuff, drive back home, and set up a stand selling the stuff at higher prices. I'm sure the local community that hates Walmart will prefer to shop at your stand, supporting the local community.
- bluGill 2y ago
- GlenTheMachine 2y agoI grew up in the poorest county in my state. It was an hour to anywhere. There were no bookstores, no movie theaters, no fast food restaurants, nothing but cows for miles. There wasn't even a public library. It might be true that in an area with established retail, Walmart tends to put those businesses out of business. But in areas like my hometown, those businesses were already out of business. We used to have a little Sears store. It had a few things in stock, but mostly it was a place you could walk into, peruse the Sears catalog, and order with free shipping. It went out of business years before Walmart got to town. There was, at some point, a small department store as well. It had been boarded up in the 1970s. Literally the only businesses in town that survived through the 1980s were the feed store, the gas station, the pharmacy, and an independent grocery store. The grocery store went out of business when Food Lion came to town, and nobody cried because Food Lion had a much wider selection of food products. I think Walmart is a very mixed bag. But we aren't poorer because of Walmart.
- MrSkelter 2y agoYour anecdote isn’t really an argument. The fact that “people didn’t cry” when a business arrived is totally meaningless when it comes to assessing the impact of a business and its model on a community. Walmart pay subsistence wages and below. They survive via exploiting governmental support for low income individuals while funneling profit to their billionaire owners. When they become a major part of the local economy the locals lose out.
- jjeaff 2y agoWe had 2 grocery stores and I think Walmart put one of them out of business. However, the selection was much larger and it was a boost to local businesses because fewer people needed to travel to the next town over for supplies after Walmart came to town. It also employed significantly more people. I'm no fan of Walmart and their cut throat practices, but it hasn't been all bad for everyone.
- JKCalhoun 2y agoHa ha, so Walmart made your neighboring communities poorer.
- dawnerd 2y agoI don’t see how this makes sense. Walmart is consistently the cheapest grocery store around (save for Aldi but they’re not that reliable). The alternatives are mostly Kroger or Albertsons owned and their prices are just ridiculous these days. The smaller grocery chains end up having to charge a premium to stay open. I hate Walmart but when the products are the same I’m going with whoever has the lowest price. If they were around people would be spending more, period. If anything I’d blame the dollar stores for creating food deserts in already poor areas.
- burkaman 2y agoIt potentially makes sense because Walmart employees are also part of the community, and Walmart doesn't pay very much. It also won't employ as many people as all the stores it displaces did. Additionally, Walmart has extremely well-established multinational supply chains, and probably won't need to source much of its stock from the local community. If they do need to buy anything locally, they can pay absolutely rock-bottom prices once they've pushed out competitors and they are the only buyer. If you shop at Walmart but otherwise have no other exposure to the retail sector, then as an individual you are probably financially better off. But looking at a community as a whole, the negative effects on retail employees and local suppliers apparently outweigh these individual gains.
- dawnerd 2y agoWalmarts pays the same min wage as every other grocery store so that’s not it. And they employ a heck of a lot more. Vons maybe has three people at any time. WM also carries local produce and products. I’m sure there’s some cherry picked examples out there but the vast majority of cities are probably benefiting from a large anchor store.
- peutetre 2y agoMany Walmart employees are not paid a livable wage. Walmart is a major beneficiary of corporate welfare: https://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/ https://www.forbes.com/sites/clareoconnor/2014/04/15/report-... https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-top-employers-of-medicaid-and-food-stamp-beneficiaries.html https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-... https://laborcenter.berkeley.edu/a-downward-push-the-impact-of-wal-mart-stores-on-retail-wages-and-benefits/ https://laborcenter.berkeley.edu/a-downward-push-the-impact-... American tax payers are paying billions to make up the difference and subsidize Walmart's substandard wages. Walmart privatizes its profits and socializes its costs.
- ab_goat 2y agoFrom the comments here, I don’t think people understand how much small retail supports an entire local economy. With big retail, you get the smallest possible wages and all the profit sucked out to somewhere else.
- dlmotol 2y agoSo 10 small businesses what does that support? 10-20 families?
- ab_goat 2y agoWay more. First, a small business is not just a "family". Their employees are other members in the community. And there's the cascading effect because those folks are using their pay to go to local restaurants, the bowling alley, the hairdressers. When business like WM push prices down and make it so other businesses aren't able to compete, all you get locally is the ~minimum wage salary and the tax revenue. This might be "more efficient", but it comes at a cost to community.
- scotty79 2y agoYou could tell it about any efficient business. If there's no Wallmart in town and all that profit goes to small store owners then everytime they shop outside of town or go on a vacation they "suck" the profit out of the town. Each time a customer needs to travel to big city or order remotely because town shops don't carry what they need they suck profit out of town. If Wallmart can come to town and employ enough people it might help keep profit in town rather than suck it out.
- ab_goat 2y agoI think this is blissfully ignorant. Walmart's model is built on creating prices and selection that are so attractive that it is very difficult to compete. Part of the way they do that is by extracting profits out and leaving only low paid employees locally.
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- prng2021 2y agoMost people will read the conclusions from this research and believe we’d all be better off without Walmart. The question really is whether you think we’d be better off getting rid of all big corporations and reverting to a much much smaller economy with only mom and pop shops. It’d be a world where businesses have no economies of scale. As a result, would you be ok with a country of significantly less consumption of everything and significantly fewer conveniences (ie free overnight shipping)? I mean electronics, food, clothing, and everything else you buy today sold by Amazon, Target, Walmart, etc. I don’t have a very strong stance either way on this, but that’s the reality you have to be ok with if you believe big corporations are bad.
- WalterBright 2y agoOne could look at how colonial America lived. I once toured Washington's home Mount Vernon. He was probably the richest man in America at the time. I wouldn't prefer his lifestyle, at all.
- krapp 2y agoOne could, but given that such small-scale economies existed within in the modern post-industrial era, it would be disingenuous to do so.
- WalterBright 2y agoBig business drives the prosperity of the economy. Trying to run an economy with mom and pop businesses means poverty.
- krapp 2y agoNo it doesn't, because "poverty" is relative to the scale of an economy. See me, living in a small Texas town and paying $500/mo for an apartment someone in Manhattan would kill to rent for ten times as much. Plenty of people have lived in towns and villages which weren't entirely dominated by big businesses and they got along just fine.
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- Hilift 2y agoBefore the US had a rust belt, a meth belt, and opioid belt, you could go to Western Auto and put a bicycle on layaway. I think the malls out-competed a lot of the older nostalgic stores. Walmart did siphon away enough business from malls to come out on top. FYI, Sears acquired Western Auto and most of it was put into Advance Auto Parts. The headquarters in Kansas City was converted into 101 condos. https://www.apartments.com/western-auto-bldg-multi-family-kansas-city-mo/w65wtkl/ https://www.apartments.com/western-auto-bldg-multi-family-ka...
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