Wal-Mart’s Negative Effects in the Economy
Walmart started as a single store in the year 1962. It has been founded by Sam Walton and had started in Arkansas and Kansas. (www. walmartstores. com, 2008) The company has been known as a company that provides the lowest prices to its consumers. Wal-Mart Stores Inc. can be considered as the world’s largest corporation. In the year 2003, it has posted $245 Billion in sales in its most recent fiscal year. The Wal-Mart stores is the largest seller of toys, furniture, jewellery and other consumer products available in the market.
There had been several economists that states that Wal Mart brings negative effects to the economy of the country. It has been said that in a place where Wal Mart is built, small businesses die. Wal Mart has also been reported to drive down wages of the employees and people are laid off and the reason for this is the death of some businesses. I. Forces Smaller business out In Los Angeles, there have been several businesses that died because they have lost their customers. The owners point Wal Mart as the reason for the dropping numbers of their customers.
According to Goldman and Cleeveland (Los Angeles Times, 2003), the California-based Raley’s grocery had closed 18 stores in the area and had laid off 1,400 workers. Raley’s grocery had attracted thousands of shoppers with the services of buying flowers, mailing packages and having salon and power. When Wal-Mart had decided to tap the groceries market, it had led to 25 regional supermarket chains to close or file bankruptcy. This had caused 12,000 union jobs across the nation. UPS Franchise store is another business that had gone under because of the introduction of the grocery market in Wal-Mart.
Diana Murphy, the shop owner of Windmill flowers had blamed the closure of the shop to Wal-Mart. According to her “There are a couple of things in play,” Murphy said. “The recession, terrorism. And Wal-Mart. It’s had a direct effect on me, because they sell flowers, too…. They even deliver. ” (Los Angeles Times, 2003) This had driven several businesses out of the picture. People consider the prices that they buy and lowest prices in town can be seen in Wal-Mart together with the delivery side on the Flowers had been adapted by Wal-Mart in order to crush the competition.
Driving Down Wages and using Illegal Immigrants as workers There have been information regarding the unjust wage practice that Wal Mart is giving to its employees. According to Mrs. Gray from Raley’s, her wage was $13. 89 while at Wal-Mart its $9. (Los Angeles Times, 2003). An investigation is being made whether Wal Mart uses janitors provided by subcontractors were noted to be illegal immigrants which had been cheated from their overtime pay. Mr. Burt Flinger III, a retial consultant from Strategic Resource Group in New York implied that the giant stores of Wal-Mart takes away 200 jobs.
David Moberg had illustrated the very low compensation of the associates of Wal-Mart. According to the study, (Moberg, 2004) Wal-Mart wages are low which averages from $9 for full time worker and $8 for the 45% who works less than 45 weeks a year. It is further stated that Wal-Mart holds the wages down in the retail industry since it is considered as the biggest corporation. A study made by Orange Country Business Council Forecast had noted that a single Wal-Mart can cause Southern Carolina $2. 8 Billion in lost wages, annual benefits. The grocers nearby would be cutting jobs and wages to the unionized workers.
Giving the workers the lowest possible wage is a bit of an insult to a worker. Wal-Mart tells over and over again to treat their associates kindly. Looking back, the associates that Wal-Mart is talking about is its employees. As Sam Walton believes, the employees should not be treated as different. In the website of the company (walmartstores. com, 2008) it had been told there that Sam Walton had started the profit sharing among the company’s associates because he believes that the success of the company depends on the employees. But sadly, this is not being done anymore.