: Microeconomics

“Is Wal-Mart Good for America”? You may have heard or even watched movies about such a topic. What are the economic and social advantages and disadvantages you see associated with a Wal-Mart to your local area, and to you as a consumer? Make sure that you consider the social and economic effects on small businesses and workers’ wages in your analysis.

* Write a Research Paper with a minimum Body length of 2-3 pages using APA style.
* Double-space your Research Paper.
* Include a Title Page, an Abstract with Key Words, an Introduction, a Body, a Conclusion, and References.

ANSWER

Is Walmart Good for America?

Abstract

            Walmart has both positive and negative social and economic effects on the local community. The main social and economic advantages include employment, low prices, affordability and accessibility of products which boost the standards of living for consumers. However, the negative social and economic benefits include low wages, reduced retail employment and closure of small business which negatively impact the economy.

Keywords: Walmart, economic effects, social effects, local retail businesses and wages.

Introduction

Over the last few years, Walmart has been growing rapidly, opening stores in different states frequently. Considerably, Walmart is known for being a large economic chain that provides various products for customers at affordable prices. The low prices have made it tough for retailers to rival Walmart (Brinkmann, 2021). Walmart has been very successful over the years, but many concerns exist about its business practices. The social and economic benefits and limitations of Walmart’s business structure have been a topic of many recent debates. This paper will discuss Walmart’s social and economic effects on communities and whether those effects are positive or negative.

The most common ways that Walmart boosts local economies are by increasing job opportunities and providing lower prices than other competitors. Walmart offers individuals from the local community employment opportunities (Crowley and Stainback, 2019). However, Walmart also leads to limited benefits and low wages that are likely to lead to a higher marginal propensity to the consumer. The low income negatively affects the economic growth of the local area, which influences the standards of living. Therefore, the low wages can lead to a multiplier effect with more spending leading to knock-on effects in the economy.

The Walmart economy has been beneficial for the low-income families that cannot afford to purchase costly products. Walmart sells its products at low and affordable prices compared to other retailers. Therefore, Walmart can curb inflation and boost the economy through low and affordable prices. The Walmart economy largely boosts the economy through the low prices that benefit the low-income families and raise their living standards. There is an increased standard of living because they can afford to purchase products that they couldn’t ordinarily purchase from the local stores.

On the other hand, the Walmart Effect, an economic impact felt by the local stores, impacts businesses with the local areas. Ideally, when a large and cheap company such as Walmart opens a store in a local area, it negatively affects surrounding businesses because it causes other stores to close down. When Walmart enters a town, it causes problems by offering low prices and paying workers lower than average wages. These conditions are hard for smaller businesses to compete with because they cannot offer the same price or wages, so many small stores close down. According to Neumark, Zhang, and Ciccarella (2008), Walmart store opening lowers the county-level retail employment by 150 workers, reducing the county-level earnings and low retail employment growth. Therefore, Walmart’s economic disaster on the local retail business leads to negative economic effects.

In addition, Walmart may not be good for the local economy overall. This is because Walmart tends to import a large share of its products from foreign countries. This means that most of the money spent at Walmart stores is not being recycled within the local economy. In addition, when one dollar leaves the community to pay for a product from Walmart, there is less money left over to purchase any other good or service in the community.

Conclusion

Walmart impacts communities in the United States, and the effects are much greater than what people think. Giving Walmart a large market share has allowed them to dictate market practices and prices, thus affecting the local retailers. Despite the increasing job opportunities and low prices, the low wages and uncompetitive practices have negatively influenced the economy and living standards. Small businesses have been forced to operate at low margins, the economic activity is low due to reduced competition, and the low wage effect leads to low standards of living, which generally affect the economy.

References

Brinkmann, R. (2021). Green Your Economy. In Practical Sustainability (pp. 227-242). Palgrave Macmillan, Cham.

Crowley, M., & Stainback, K. (2019). Retail sector concentration, local economic structure, and community well-being. Annual Review of Sociology, 45, 321-343.

Neumark, D., Zhang, J., & Ciccarella, S. (2008). The effects of Wal-Mart on local labor markets. Journal of Urban Economics, 63(2), 405-430.