WalMart is one of the world’s most profitable companies. It sells household goods at competitively low prices, while at the same time doling out 20% of its massive earnings to stockholders. It is able to do this by 1) offering bottom of the barrel wages for workers 2) outsourcing manufacturing to China, for basement level prices and 3) lobbying to manipulate government programs and the tax code to enable its business model.
As discussions of walkouts and strikes by WalMart workers rages, WalMart’s stock is doing better than ever.
WalMart’s low wages are, of course, part of it’s business model. Customers go to WalMart to buy goods at low prices. WalMart employees are poorly paid and recieve 10% off of purchases at WalMart, meaning that their wages are simply fed back into the company, creating an awful vicious cycle that cripples local economies.
With an average of 50 Wal-Mart stores per state, the average wages for retail workers were 10 percent lower, and their job-based health coverage rate was 5 percentage points less than they would have been without Wal-Mart’s presence.
Wages in 2012 are even lower. If we repeated the study, we might find that the situation now is even worse.
One oft repeated right wing mantra is that WalMart workers choose to work there. What happens to them is their own fault. As the entry of WalMart devastates the local business community in rural areas, there really aren’t many jobs to “choose” from anymore. I’ve been through plenty of rural towns where the only employer is WalMart.
The opening of a WalMart has also been shown to increase poverty. Increases in poverty are, in the end, merely shifts of capital, which could go to education or small business ventures, from the group of the bottom to the top.
WalMart bleeds communities dry through schemes that minimize its property tax burden:
This first-ever investigation of Wal-Mart’s local property tax records finds that the retail giant systematically seeks to minimize its payment of taxes that support public schools and other vital local government services. Online appendices with lists of stores and distribution centers examined.
The moral of the story is that local businesses can’t compete, potential entrepreneurs lack capital to start businesses and localities are bled dry of resources to support community investment.
After reading this post, I found that I didn’t develop the idea of WalMart as blood sucking parasite very well, but it’s there anyway.
- A visit to the local witchdoctor: treating snakebites in Kwale, Kenya
- 10 things about the Kenyan Coast
- Waning interest in the development industry in Kenya?
- Snakebite follow up in Mbita, Western Kenya
- An incredibly boring and rambling post about yesterday’s journey to Mbita, Kenya that no one should read.