Walmart: Hero or Villain?
With over $500 billion of revenue in 2018, Walmart has become the largest company in the world. It employs more than 2.3 million people, a quantity exceeding the size of the Chinese National Army. The next largest company in America, by revenue, is Exxon Mobil with less than half of what Walmart earns in revenue. If Walmart was a country, it would have the 23rd largest economy. Its importance to the United States of America is obviously undeniable, but how much impact does it actually have?
Walmart strongly affects the country’s employment opportunities. Out of the 2.3 million people hired by Walmart, 1.5 million live in the U.S. Meaning that, 1% of the working population of US works for this company. The large employee size implies an extensive cost on the company to pay their salary. Consequently, its hiring pattern has shifted from full-time to part-time workers.
From 2005 to 2018, the part-time workforce increased from 20% to more than 50%. According to the Organization United for Respect, 69% of the part-time employees would actually prefer to have a full-time job, suggesting that the workers are actually in need of a higher income. Evidently, 55% of these workers do not have enough food to meet their basic needs. The majority of Walmart employees are on food stamps and other governmental subsidies. Nevertheless, Walmart continues to hire more part-time workers to reduce its wage expenses. Hiring part-time workers means paying them less and granting them fewer benefits. As compensation, in January 2018, the company rose its minimum wage to $11 an hour, matching Target’s commitment, and surpassing the $7.25 federal minimum wage.
Even though Walmart creates job opportunities for Americans, its financial strategies utilized to generate more revenue can be ethically challenged. Moreover, Walmart impacts the US in another sector aside from the labor force- that is the nation’s trade deficit.
In 2015, Walmart started the Reshoring movement by committing to spend $250 billion for products made in the USA by the year 2023. On top of the people they hire, the investment multiplier effect is estimated to create 1 million jobs in the US. Its cost and operating expenses in 2015 exceed $458 billion governmental expenses combined from the four largest states (New York, California, Texas and Illinois). Despite the commitment to domestic spending, the enormous size of Walmart means that it is still spending heavily on exports. According to a study by the Alliance for American Manufacturing published in 2016, Walmart’s spending on imports dwarves domestic spending. Estimates say that Chinese suppliers make up to 70% of Walmart’s merchandise, and only 20 percent are American-made products. It is also estimated that 11.2% of all US imports from China are purchased by Walmart. It remains unsure how the US-China trade war will affect prices in Walmart, but strong evidence shows that Walmart will continue to focus on imports rather than domestic products. Thus, concluding that the “Buy America” advertising campaign is extremely misleading.
There are even more costs of Walmart to America that the statistics may suggest, for example, Walmart’s extensive network has also caused a lot of small businesses to shut down, and its monopoly power has forced a lot of suppliers to cut corners in order to save cost. The question of whether Walmart is beneficial to society remains a fierce debate.
Sources:
https://www.epi.org/publication/the-wal-mart-effect/
https://247wallst.com/retail/2018/09/21/how-much-will-tariffs-hurt-walmarts-profits/
