IS WALMART’S IMPACT ON COMMUNITIES GOOD OR BAD?
In the past decades, Walmart has expanded its retail stores in the United States despite resistance from local governing economic entities and the public. The main reason for resisting Walmart entering their market is that most believe that Walmart’s entry is a threat to the community’s cultural, historical, environmental, and economic values. But the most heard of complaints from most communities are that Walmart’s entries usually eliminate jobs, lower wages, and forces small businesses out of business. David Neumark et al. (pg 428, para 5 & 6) state that,
Wal-Mart entry may also result in lower prices that increase purchasing power, and if prices are lowered not just at Wal-Mart but elsewhere as well, the gains to consumers may be widespread. Furthermore, the gains may be larger for lower-income families (Hausman and Leibtag, 2005), although it is also possible that labor market consequences for these families are also more adverse. Another line of criticism of Wal-Mart is that through lowering wages it increases the burden on taxpayers by increasing eligibility for and receipt of government benefits. 49 However, a key implicit assumption is that in the absence of Wal-Mart, employees of the company would have higher-paying jobs, rather than, for example, no jobs. Thus, the validity of this criticism hinges on whether Wal-Mart’s entry into a labor market affects overall employment and wages. It is also worth pointing out that if Wal-Mart causes both earnings and price declines for low-income families, then taxpayer burden could increase even if the price declines more than offset the earnings declines for these families, because government programs are typically tied to earnings.
Walmart’s entry strategy has been to spread out while taking into consideration the distance customers would have to travel to shop. Even though Walmart brings with it the ease of access for consumers it all increases poverty...