It seems a little passé to ask these days whether Walmart is good or bad for a community.
That was a hot debate 20 and 30 years ago, before the internet became available to the public and spawned the growth of shopping online. Now mom-and-pop retailers seem to worry more about competing with Amazon, eBay and Etsy than they do with the world’s largest brick-and-mortar merchant.
Still, I found interesting a recent article in The Atlantic magazine that examined new research on the so-called “Walmart effect.”
It should not surprise many in this community that the effect is not so positive.
I remember the moaning decades ago of Greenwood merchants, many of them since shuttered, that they could not compete with Walmart. The discount giant, with its reputation for squeezing suppliers because of its high purchasing volumes, was able to sell products for less than these merchants could buy them at wholesale.
Nor does the company, for all of its financial success, seem to be much loved. These examples are anecdotal, but they’re telling. I can’t recall Greenwood’s Walmart ever winning a People’s Choice Award in any category in all the years this newspaper has asked local residents to vote for their favorite places to shop. And just this week, I heard about a local shopper saying how much she was going to miss Big Lots when that financially struggling chain closes because she might have to start going to Walmart instead.
The counter-argument has always been that, even if Walmart drove out smaller competitors, including family-owned businesses that had been the bedrock of a community, the citizens still benefited overall financially from the lower prices they paid for groceries, clothes, electronics and all the other stuff they could get there. City coffers also benefited from the higher sales tax receipts that usually accompanied the opening of a Walmart.
The Atlantic article, however, reported that two new research studies challenge the view that, on balance, families and communities are better off if they have a Walmart close by. Rather, the research found that, although the consumer savings are real, they are more than offset by how much Walmart depresses wages and employment.
“On net, they conclude, Walmart makes the places it operates in poorer than they would be if it had never shown up at all,” the Atlantic article summarizes.
The first research paper looked at the outcomes for more than 18,000 individuals across the U.S. going back to 1968, and it compared how their personal incomes fared in towns that got a Walmart Supercenter compared to those that did not.
The conclusion: “In the 10 years after a Walmart Supercenter opened in a given community, the average household in that community experienced a 6 percent decline in yearly income — equivalent to about $5,000 a year in 2024 dollars — compared with households that didn’t have a Walmart open near them.”
Despite this hit to their wallets, these folks theoretically could be better off if they saved more than $5,000 a year on their spending by shopping at Walmart. Walmart’s own commissioned research puts the average savings at $3,100 a year — a figure that may be exaggerated. But even if it’s accurate, the researchers calculated that poverty still increases by about 8% in places where a Walmart opens compared to places where it doesn’t.
The other research paper presented a similar comparison between the economic pros and cons of Walmart, but with a twist. To eliminate the possibility that Walmart picks communities to locate that were already predisposed to increasing poverty, this study only looked at counties where Walmart did open and those where it tried to open but failed because of local resistance. Presumably, those counties would have similar starting-point characteristics since the retailer wanted to be in all of them.
This study’s findings were about the same as the other one. Workers in counties where a Walmart opened were worse off overall, and it wasn’t just workers in the retail sector but in most every sector, from manufacturing to agriculture. Five years after a Walmart enters a county, its employment falls by about 3%, the research found, with most of these losses concentrated in goods-producing enterprises, which lost some of their biggest customers when mom-and-pop enterprises vanished.
Greenwood might have done better had it been one of the Walmart resisters, although there’s always the chance that the retailer would have set up shop just outside the city limits and deprived Greenwood of its cut of the sales tax.
The point to remember, if the promise of low prices is what lures you to Walmart or stores like it, is that low prices in the long term have a cost of their own. And what’s true about Walmart is probably just as true about Amazon.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
