Jobs are Sparse in the Wal-Mart Economy

Economists worry over the decline of the American consumer, but what about the decline of the American worker?

It's a story told in towns across America: middle-class jobs are vanishing. Where once there were steel mills and auto plants, abandoned factories and Wal-Mart stores now stand. Companies that once employed hundreds of thousands of U.S. workers are now manufacturing overseas, abandoning not just individual workers, but entire communities.

Wal-Mart, and the companies that copy its business model, are largely responsible for the loss of these jobs. Wal-Mart's demands for ever-lower costs have forced dozens of American companies to stop producing in the U.S. and move operations overseas, where labor is cheaper and safety regulations are lax. The company often justifies these business practices as a necessary evil, claiming to save consumers money on the other end. On the heels of one of the worst retail holiday seasons in recent memory because Americans are losing their jobs, losing their homes, trying to pay for health care and worrying about a recession, it is evident that Wal-Mart's logic is deeply flawed. At some point we have to face facts: more and more Americans are skimming the edge of poverty.

In the wake of massive factory closings across the country and the destruction of Main Street businesses, Wal-Mart is often one of the only employment options available. As a story from the Associated Press this week explains, Wal-Mart's jobs are often a last resort, and when people do apply to work at Wal-Mart, it's not because the company's a great employer; sadly, it is often the only employer in towns where the "Wal-Mart effect" has already forced manufacturing jobs to leave the area and small businesses to close.

Wal-Mart's business model relies on an economic model which eradicates American jobs and moves money overseas. The company's unsustainable economic practices embody the current race-to-the-bottom economy and American workers and communities are suffering as a result.

The real irony is that Wal-Mart stands to benefit from a poor economy here in the U.S. Some analysts are betting that as people face harder times, they'll be forced to trade down and shop at Wal-Mart. So, as Wal-Mart's negative economic influence comes full circle, instead of feeling its customers' pain, Wal-Mart may actually sell more. It has the makings of a dark comedy, only it isn't at all funny if you're an average American worker trying to get by right now.

Wal-Mart claims to be a friend of low-income shoppers, but the high costs of its low prices can't justify the damage it does to American workers and the economy. The U.S. needs sustainable jobs that pay fair wages and benefit workers and communities. Of course, Wal-Mart can't single handedly reverse the damage and jumpstart the economy, but as the nation's largest private employer with 1.3 million employees and $350 billion in revenue, it could offer some relief to its own employees with a fair, living wage and affordable, quality health care.

Comments

[taikan]

At the moment, it appears that the key thing keeping our economy going is the fact that every other major economy in the world depends on the continuing success of our economy. Thus, China continues to hold dollars because its economy depends to a very large degree on its ability to manufacture and sell products to America. The same holds true for Japan, Korea, Taiwan and the smaller manufacturing countries in Southeast Asia. The oil producing countries in the Middle East also are in a similar position. If our economy fails, their economies will fail, too.
However, as Europe, their own domestic markets and the markets in other countries become more important, the manufacturing and oil producing countries will lose the incentive to continue financing our debt-based economy. That is when we really will be in trouble.

[Iownpeterbilt]

We have a ringside seat to watch the demise of the middle (working) class in this country.
An economy which does nothing but deal in borrowed money cannot be very sucessful.
The consumer has been spending money he (or she) doesn't have because the value of the house (which he doesn't own) kept going up, until the bubble burst.
We have became a nation of beggars, if our suppliers quit buying our assets, this country is dead in the water!!!

[Sciguy]

People simply do not understand how unfettered capitalism works. I'm certainly no business guru, but I do understand that it's much more profitable - and easier - to send jobs overseas to keep prices low (by paying horribly low wages) than it is to somehow make overseas operations competitive with US factories by insisting that employees overseas also earn a decent wage.

We have a new status quo now: be concerned ONLY with profits, not with how the profits got there or who slipped into poverty because of the god Profit.

MajorKong made a good point - if you're poor enough, the only place you can shop for necessities is the place that doesn't pay you enough to shop elsewhere. Assuming that you're paid enough to buy necessities.

Most people are astonished to find that when you work somewhere and buy their product, too, you're sort of paying yourself. If you work at GM, and buy their cars, then part of their profits come back to you as a paycheck. If you work somewhere that pays very little and/or makes most things overseas, then you don't contribute much to their profits and eventually can't afford their product. The end result: an economy in which only the COEs can afford to buy their own stuff.

[GreedyOldPsychopaths]

David,

While I despise Wal-Mart and the Wal-Mart economy, Wal-Mart is more like a poster child of the economy than the agent of causation.

If you're looking for the real culprits, here is an abbreviated list: University of Chicago Department of Economics; the Freidmans (both Milton AND Thomas); Multinational Corporations and the Investor Class; Wall and 'K' Street; unscrupulous financial institutions and their derivatives; Supply-Side economics; the US government with FTA/MFN deals and tax breaks for the wealthy; presidents Reagan, Bush I, Clinton I, and Bush II; Bubbleboy (Greenspasm); the MSM, and ignorant voters and consumers. If you're looking for the single ultimate causation, allow me to suggest corporate and personal GREED.

Ultimately, this economic house of cards will collapse catastrophically when sufficient foreign holders of US securities abandon support of the depreciating dollar in an effort to stem billions in losses. Already, China has diversified her currency basket and placed greater emphasis on expanding her internal economy.

Once the worldwide dollar dump finally occurs, in the words of economist PC Roberts, "Wal-Mart will look like Neiman Marcus overnight.­"

[BeeOplentee]

How utterly silly (and sinister) you are to equate the loss of manufacturing jobs to WalMart, a discount department store!

We've lost our manufacturing sector due to the realities of basic Economics 101: You can't compete when you're paying $18.00/hr for labor to make steel against the other guy who is paying $1.00/hr to make the same.

WalMart is at least giving jobs to the economically displaced workers, even if they are "service economy" jobs. Two different worlds.

And the "homey" little mom & pop stores WalMart is displacing? Why, these local businesses have (had) NO benefits, NO future (only family heirs would gain), and their pay structure was the minimum wage!

You, my friend, are so transparent!

[Guitarsandmore]

You just have to take a stand. Walk through Macys, Target, Penneys, and then go walk through Walmart. You can't tell me you would rather shop in Walmart than the others stores. Walmart looks like a train wreck before you even start shopping.

Quit your job so you don't have to pay taxes. Shop anywhere but Walmart and run up your credit cards until all of the Republicans are out of office. (Then pay them off and go back to work) Don't feed this evil corrupt economy.

[texanna]

I refuse to shop at Wal-Mart or belong to it's sister company, Sam's Clubs. I've been aware of their predatory practices and their effects on our economy and middle class for some time. Unfortunately, too many Americans have no clue and so there they are pushing that big 'ol cart around WM taking advantage of those "Always Lower Prices" without thinking for one minute how those prices keep getting lower.

[MajorKong]

Wal-Mart is sort of like Henry Ford in reverse. Henry Ford famously said: "If I pay a man enough to buy my car, he'll buy my car."

Wal-Mart is more like: "If I pay someone so little they can only afford to shop at Wal-Mart, they'll shop at Wal-Mart."

[seawolf77]

When the obit is written for USA, Wal Mart will figure greatly in it. Remember when you were young and there were all varieties of retailers, all shapes and sizes selling all kinds of things. Now it's Wal Mart, Home Depot, Best Buy and JC Penny. Remember when you didn't even know what a traffic jam was! There were not enough cars. And pizza tasted like pizza, not cardboard. It's almost as if Pizza Hut Execs got together in a room and said how can we make pizza taste as close to cardboard as possible. This country is sterile, bland,crowded, and tasteless.

[hopeless277]

Something tells me that there's a Ferengi on the board of Wal-Mart. And he always gets the last word.