Sam Walton opened the first Walmart store in Rogers, Arkansas, 50 years ago this month. Sprawled along a major thoroughfare outside the city's downtown, that inaugural store embodied many of the hallmarks that have since come to define the Walmart way of doing business. Walton scoured the country for the cheapest merchandise and deftly exploited a loophole in federal law to pay his mostly female workforce less than minimum wage.
That relentless focus on squeezing workers and suppliers for every advantage has paid off since July 1962. Walmart is now the second-largest corporation on the planet. It took in almost half-a-trillion dollars last year at more than 10,000 stores worldwide.
Walmart now captures one of every four dollars Americans spend on groceries. Its stores are so plentiful that it's easy to imagine that the retailer has long since reached the upper limit of its growth potential. It hasn't. Walmart has opened over 1,100 new supercenters since 2005 and expanded its U.S. sales by 35 percent. It aims to keep on growing that fast. With an eye to infiltrating urban areas, Walmart recently introduced smaller "neighborhood markets" and "express" stores.
While the big-box business model Sam Walton pioneered half a century ago has been great for Walmart, it hasn't been so great for the U.S. economy.
Walmart's explosive growth has gutted two key pillars of the American middle class: small businesses and well-paying manufacturing jobs.
Between 2001 and 2007, some 40,000 U.S. factories closed, eliminating millions of jobs. While Walmart's ceaseless search for lower costs wasn't the only factor that drove production overseas, it was a major one. During these six years, Walmart's imports from China tripled in value from $9 billion to $27 billion.
Small, family-owned retail businesses likewise closed in droves as Walmart grew. Between 1992 and 2007, the number of independent retailers fell by over 60,000, according to the U.S. Census.
Their demise triggered a cascade of losses elsewhere. As communities lost their local retailers, there was less demand for services like accounting and graphic design, less advertising revenue for local media outlets, and fewer accounts for local banks. As Walmart moved into communities, the volume of money circulating from business to business declined. More dollars flowed into Walmart's tills and out of the local economy.
In exchange for the many middle-income jobs Walmart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Walmart employees have no choice but to rely on food stamps and other public assistance.
Walmart's history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Walmart, we've more than paid for it in diminished opportunities and declining income.
And the worse things get, the more alluring Walmart's siren call of low prices becomes. While the Ford Motor Co. once profited by creating a workforce that could afford to buy its cars, today Walmart profits by ensuring that Americans cannot afford to shop anywhere else. The average family of four now spends over $4,000 a year at Walmart.
Such market concentration is unprecedented in U.S. history, as is the concentration of wealth it has engendered. Sam Walton's heirs own about half of Walmart's stock and have a net worth equal to the combined assets of the bottom one-third of Americans -- about 100 million people. This year alone, the Waltons will pocket $2.7 billion in dividends from their Walmart holdings.
They are among the few Americans who have reason to celebrate Walmart's 50th birthday. As for the rest of us, the milestone offers a good moment to reflect on the company's business model and where it might lead us if we allow Walmart's growth to continue full-steam for another 50 years.
--
This op-ed is cross-posted from Other Words, which distributes commentary articles to newspapers.
Follow Stacy Mitchell on Twitter: www.twitter.com/stacyfmitchell
If you really care about America, shop as much as you can elsewhere. A 100% ban on Walmart is unrealistic for many, but every bit helps.
A few points:
(a) You are incorrectly identifying Wal-Mart as the driver for a decline on US manufacturers and the jobs that go with them. Firstly, we manufacture more now than we ever have. More than twice as much in inflation-adjusted output than the 1970's, and our share of global manufacturing output is about what it was in 1980, about 20%-21%. More importantly, our manufacturing decline as a percentage of national GDP is similar to what it is Germany, Japan, and other developed manufacturing-intensive countries...who do not have Wal-Marts and plenty of small mom-and-pops. Secondly, so what? Manufacturing is a dirty polluting industry. Why concern yourself with it if the real money is in the design, marketing, distribution, etc.
(b) You mistakenly assume the middle man in the supply-demand relationship is the problem. Wal-Mart is not the reason manufacturers and mom-and-pops went out of business, CONSUMERS are. Wal-Mart is simply the medium that delivers what the consumer demands. So to restate... The consumers drove those businesses out of business by not wanting to buy their crappy products when given a choice. Let me guess, you are against consumers having choice?
(c) Ford, your hero, said it best...he does not pay his workers, the consumers do, he just handles the money. In the case of many American companies, the consumer no longer wanted to pay their extortive wages and live a lower standard of living so the bloated unionized American manufacturers could live a higher one.
Kai
Also - before I get too long winded, the Walton family is incredibly wealthy, but they have definitely given back to the community. The Crystal Bridges Museum is a testament to the generosity of the family and their willingness to share their wealth with the community. There are countless other examples including many scholarship funds and building projects in universities across the country.
We all have the same opportunity to make something great - Walmart is gigantic but not immune to online commerce and other retail innovations that are eating at their market share. If you're so convinced that they're doing it wrong, create something better - I double dog dare you. That's the challenge and the beauty of capitalism.
To see the true impact of Walmart on the economy, look near our stores - you’ll typically see new businesses cropping up and existing businesses thriving because of the customer flow we create.
With a tough economy, our customers need to stretch their paychecks to meet their family’s needs. They appreciate the low prices and one-stop shopping convenience.
More than half of Walmart’s domestic sales are groceries and consumable items predominantly sourced from U.S. suppliers. Recently, we’ve nearly doubled our sourcing of locally grown produce. Last year, Walmart spent more than $200 billion with 57,000 U.S. suppliers, supporting 3.5 million jobs, according to Dun & Bradstreet.
More than 1.3 million people choose to work at Walmart in the U.S. The average, full-time hourly wage is more than $5 higher than the federal minimum. Most of our jobs are full time. We offer affordable, accessible health insurance - as low as $15/pay period - and a generous 401(k) plan with a 6% company match, among other benefits. Roughly three-fourths of our store management started out in hourly positions with Walmart.
It’s easy to be a critic – *anyone* can be one. Combining entrepreneurial spirit, hard work, vision and a commitment to serving customers with things they want and need at prices they can afford is unique and represents true leadership. These are what Sam Walton brought forth 50 years ago and are the principles that still guide us today.
People need to learn "enough", and leave some for the rest of the people.
Being a billionaire ought to be a capital crime -- if your pursuit of happiness is not satisfied with $999,999,999.99, then one dollar more isn't going to do the trick either. People need to learn to retire and enjoy their wealth, and let others have a turn playing the game of chasing dollars.
The poor disgrace of what Walmart has done to its workers and continues to do is truly unfair for all they have taken away from America.
I will not shop at Walmart but go anywhere else, when we find Made in USA we need to purchase those products always over any foreign one regardless of price.