DID WAL-MART DESTROY AMERICA?

28 comments

Posted on 8th July 2012 by Administrator in Economy |Politics |Social Issues

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This is an interesting question. The author of this article blames Sam Walton for destroying the middle class in the U.S. I think her ire is misdirected. My knowledge of Wal-Mart began in the early 1990s when I was responsible for financial and economic reporting at IKEA. The management of IKEA in Europe was fascinated by Wal-Mart and their success in the U.S. At this time they were still relatively small compared to today. Their sales were still below $20 billion. Today their sales are above $450 billion. I was asked to write a report on Wal-Mart for the Swedes back at headquarters. It was well received. This was my first dabbling in writing about companies and economics. 

Wal-Mart changed when Sam Walton stepped down as CEO and subsequently died in 1992. The main advertising campaign of Wal-Mart in the early 1990s was Buy American. All of their goods were sourced in America. They touted this fact to the point of obnoxiousness. I know that for a fact. The CEO of IKEA North America in 1993 was a pompous prick named Goran Carstedt. He came from Volvo and thought highly of himself. The rest of us, not so much. He wanted to strike up a relationship with David Glass, the CEO of Wal-Mart. He sent a letter to Glass, along with two Swedish candle stick holders as a goodwill gesture. To my delight, the candlestick holders were sent back to Carstedt with a letter saying Glass didn’t care for cheap foreign made crap. We laughed our asses off behind Carstedt’s back.

But the irony is delicious. Once Wal-Mart came under the control of MBA types, foreign sourcing of products in order to maximize corporate profits became the mantra. Many of the ills detailed by the author are true. I do believe that the net impact of its thousands of U.S. stores has been negative for America. What if Sam Walton and future CEOs had decided to continue to source all their goods in America, foregoing maximum profits? That is an interesting question. I’d like to hear what the shit throwing monkeys think. 

50 Years of Gutting America’s Middle Class

Walmart’s explosive growth has gutted two key pillars of the American middle class: small businesses and well-paid manufacturing jobs.

By Stacy Mitchell

Stacy Mitchell

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.

Stacy Mitchell is a senior researcher at the Institute for Local Self-Reliance and the author of Big-Box Swindle. She lives in Portland, Maine.

28 Comments
  1. Stan says:

    The bigger they are, the harder they fall.

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 2:09 pm

  2. ThePessimisticChemist says:

    @Admin – I agree with your take on the article.

    Bring back tariffs and reign back on some of the stupidity when it comes to hiring in America. How did we ever get to the point where it made companies MORE money to manufacture overseas? Idiotic.

    Well-loved. Like or Dislike: Thumb up 14 Thumb down 1

    8th July 2012 at 2:42 pm

  3. Jmarz says:

    I’m by far no fan of Wal Mart but the writer of this piece is putting the blame of a destroyed America on the wrong person. If we didn’t have a fiat system, a Fed who artificially suppresses interest rates to increase consumption, and a government that seeks power via excessive taxes, laws, and regulations, this country would be in a different situation today. The blame for a destroyed America should be on the Fed and government not Sam Walton.

    Sam Walton was a businessman; a damn good one. He found a need in the marketplace and efficiently seized a niche. He squeezed suppliers and offered low wages in order to be the cost leader. He had a vision and worked his ass off to accomplish his vision. Quite frankly, if he didn’t seize this niche someone else would of. As an entrepreneur you have to learn how to operate in the environment given.

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 2

    8th July 2012 at 4:17 pm

  4. Appalachian Trail Deblazer says:

    I read about Sam Walton back in the 80′s. My dad owned an Ace Hardware / Purina Dealership (1946 – 1987) and he was concerned about a loss of business as WAL-MART was opening their first store in this area.

    Sam Walton initally had just a regional type store / market; however, when he bought the Benton Arkansas BANK. He could loan his company money on his terms and WAL-MART took off like a ROCKET. Nothing has stopped them since.

    My father sold his business in 1987. The new owner went out of business the fall of 2011 and the property sits idle and empty now. My Dad passed away 2 years ago. When Dad owned the business it was a prosperous and vital family operated business in our small community.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    8th July 2012 at 4:31 pm

  5. Zarathustra says:

    I’ve never spent one cent in a Walmart.

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    8th July 2012 at 5:48 pm

  6. John A says:

    Walmart is just like many other big American corporations: they sell goods manufactured outside the US, mostly China. Comedian Bill Cosby has had some interest in politics in the past. He stated once that if he was elected as President, the first thing he would do would be permanently remove all special interest lobbyists from DC. Sounds like plan to me.

    Like or Dislike: Thumb up 3 Thumb down 0

    8th July 2012 at 5:50 pm

  7. AWD says:

    The average U.S. family now spends more than $4000 a year at Wal-Mart. 80% of products at Wal Mart are produced overseas mainly China. Up to 40% of Wal Mart earnings come from SNAP benefits (taxpayers) and 80% of that money is being shipped off to China.

    The middle class has committed suicide by shopping at Wal Mart and buying cars from Japan and S. Korea. They’re too stupid to figure it out, and way too stupid to do anything about it. They continue to waddle or ride their scooters into Wal Mart to buy a cart-load of crap they’ll throw out in 3 weeks. They buy jumbo slim jims, pork rinds, gallons of sugary drinks, little debbie’s, frozen pizza’s, all manner of fat and carbs, and 40% of it goes on their SNAP cards.

    Wal Mart is going to have to lower their prices much more in the coming years, as the middle and low class people that shop there won’t have any jobs or money. Thank god for SNAP and cash EBT benefits and entitlements. Taxpayers will keep Wal Mart going, until Asia has all our money. Good thing China makes good bicycles, as people won’t be able to afford cars when all the cash and benes run out.

    When the jig is up; and the middle class is gone, the lower class no longer gets SNAP and EBT cash, the Walton’s will sell Wal Mart to the Chinese. Might as well, Wal Mart is already a subsidiary of China.

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    8th July 2012 at 5:53 pm

  8. Shit Throwing Monkey says:

    I remember when everything was American. And I recall the expensive crap that was produced. The Japanese and Germans took the auto market not because of lower price but because their products were simply better. In the USA we had out of control unions driving their own companies out of business. If you like that, you must love public service unions and airline unions, both which capture egregious earnings and benefits in proportion to the value provided

    Nowadays manufacturing is returning to the USA. But it is highly automated. Software is eating all kinds of jobs, even higher end ones. The future is sad but simple: a strong back is not enough to make a living anymore since robots will handle that. You need an IQ of 100 or better, and preferably training in a trade or profession not easily replaced by machines

    Finally, we have millions of illegal immigrants who apparently are willing to do jobs entitled Americans are not. They’d rather have the 99 weeks. The immigrants want their kids to have good lives and willing to do what they must

    We’ve become a lazy crock of dung. Stop blaming Walmart. Start blaming the lack of culture that reveres education and work, and prefers Snooky to Tolstoy

    Well-loved. Like or Dislike: Thumb up 16 Thumb down 3

    8th July 2012 at 6:08 pm

  9. ZombieDawg says:

    Oh dear…slagging off Walmart eh…
    Still – I guess it’s ok for Americans to do it…

    Walmart explained – http://www.southparkstudios.com/full-episodes/s08e09-something-wall-mart-this-way-comes

    No 4 page analysis, no complicated financial explanations, no charts, no demographics, no BS.
    It is what it is because consumers made it what it is Simple as that.

    Like or Dislike: Thumb up 1 Thumb down 0

    8th July 2012 at 7:06 pm

  10. Maddie's Mom says:

    I don’t throw much shit, but I guess I’m still one of the monkeys so…

    I don’t know if Sam Walton single-handedly destroyed anything but perhaps those that followed in his footsteps did. I think he might not like what they’ve become.

    I detest Wal-Mart. I’m giving more and more of our money to the local grocers, farm stores, pharmacies and places like Ace Hardware (our Ace has freakin’ everything!) Some rainy Saturday morning I’m going in there and not leave until I have walked every aisle and looked at every item on the shelves. lol

    “Wal Mart is already a subsidiary of China.” – AWD

    Yep. I usually call it ChinaMart. Or my very favorite “Retail Hell”.

    Wouldn’t it be great to live to see them go down?

    (ooops! I guess maybe that was some shit ;)

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

    8th July 2012 at 7:07 pm

  11. Colma Rising says:

    $3 spent that will circulate locally is worth paying over $2.59 circulated globally.

    It’s too late now.

    Get used to eating gruel….

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    8th July 2012 at 7:17 pm

  12. AWD says:

    MM:

    The only way Wal Mart is going down is if they allow labor unions. Unions will bankrupt and destroy them faster than anything else known to man, and probably the only thing.

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 0

    8th July 2012 at 7:18 pm

  13. Jmarz says:

    Wal Mart will never disappear but I think as the USD continues to be devalued and inflation gets worse, they will have a hard time keeping prices low. Their overhead is insane so I think inflation and a tapped out consumer will be a challenge for them going forward since they import so much.

    Like or Dislike: Thumb up 4 Thumb down 0

    8th July 2012 at 7:23 pm

  14. SSS says:

    Piffle.

    Once again Admin targets (pun intended) the wrong evil megacorp, and his adoring masses cheer. It isn’t Wal-Mart, people. It’s the company that literally smashes your freedom of expression to smithereens by asking you to behave when you’re a customer.

    IT’S THE DEVIL HIMSELF ………………. SOUTHWEST AIRLINES!!!!

    Like or Dislike: Thumb up 2 Thumb down 2

    8th July 2012 at 7:33 pm

  15. Ron says:

    In the early seventys it was japanese motorcycles that kicked ass.And some european makes.
    The arab gas crisis showed that little japanese cars were good.And most goods said made in the usa on them.Taiwan was the only other place i remember stuff coming from.
    I do shop at walmart,but im not really impressed with the stuff they sell.I like to shop at farm type stores. I really hate shoes from china.Its funny to compare the quality of products from japan and china.Ive been spending a little more for quality clothes (dickies)because they last longer.
    In about 1994 companys started moving overseas for cheap labor and the lack of regulations.I kept wondering what jobs would replace these?the answer is none.I never did shop much at malls,stuff was to expensive.I liked stores like tg@y or Ben Franklins.,I like the cal-ranch store and buy clothes from resale places sometimes.I use ebay sometimes to.

    Like or Dislike: Thumb up 3 Thumb down 2

    8th July 2012 at 7:37 pm

  16. AWD says:

    Ungh, I changed my mind. People that go to Wal Mart deserve to be jobless and penniless.

    3986.jpg

    We need to sell them to China, in exchange for the T-bills/debt. They’d make great organ donors.

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 7:55 pm

  17. Administrator says:

    I bet SSS loved the Saggy Bottom Boys

    Like or Dislike: Thumb up 1 Thumb down 1

    8th July 2012 at 8:09 pm

  18. Celtic Tiger says:

    I generally agree with jmarz. Government, unions and complacent managers have done far more damage to American manufacturing than Wal-Mart.

    Around 30 years ago, I worked for two years as a K-Mart assistant store manager. All the sorts of charges leveled against Wal-Mart were being hurled against K-Mart back then by lefties and the unions.

    Local businesses can and do work around the big discounters by selling higher quality, better assortment of specialty goods, and with better customer service. A local sporting goods store, for example, can work with Little League, school teams, bowling leagues, etc, arranging group purchases of uniforms, equipment, and trophies, which a thinly-staffed discounter cannot do.

    Local retailers have always hated chain stores. But for all their advantages of pricing, chain stores are sure not invincible. Woolworth’s was the first great American chain. Where are they now? Where is A&P, the first national supermarket chain? Where is Montgomery Ward’s? Where is Grant’s? Once-mighty Sears, K-Mart, and J.C. Penney’s are all circling the drain.

    But high-end stores are doing well. Target is OK. Family Dollar is competing at the bottom end. Major supermarket chains are holding their own.

    Retailing has always been a fiercely competitive, low margin business at every level. Would we consider a 4% savings rate to be sufficient for a typical family? Yet that is the after-tax profit of Wal-Mart. And that is exceptionally good in that industry Most supermarkets run at 1% or less. Department stores average less than 2%.

    Sorry, but there is not a lot of room for big pay increases for retail workers. Clerical jobs have always been mainly for entry-level young people or housewives whose husbands were the primary breadwinner.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 1

    8th July 2012 at 8:15 pm

  19. sensetti says:

    WMES

    “The truth is that our “just in time” inventory and delivery systems leave us incredibly vulnerable to a nationwide disaster.

    You see, it is very expensive to hold and store inventory, so most manufacturers and retailers rely on a continual flow of deliveries that are scheduled to arrive “just in time”, and this significantly reduces their operating expenses.

    This is considered to be good business practice for manufacturers and retailers, but it also means that if there was a major nationwide transportation disruption that our economic system would grind to a halt almost immediately.

    Once store shelves are picked clean, they would not be able to be replenished until trucks could get back on the road. In the event of a major nationwide disaster, that could be quite a while.

    So what could potentially cause a nationwide transportation shutdown?

    Well, it is easy to imagine a lot of potential scenarios – a volcanic eruption, a historic earthquake, an EMP attack, a solar megastorm, a war, a major terror attack, an asteroid strike, a killer pandemic, mass rioting in U.S. cities, or even martial law”.

    If something caused the trucks to stop running, life in America would immediately start changing.

    http://theeconomiccollapseblog.com/archives/read-this-first-before-you-decide-that-preppers-are-crazy

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    8th July 2012 at 9:09 pm

  20. DaveL says:

    “Zarathustra says:

    I’ve never spent one cent in a Walmart.”

    Of course you haven’t. Even Walmart doesn’t sell anything for a penny. How much quicker would the middle class disappear if everything was “Made in America”?

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 10:08 pm

  21. flash says:

    When capitalism dies it will not be at the hands of retailers. It will have been slowly suffocated by mountains of graft created by the public private partnership between government and banksters.

    Who killed capitalism?
    http://www.wnd.com/2012/07/who-killed-capitalism/

    Like or Dislike: Thumb up 2 Thumb down 1

    8th July 2012 at 5:17 am

  22. Maddie's Mom says:

    DaveL,

    Not sure I follow.

    We had a middle class back when most things were “Made in America”.

    Maybe if it were that way again, we would buy more selectively and not just mindlessly throw away money on cheap imported crap we probably didn’t need in the first place.

    Like or Dislike: Thumb up 4 Thumb down 0

    8th July 2012 at 8:56 am

  23. Zarathustra says:

    I’m not sure the Beatles had WalMart in mind when they performed this, but all you boomer haters should groove on the irony.

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 5:00 am

  24. President Obama Under Fire Over Business Comments | Revolution In Media says:

    [...] Did Wal-mart Destroy America? (theburningplatform.com) [...]

    Like or Dislike: Thumb up 0 Thumb down 0

    8th July 2012 at 12:11 pm

  25. Jim Ward says:

    The Republicans refused to even allow debate let alone support the President’s jobs plan. The bill was then broken into 19 separate bills and Republicans got behind exactly one of these. Republicans have openly declared — despicably during wartime and economic crisis — that their number one priority has always been defeating the President. They now, with nothing to run on, want to revive the Cold War and McCarthyism as they try to portray this moderate President as some kind of “Commie.” All to distract from the Republican policies that led this great nation to near economic disaster: “trickle down” that never trickled, Bush tax cuts that never turned into jobs, tax cuts for the wealthy even in wartime, downsizing and outsourcing, sending good middle class jobs overseas, making millions by bankrupting companies and laying off workers, unleashing Wall Street and the banks via deregulation, tax avoidance and overseas bank accounts, letting our infrastructure decay, and more. All while demonizing “big government” — otherwise know as school teachers, police officers, fire fighters, construction workers, librarians and other public workers. Romney/Ryan are the Walmart of public policy — killing downtowns, crushing small business, sending jobs overseas and diminishing any sense of accountability or civic responsibility.

    Like or Dislike: Thumb up 1 Thumb down 3

    8th July 2012 at 4:04 pm

  26. Administrator says:

    Jim Ward with a post directly from the DNC playbook.

    Are you actually a paid shill who is supposed to go on the internet and spew the Democratic line of bullshit?

    People like you disgust me.

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 4:10 pm

  27. Administrator says:

    Isn’t it interesting how Jim Ward shows up on a six week old article with an anti-Romney post that seems pre-packaged.

    This is Jim Ward’s 1st post ever on TBP. I’m sure he wants a healthy debate.

    Douchebags like Jim Ward should be hung from their balls.

    I hate fucking scumbags like Jim Ward

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 4:14 pm

  28. ThePessimisticChemist says:

    “All while demonizing “big government” — otherwise know as school teachers, police officers, fire fighters, construction workers, librarians and other public workers. ”

    School teachers that churn out mindless drones, unfit for anything other than pulling a lever or drawing welfare.

    Police officers that are increasingly predating upon the sheep they are sworn to protect.

    Fire fighters that have stood and watched homes burn because that person had failed to pay their taxes.

    Construction workers who draw 60% more pay than a private sector employee AND get benefits befitting a private sector worker of much higher economic value.

    Librarians? Really?

    “Other public workers,” you must mean all of the IRS agents, TSA grope-artists and petty bureaucrats that really keep this country afloat.

    Like or Dislike: Thumb up 2 Thumb down 0

    8th July 2012 at 4:45 pm

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