The Problem with Big-Box Stores

Everybody knows the famous Wal-mart slogan, “Everyday Low Prices.” When you think about a store that has about every single item you can possibly think of within a reasonable walking distance, then you think to yourself how could a store like this could have a harmful effect on the economy and society. These big box stores such as Wal-Mart, Home Depots, Target, K-Mart, and numerous other big box stores all share the hidden problems rarely seen by the public.

Big box stores such as Wal-Mart cause numerous different problems for the economy in the United States. These stores are creating a huge class of low-paid, non-union workers who can not afford basic needs such as health insurance or school lunches for children. They are forcing U.S. Suppliers to manufacture products in low-wage countries overseas in order to meet demands for increasingly low prices. They cost the American taxpayers millions of dollars in road construction, public safety, poor health care coverage, and sending manufacturing business overseas.

In a study compiled by the University of California, at the Berkeley labor institute, the average Wal-Mart employee in California earns 31 percent less than the average employee at other large retail stores. The average Wal-mart employee’s wage in California is around $9.70 as other retailers in California is around $14.01. This same study states that fewer Wal-Mart employees are covered by company-based health insurance. This will result in the Wal-Mart employees, who have families to support, having to use more taxpayer subsidized public assistance such as health care and food stamps. Wal-mart offers inadequate health insurance plans, throwing more health care responsibility to the workers. Wal mart encourages employees to seek charitable and public assistance for meeting health care needs. The amount of public assistance used yearly by employees of Wal-mart ranges around $1,952 as the other retail stores employees averages around $1,401. These big box retailers carry hidden costs. In addition to millions of dollars in tax breaks and other government subsidies paid to big discounters, these companies often pay below-subsistence wages. The average Wal-mart clerk made $8.23 an hour in 2001 or $13,861 a year, below the federal poverty line of $14, 630 for a family of three. The study from University of California, Berkeley found that Wal-mart employees in California cost taxpayers 86 million dollars due to reliance on government services.

These big box stores have a representation of putting smaller stores out of business because they can not compete to the big box stores ridiculously low prices. These big box stores such as Wal-Mart or Home Depots have harmed the economy by putting these small town businesses out of business. A local community of small owned stores has three times more money stay in the local economy when goods and services are brought from locally owned businesses instead being bought at these national chains and big box stores. According to a study, the percentage of revenues spent in the local and state economy of a locally owned business is 53.3%. As the big box stores only have 14.1% of revenues spent for the local and state economy. Because of stores like Wal-Mart having about every kind of item a consumer can possibly think of buying, bookstores, music retailers, electronic chains and supermarkets are struggling to compete with the low prices of Wal-Mart. Even stores like Toys “R” Us announced that it might abandon the toy business due to the more successful toy sales of Wal-Mart. Not only does these stores cause problems for businesses trying to sell, but also cause problems for the manufacturing businesses. Wal-Mart demands companies that the suppliers have to lower their wholesale prices or they will threaten that manufacturing company by find another business that will help them. This forces these manufacturing companies to send their business overseas to places like Mexico, China, or other oversea manufacturing plants. This in the end results in more jobless Americans. Levi Strauss & Co., America’s ironic jean maker, shuttered all its North American manufacturing plants in the past two years, eliminating some 5,600 jobs; foreign factories now handle the work.

These big box stores such as Wal-Mart have also use strategies such as creating 325 “dead” stores in America. These are stores which used to be a Wal-Mart, but decided to move their business somewhere else. However; they still own the empty store and will refuse to let it be occupied by other brand of big box store. These big box stores have made a negative impact on America’s economy and needs to be regulated before any more harmful actions are done towards the American economy and people.