Ross Goldfarb

Large Corporations Impact on Society and Development

Case Study: Walmart
Abstract
Walmart is a massive corporation that leaves a lasting effect on
every community it decides to settle in. This paper looks into the issue
of

Walmart

and

other

large

corporations

negative

impact

on

communities and societies across America. Statistics and opinions

across the web were used to collect information about how Walmart
does their business and what its impact is on local communities. The
results show that Walmart kills local business and doesnt fairly
compensate its employees for the work they do in addition to
destroying jobs and damaging the environment. It was concluded that
Walmart wipes out many options within communities, forcing residents
hands as the main source of jobs and goods in the community, even
though the conditions and impacts are unfavorable.

Introduction
I am investigating Walmart and other large corporations impact
on society and development. In order to do this I will look into
Walmarts effect on local business, Walmarts wages and benefits for
employees, Walmarts effect on the local environment, and Walmarts
destruction of jobs across multiple platforms. I believe that Walmart
may look good from the outside, but deep down they are a heartless

Ross Goldfarb
corporation that is greatly hurting communities. In this research, I have
found

that

Walmart

is

killing

local

business,

providing

unfair

compensation to employees, and hurting the environment. Walmart is

effectively killing the local business, then hurting those in the
community who are forced to turn to them for help.

Literature Review
In the topic of whether or not big corporations are good for
America, people are torn.

Those who are for it usually point to

decreased prices of goods and increase in number of jobs as their main

arguments. Global Insight did a study in 2006 that said Walmart saved
consumers a total of $263 million in the past 20 years, which equates
to $2,329 per household (Global Insight, 3). It was also found that
Walmart has been responsible for 210,000 jobs over time span (GI, 3).
The research, measured by the Consumer Price Index (CPI), concluded
that the rise of Walmart led to a 4.2% reduction in the price of goods
and a 3.1% decrease in the price of all items (GI, 14). While this
information seems to paint Walmart in a positive light, a new study was
done which seems to disprove the data. While GI said that Walmarts
rise lowered overall prices by 3.1% in the CPI, the Economic Policy
Institute (EPI) found that services Walmart doesnt provide account for
60% of the CPI (Bernstein, 2). Even if Walmart did account for the other

Ross Goldfarb
40%, they would only be accountable for a 1.7% increase in overall
savings (Bernstein, 2).
In looking at the surrounding area, Panle Jia found that
Walmarts expansion explains about 40-50% of the decrease in small
discount stores (Jia, 1). Carlena Ficano found similar information in
that within 15 moths of Walmarts arrival, over 14 existing retail
establishments close (Ficano, 1). In addition to the decrease in stores,
Michael Hicks study on the impact of Walmart in Maryland found that
retail employment dropped by 414 individuals (Hicks, 66). In terms of
the environment, Walmart kept 80.9 percent of all of its waste out of
landfills and increased its locally grown produce by 97 percent in 2011
in addition to being the third-largest U.S. corporate consumer of green
power (renewable energy)

(Kurtzleben). While this is great, it has

been found that Walmart uses the same amount of energy as 1,095
US homes do in one day in addition growing its carbon footprint by
13.8% since 2005 (Kurtzleben).
Another hotly debated topic is if a job at Walmart is a great
opportunity or a last resort. Business Insider takes both sides of the
argument.

According

to

Henry

Blodget,

Walmart

employs

approximately 1% of the entire American workforce with a fulltime

employee making $12 an hour, or $25,000 a year, which is just above
the poverty line (Blodget). He argues, If Walmart were to give each of
its US associates a $5,000 raise, it would cost the company $7 billion a

Ross Goldfarb
year. This would reduce Walmart's operating profit to a still-extremelyhealthy $20 billion. It would also give 1.4 million hard-working
Americans another $100 a week to spend (Blodget). Hayley Peterson
counters by saying Walmart recently announced an hourly pay raise of
$500,000 for its associates and all hourly employees will make at least
$10 an hour by next February. She then compares Walmart to
Starbucks by saying Walmart sales associates earn 6 cents more on
the hour than Starbucks baristas and assistant mangers at Walmart
make $43,916 a year to Starbucks 33,634 (Peterson). In addition to
money concerns, Walmart is also cutting benefits. According to the
Wall Street Journal, Walmart will now be cutting health care for part
time workers who work under 30 hours a week. This will affect 30,000
people in addition to those affected by the health care cut for people
who work under 25 hours a week in 2011. Walmart will also raise its
premiums for all workers, forcing them to pay an addition $10 per pay
period which takes away almost half of workers paychecks before they
even get them (Banjo). Walmart also released information that said,
more than 475,000 of its 1 million hourly store employees earn at
least $25,000 a year for full-time work (Berfield). This means that as
many as 525,000 full-time hourly employees earn less than $25,000 a
year (Berfield). A congressional report even found that the 300
employees at one Walmart in Wisconsin require $900,000 worth of
public aid every year (Berfield).

Ross Goldfarb
In the 1990s, Walmarts motto was Buy American. Twenty
years later, Walmart has begun buying $12 billion worth of goods from
China, which is nearly 10% of all Chinese exports (Fishman). It is
argued that all large companies move overseas, but none to the extent
of Walmart. After Levis Jeans partnered with Walmart and began
importing their jeans from China, they had no use for their American
plants. As Charles Fishman says, Levis is closing its last two U.S.
factories, both in San Antonio, and laying off more than 2,500 workers,
or 21% of its workforce. A company that 22 years ago had 60 clothing
plants in the United Statesand that was known as one of the most
socially responsible corporations on the planetwill, by 2004, not
make any clothes at all. It will just import them (Fishman).

Findings
Initially, I was interested in seeing opinions and statistics on why
Walmart and other big corporations could be good for America because
it was a side I have not heard much about. Apparently, not many
people have. Not only did I find almost no articles on the positives of
big business, but also every positive statistic I found had a study done
to disprove it. Looking at Walmart from the outside, they have the look
of company that has a positive influence on society: They employ
about 1% of the entire American workforce, which means they create
much-needed jobs; they made $485 billion in revenue last year, which

Ross Goldfarb
means people enjoy shopping there; and they have the lowest prices in
the business, which is great for consumers. But once you begin to peel
back the layers, Walmarts true identity starts to reveal itself, and boy
is it ugly.
America loves locally owned business. And why shouldnt they?
Local business promotes entrepreneurship, keeps money in the
community, and reduces environmental impact in addition to a
plethora of other positive effects. People will go to great lengths to try
and keep local business, as evidenced by the petition signed by over
3,000 people to try and keep Starbucks out of Elon so that the local
coffee shops could continue to thrive. When big businesses come to
town, one of the most visible effects is the wiping out of local business.
Walmart does this on an extreme scale, killing off 40-50% of small
retail stores in its rise to prominence. Also, within the first 15 months of
a Walmart being built, up to 14 small businesses in the community will
close. This number is unacceptable and is ruining communities around
the country.
Once these shops are forced to close because of the presence of
Walmart, the shops former employees must find work. More likely than
not, they will go to Walmart and be forced to deal with one of the worst
jobs in America. Because Walmart is one of the cheapest employers in
the nation, they dont like hiring full time employees so that they can
pay as little in benefits as possible. The definition of part-time work is

Ross Goldfarb
working 35 hours or less per week. Walmart has cut health care each
of the last two years for part-time workers, first for people who work
less than 25 hours a week, and now up to everyone who works 30
hours or less. Eventually all part time workers will be out of luck. It isnt
much better for full-time workers though, as over half of them earn
under $25,000 per year, which is right at the poverty line for a family
of four. In the end, even though these employees have jobs, they get
no benefits, high premiums, and most still have to use government
assistance just to get by. The way I see it, this should absolutely be
illegal.
Another one of Walmarts awful effects is the amount of
American manufacturing jobs that they destroy. Initially, Walmarts
slogan was Buy American, but nearly twenty years later, they have
become the biggest offender of these words. By buying $12 billion
worth of goods from China, they have effectively closed all of their
local manufacturers. But not only that, theyve even influenced other
to do the same by convincing Levis to close both of their American
plants and layoff all 2,500 of its employees.

Conclusion & Recommendations

To conclude, although the idea of Walmart seems like a good
concept, it is actually one of the worst things to ever happen to
America. Walmart is very effectively killing local business, killing jobs,

Ross Goldfarb
and offering very poor jobs in return. By killing all the local business,
Walmart becomes the only option within the community for jobs and
for goods. The community is then forced to accept these unfair jobs
and cheaply made goods because they have no alternative. It is one
big cycle when a Walmart comes to town and they are severely injuring
communities and the people in them. Walmart most definitely has a
negative impact on American society.
There are many things that Walmart does that just cant be fixed
due to the fact that it is such a large business. Wherever they go, they
will always put local business out of work and will always have a large
negative environmental impact due to the size of their stores. But one
thing they can fix is how they treat their employees. I would
recommend using the idea proposed by Henry Blodget: If Walmart
were to give each of its US associates a $5,000 raise, it would cost the
company $7 billion a year. This would reduce Walmart's operating
profit to a still-extremely-healthy $20 billion. It would also give 1.4
million hard-working Americans another $100 a week to spend. I
would also recommend giving every employee guaranteed health care.
This is would be a very logical way to increase employee lifestyle and
morale. Another recommendation I have is making Walmart open some
manufacturing plants here in the U.S. This would greatly decrease the
number of jobs killed by Walmart and would increase the number of
domestic goods produced while helping the economy.

Ross Goldfarb

Works Cited
Banjo, Shelly. "Wal-Mart to End Health Insurance for Some Part-Time Employees." The Wall
Street Journal. N.p., n.d. Web.

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Berfield, Susan. "More Than Half of Wal-Mart's Hourly Workers Make Less Than
$25,000." Bloomberg.com. Bloomberg, 23 Oct. 2013. Web.
Bernstein, Jared, L. Josh Bivens, and Arindrajit, Dube. "Wrestling With Walmart." EPI
WORKING PAPER (2006): n. pag. EPI, 15 June 2006. Web.
Blodget, Henry. "Walmart Employs 1% Of America. Should It Be Forced To Pay Its Employees
More?" Business Insider. Business Insider, Inc, 20 Sept. 2010. Web.
Ficano, Carlena C. "Business Churn and the Retail Giant:Establishment Birth and Death
FromWal-Marts Entry." Social Science Quarterly. Wiley Blackwell, n.d. Web.
Fishman, Charles. "The Wal-Mart You Don't Know." Fast Company. N.p., 01 Dec. 2003. Web.
Hicks, Michael J. "Estimating Wal-Mart's Impacts in Maryland: A Test of Identification
Strategies and Endogeneity Tests." Eastern Economic Journal. 1st ed. Vol. 34. N.p.: n.p.,
n.d. 56-73. JSTOR. Palgrave Macmillan Journals. Web.
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Jia, Panle. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the
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n.d. 1263-316. ProQuest Resource Links. Web.
Kurtzleben, Danielle. "Walmart Struggles to Overcome Environmental Criticism." US News
and World Report. N.p., 20 Apr. 2012. Web.
Peterson, Hayley. "Working at Wal-Mart Is One of the Best Retail Jobs to Have Right
Now." Business Insider. Business Insider, Inc, 19 Feb. 2015. Web.