Walmart Is Closing 269 Stores–Could Wage Inequality Be To Blame?
I have boycotted WalMart for several years now, due to their mistreatment of their workers and their union busting, anti-raising the minimum wage ways. But when I read the news today that the big box giant was shuttering 269 stores–154 of them in the United States–and laying off 10,000 workers, I didn’t feel good. Of course I didn’t! I don’t want people to go hungry or to lose their jobs–I want them to have jobs where they are treated well and respected, and paid enough to live on.
While the loss in revenue is being largely attributed to these stores not being able to compete with online retailers, as well as the lack of success of WalMart Express Centers–there is another thing to consider: the people who would normally shop at WalMart do not have the money to shop at WalMart, and that is largely the fault of WalMart.
Henry Ford was a gross person in a lot of ways, particularly as it concerned his anti-Semitism. However, he was very, very smart about one thing–he wanted his workers to be paid enough to afford the cars they were building. By doing this, he sold far more cars and made far more money than he would have by skimping on pay for his workers.
WalMart’s model essentially relies on low-income workers having money to spend there–exactly like the kind of people who work at WalMart. Unfortunately, the people who work at WalMart are so poor that they are hosting canned food drives for themselves for Thanksgiving dinner. They are so poor that our government has to subsidize their pay to the tune of $6.2 billion a year just so they can survive. Unlike Henry Ford, they are not paying workers enough to generate a profit for themselves.
If WalMart had paid their workers more–thereby setting higher standards for other employers across the board who would have had to raise wages to compete for employees–more people would have had money to spend at WalMart. It’s the classic “you have to spend money to make money.” When people are only spending their money on basic necessities like food and rent, our economy suffers. Our economy is far more robust and stable when lots of people have some money to spend than when just a few people have lots of money to spend and aren’t spending it all anyway because they’re already pretty comfortable.
When you give poorer people money, it usually goes right back into feeding our economy, because they need to spend it to get by. When you give rich people money, they hold onto it because they are financially able to do so. This same idea applies to manufacturing goods overseas rather than here in America–sure, you save money, but you’re also contributing to an economic situation where fewer people here can afford to buy your stuff.
The current model–in which people at the top make grotesque amounts of money that they will never spend and people at the bottom are just scraping by–is completely unsustainable in the long term. WalMart is a really good example of this–hopefully other companies will take notice and realize that the short term profit isn’t always worth the long term risk.