Wal-Mart: Good or Bad?

Essay by snipes2189College, UndergraduateA+, April 2009

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The largest corporation in America with $378,799 million in revenues and employing 2,055,000 employees, Wal-Mart has become one of the greatest success stories in American history, but also one of the most controversial stories since Standard Oil (Fortune). But with all big business comes critics. Today's critics suggest Wal-Mart unfairly uses it power of size, which is goliath, to exploit employees and impoverish nations, ruin competition, and place undue pressure on the government. However, one item most critics fail to mention is that Wal-Mart creates consumer welfare. Throughout this paper, I will analyze each criticism of Wal-Mart and sufficiently cite evidence proving the greater good that is realized with the existence of Wal-Marts worldwide.

Wal-Mart Costs JobsCritics of Wal-Mart and other big-box discount stores argue that jobs are lost due to two reasons: First, local retailers and other local businesses are forced to close as a result of the inability to compete with the lower prices.

Second, the selling of foreign goods by Wal-Mart cuts revenues for domestic nonretail industries which in turn causes layoffs. Contradicting evidence, however, shows that "employment rose nearly 3 percent in the general merchandise store category" during the 2000 to 2004 time period; a period in which national employment was slowing declining (Vedder). In addition, Vedder and Cox performed a study involving sixteen different statistical tests measuring the relationship between job growth and the presence of Wal-Mart. The study concluded with only five tests showing a negative relationship and eleven with a positive relationship. If true, than how can Wal-Mart be responsible for the loss of jobs?Furthermore, critics would have the public believe that the greater number of Wal-Marts means the greater percent of unemployment. But as Vedder and Cox found, the unemployment rate declined throughout the transformation of Wal-Mart's presence in the United States...