The Wal-Mart Effect

The Wal-Mart Effect: How an Out-of-Town Superstore Became a Superpower is a 2006 book by business journalist Charles Fishman which describes local and global economic effects attributable to the retail chain Walmart.[1][2][3]

In the book, Fishman writes that Walmart is arguably the world's most important privately controlled economic institution, and that the phrase "the Wal-Mart effect" is shorthand for a wide range of both positive and negative impacts on consumers resulting from how Walmart does its business. He describes these effects as including the suburbanization of the local shopping experience, the driving down of local prices for all everyday necessities, the draining of the viability of the traditional local shopping areas, a continual downward pressure on local wages, the consolidation of consumer product companies aiming to match Walmart's scale, a continual downward pressure on inflation, and a new and continual cost scrutiny at a wide ranges of businesses enabling them to survive on thinner profit margins.[4] Fishman concludes that Walmart is "beyond the market forces that capitalism relies on to enforce fair play [and] isn't subject to the market forces because it's creating them."[5]

Fishman did not coin the phrase Wal-Mart effect. It has been traced back to 1990, when journalist Julie Morris used it in a USA Today story.[6]

Following the publication of The Wal-Mart Effect, Walmart commissioned its own study of the phenomenon from Global Insight, a research and consulting company.[7] The Wal-Mart Effect was among several books documenting and analysing the economic effects of Walmart on local economies: others have included The Local Economic Impact of Walmart by economist Michael J. Hicks,[8] and Walmart: The Face Of Twenty-First-Century Capitalism by American labour historian Nelson Lichtenstein.[9]

Since the release of The Wal-Mart Effect, journalists, economists and others have documented additional Walmart effects. In 2013, the Democratic staff of the U.S. House Committee on Education and the Workforce released a report called Walmart’s The Low‐Wage Drag on Our Economy: Wal‐Mart’s low wages and their effect on taxpayers and economic growth, which analyzed Walmart's effect on U.S. government finances and concluded that each Walmart store costs taxpayers between $900,000 and $1.75 million per year for social services for its workers, such as healthcare, Section 8 housing programs, subsidized school lunches and earned income tax credits.[10]

References

  1. ↑ "The Behemoth from Bentonville". Economist. 23 February 2006. Retrieved 2 June 2013.
  2. ↑ "What's in the journals, August 2006". Economist. 31 August 2006. Retrieved 2 June 2013.
  3. ↑ McFedries, Paul. "Walmart Effect". Word Spy: the Word Lover's Guide to New Words. Retrieved 2 June 2013.
  4. ↑ Fishman, Charles (2007). The Wal-Mart Effect: How an Out-of-Town Superstore Became a Superpower (2nd ed.). London: Penguin Books. pp. 9–20. ISBN 0141019794.
  5. ↑ Stewart, Barbara (12 March 2006). "A trolley bad show". The Observer (London). p. 25.
  6. ↑ McFedries, Paul. "Walmart Effect". Word Spy: the Word Lover's Guide to New Words. Retrieved 2 June 2013.
  7. ↑ "Opening up the big box: measuring the Walmart effect". Economist. 23 February 2006. Retrieved 2 June 2013.
  8. ↑ Hicks, Michael J. (2007). The local economic impact of Walmart. Youngstown, N.Y.: Cambria Press. ISBN 1934043389.
  9. ↑ Lichtenstein, edited by Nelson (2006). Walmart: the face of twenty-first-century capitalism. New York: New Press. ISBN 1595580352.
  10. ↑ Heller, Laura. "Are Wal‐Mart's Low Wages A Drag On The Economy? New Report Says Yes". Forbes. Retrieved 2 June 2013.