On Black Friday, protests at many Wal-Mart stores did little to slow the flood of deal-seeking shoppers.
Wal-Mart is brilliant at meeting demand with supply. It provides U.S. consumers with inexpensive goods, particularly important for America’s expanding low-income class. Unfortunately, the positives come with negatives.
As north Alabama has discovered, Wal-Mart’s immense size and its ability to control supplier costs means it tends to squeeze out local businesses.
One way Wal-Mart manages to underprice smaller competitors is by purchasing inventory from overseas. Such goods are cheaper because the foreign laborers who produce them make low wages. Wal-Mart, in other words, pits U.S. workers against foreign workers, and the result is downward pressure on U.S. wages.
Most Wal-Mart workers make low wages and few have health insurance. The result is that some must supplement their wages with government assistance. According to a 2005 study, Wal-Mart had more employees with children on Medicaid than any other Alabama employer.
Many Wal-Mart employees are among the “working poor” that bedevil policy makers even as they drain state and federal budgets. Blaming Wal-Mart does no good. Its executives have a duty to shareholders to maximize profit.
Is America content with a situation in which its citizens can work hard without escaping poverty? Is it content with employers providing wages and benefits so low that taxpayers must provide indirect subsidies? On the other hand, are Americans willing to tinker with capitalism to correct a growing social problem?
The solutions are not easy, but the problems are real.
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