Penguin Press, 2006,
304 pages, $25.95

Shopping Ourselves Out of Our Jobs

At the recent Island Small Business Forum, I listened to an interesting discussion among three small island business owners about how difficult it is for them to compete against big chains on the mainland. One could argue that there is nothing different in their stories from thousands of other small Main Street business stories across America that have been crushed in the past 10-15 years, during the rise of the mega-corporations. On the other hand, the fact that this hardware store, video business and wine shop are still in business speaks to their tenacity, if not their business triumph.

The hardware store owner said that during the summer, loyal seasonal customers never shop on the mainland, buy all their supplies from him and patiently wait for items he cannot afford to stock. But for the rest of the year, neighbors and friends drive by the store on the way to the ferry to shop at Wal-Mart, Home Depot and other chains on the mainland. He used to take it personally — maybe they don’t like me, he thought. But when other island businesses were similarly passed by, he knew it was something else. But what?

Charles Fishman’s new book, The Wall Mart Effect sets out to answer the question of what effects Wal-Mart has had on America’s shopping patterns, communities, businesses that supply Wal-Mart, the environment and the economy. If you are looking for a simple answer as to whether Wal-Mart is good or bad for the American economy, this book will not satisfy you. If you are interested in learning why Wal-Mart has become such an enormous force in the American economy and how it maintains its position as not only the largest corporation in the world, but the largest corporation in the history of the world, this book will be captivating.

Wal-Mart’s business model is both powerfully simple and simply relentless. “Always low prices — always.” People shop at Wal-Mart not just because we all love a good deal, but because these deals, added up week after week and month after month, mean a lot to a lot of Americans. Prices that are on average 15 percent less expensive for most consumer products — soaps, toothpaste, shaving cream, deodorant, light bulbs and the like, and approximately 30 percent cheaper for the groceries it sells can save a family $125 a month — enough, in effect, to get a free bag of groceries. Indeed, several researchers Fishman interviewed suggest that the reason inflation has been held in check for the past 15 years is another Wal-Mart effect, as approximately 100 million Americans shop at Wal-Mart every week, ringing up $35 million in sales every hour, 24 hours a day, seven days a week of always low prices.

On average, according to a careful study reported by Fishman, four small businesses disappear for every new Wal-Mart that opens. There are new jobs at Wal-Mart, often hundreds of them, but many are part-time and many “associates” cannot afford health insurance and thus taxpayers subsidize their health care. The new Wal-Mart jobs hardly compensate for the loss of owner-operated businesses. According to a very detailed study in Oklahoma City, poverty actually increased in that city in the years following the opening of super centers, by almost the exact number of jobs lost by the small retailers that shut their doors or went bankrupt.

When you read a book that poses a question, “is Wal Mart good or bad for the American economy?” and answers the question, “Yes,” you might be left scratching your head at the answer.

In the end, the Wal-Mart effect is all about trade-offs. If we want island communities and mainland small towns to have viable Main Street businesses, we’d better shop there for a part of, if not all our needs. Summer and winter. Maybe we end up paying 15 percent more for our hardware and maybe we decide to purchase a few of the big items — chainsaws, lawnmowers, portable drills — at the big chain outlets. But if we want healthy small communities, we’d better stop and think about where our local dollars are going when we are on the way to the ferry or on the way to the mall. Otherwise, we will shop ourselves right out of the jobs we need to maintain our freedom to shop.