Wal-Mart's Low-Price Promise: The Changing Face of Poverty

As a small business advocate, I have witnessed worrisome changes in the business arena, but recent poverty projections for the United States, especially when accompanied by past data, are disturbing – particularly because one of the primary driving forces of this trend shows no intention of curbing its carcinogenic market structure.

In fact, it is quietly lobbying for entry in Willets Point and East New York.

While the public awaits the grimly projected 2011 poverty statistics due to be released this fall, The Associated Press asked experts to comment on the issue. If their estimations are correct, roughly 50 years of the War on Poverty could unravel at America’s feet.

According to the surveyed think-tanks, economists and other academics, the poverty level could reach as high as 15.7 percent, but a 0.1 percent increase alone could bring America back to the 1960s. In 2009, the Census Bureau reported the largest number of people living in poverty ever recorded: 43.6 million. Statistics such as these leave individuals like myself wondering how the United States ended up on such a path.  

Little did America know that the face of poverty is both ever-changing and currently routed in the low-price promise, the very same promise that Wal-Mart is offering to New York and its developers.

The changes in American poverty are directly linked with the increase in low-wage jobs that has been taking place over the past 30 years. In fact, low-wage labor is so out of control that almost one in four Americans in 2009 were earning less than two-thirds of the national median hourly wag, and as the Center for Economic and Policy Research reported in “Low-wage Lessons," incidence of low-wage work rose from just over 20 percent  in 1979 to just under 30 percent in 2010.

Where did these jobs originate and what happened to the hustling and bustling middle class, small business America? In short, small businesses are being replaced by corporations, like Wal-Mart, that strive to undercut their workers and suppliers in the name of competition.

While the median family wealth fell 38.8 percent from 2007 to 2010, conglomerates like Wal-Mart raked in millions at the entrepreneurs’ and workers’ expense. The Walton family's wealth alone was equal to the total wealth of roughly 41.5 percent of all American families in 2010. Wal-Mart continues to open compact superstores specially created to fit the smallest of locations, and ultimately, the expansive nature of this business practice forces century-old, brick and mortar shops that represent middle America to shutter their doors.

To some this is Social Darwinism – that is, survival of the fittest, but when the world’s largest retailer continues to infiltrate new markets, causing small businesses to close, respectable jobs are turned into low-wage enterprises that actively undercut the hard-working individual.

Wal-Mart argues that its labor practices have been improving. But it the face of constantly emerging studies and accusations, I find this difficult to believe.

Just a few weeks ago, Wal-Mart was once again accused by OUR Wal-Mart, a UFCW affiliated group, of firing workers attempting to form a union and, in June, the National Employment Law Project (NELP), released a report revealing the issues surrounding Wal-Mart’s domestic supply chain. NELP, arguing that Wal-Mart’s supply chains actively create poor working conditions, points to the “rampant wage and overtime and health and safety violations” subject to a class action lawsuit at Schneider Logistics – a mover of Wal-Mart goods.

Does anyone ever wonder about the low-price promise and its real-world effects throughout America?

It begins with Wal-Mart’s price leadership business model, a structure heavily dependent upon squeezing outsourced suppliers and workers in low-paying positions in an effort to provide low-cost goods. Wal-Mart executives flash price leadership as a consumer benefit, but adhering to this model has changed and negatively impacted the American business environment.

The proof is in the projected poverty statistics.

The real danger behind Wal-Mart’s practices often goes unseen because people enjoy cheap products, but at the core of the poverty issue is the recursive nature of the low-price promise. When a Wal-Mart encroaches into new territory, the surrounding small businesses are either forced to adopt its business model or become uncompetitive and face potential bankruptcy. This is a recurring loop, and when approached in this light, it becomes clear that Wal-Mart is a cancerous mole on the back of the once-thriving middle class.

As a spokesman for many of New York’s finest small business establishments, I have devoted myself to protecting the mom-and-pop shops that bring New York City its originality and uniqueness. This city is and always will be the small business haven of America and with this revelation comes the hopeful preservation of the American dream – not just for this generation, but for all generations hence.

However, threatening this middle class dream is the Wal-Mart low-price promise – the same promise which has facilitated the poverty epidemic currently sweeping the nation. Wal-Mart is quietly trying to force its way into New York City. At the end of the day, the public and New York City decision makers must choose what they value most: cheap goods and poverty or a reinvigorated middle class.