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Walmart costs Americans over 400,000 jobs, study claims

Walmart costs Americans over 400,000 jobs, study claims
The Economic Policy Institute has released a study citing Walmart’s trade deficit with China as the root cause of 400,000 jobs being lost from the US workforce, over 75 percent of which were in manufacturing. However, others say the news isn’t so grim.

As the largest retailer in the world, Walmart imports a lot of cheap stuff from China because there are a several shoppers out for the best bargain available. In its report titled, “A Conservative Estimate of ‘The Wal-Mart Effect,'” the Economic Policy Institute finds that Walmart “accounted for 15.3 percent of the growth of the total US goods trade deficit with China between 2001 and 2013.”

In 2013 alone, over $49 billion in Chinese products was sold to Walmart, according to the EPI report. That same year, the trade deficit between the US and China was $324.2 billion. Between 2001 and 2013, that deficit cost the US economy 3.2 million jobs, which either went to China or were phased out entirely. The manufacturing jobs lost at the hands of Walmart-China trade make up about 13 percent of that total impact.

“Wal-Mart’s huge reliance on Chinese imports illustrates that many powerful economic actors in the United States benefit from China’s unfair trading system. Wal-Mart’s gain, however, is not the country’s gain,” the report says, concluding that Chinese labor and trade practices should be addressed by the US government as “important national priorities.”

Not all economic voices are sounding the alarm for putting pressure on China though. Writing for Forbes, Tim Worstall, a senior fellow at the Adam Smith Institute, cited Jason Furman, chair of President Obama’s Council of Economic Advisers, to show that competition spurred by Walmart “lowers US consumer expenditure by some $250 billion a year.”

That $250 billion is left to consumers to spend, and is a benefit of lower prices. Worstall agrees with EPI’s findings about the outsourcing of jobs, but is careful to point out that most of the manufacturing jobs leaving the country due to Walmart are of the textile and furniture kind. According to the Bureau of Labor Statistics, those manufacturing jobs pay a median wage of $12.72, significantly lower than the median wage of all other American jobs – a little more than $17 – that the displaced workers may seek next.

Walmart, promoting its own manufacturing initiative, called the EPI report “old” and “flawed,” saying, “By investing in products that support American jobs, we are able to bring new products to our shelves while bringing new jobs to local communities in Ohio, Tennessee, California, and many others.”

“Based on data from Boston Consulting Group, it’s estimated that 1 million new U.S. jobs will be created through Walmart’s US manufacturing initiative,” it added, “including direct manufacturing job growth of approximately 250,000, and indirect job growth of approximately 750,000 in the support and service sectors.”