THE WALMART EFFECT
New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices.
Two new research papers challenge that view. Using creative new methods, they find that the costs Walmart imposes in the form of not only lower earnings but also higher unemployment in the wider community outweigh the savings it provides for shoppers. On net, they conclude, Walmart makes the places it operates in poorer than they would be if it had never shown up at all. Sometimes consumer prices are an incomplete, even misleading, signal of economic well-being.
Fully assessing the impact of an entity as dominant as Walmart, however, is a complicated task. The cost savings for consumers are simple to calculate but don’t capture the company’s total effect on a community. The arrival of a Walmart ripples through a local economy, causing consumers to change their shopping habits, workers to switch jobs, competitors to shift their strategies, and suppliers to alter their output.
The two new working papers use novel methods to isolate Walmart’s economic impact—and what they find does not look like a progressive success story after all. The [first], posted in September by the social scientists Lukas Lehner and Zachary Parolin and the economists Clemente Pignatti and Rafael Pintro Schmitt, draws on a uniquely detailed [dataset] that tracks a wide range of outcomes for more than 18,000 individuals across the U.S. going back to 1968. These rich data allowed Parolin and his co-authors to create the economics equivalent of a clinical trial for medicine: They matched up two demographically comparable groups of individuals within the dataset and observed what happened when one of those groups was exposed to the “treatment” (the opening of the Walmart) and the other was not.
Their conclusion: In the 10 years after a Walmart Supercenter opened in a given community, the average household in that community experienced a 6 percent decline in yearly income—equivalent to about $5,000 a year in 2024 dollars—compared with households that didn’t have a Walmart open near them. Low-income, young, and less-educated workers suffered the largest losses.