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  • 12.17.15

Walmart’s Trade With China May Have Eliminated 400,000 U.S. Jobs

Cheap prices have come with a huge cost to U.S. employment, a new analysis finds.

Walmart’s Trade With China May Have Eliminated 400,000 U.S. Jobs

In the last decade, lots of U.S. companies have moved factories to China, hoping to take advantage of cheaper labor costs and lax regulations. But one company stands out. Walmart is not only the biggest importer of goods from that country, with 775,000 shipping containers arriving here every year. It is also promoter-in-chief of a particular type of capitalism that advantages American consumers while disadvantaging American workers.

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A new analysis sums up Walmart’s impact on U.S. manufacturing, claiming the retailer alone displaced 400,000 U.S. jobs between 2001 and 2013. The Economic Policy Institute, a left-leaning think-tank, says Walmart was responsible for a total of 11.2% of U.S. imports over the period and 13.2% of all U.S. jobs lost to our growing trade deficit with China.

The Institute calls Walmart “a prime contributor to the crisis in manufacturing employment over the past 15 years” and says the retailer has “aided China’s abuse of labor rights and its violations of internationally recognized norms of fair trade.” By distributing Chinese-made products, EPI says Walmart has helped the Chinese government to reduce the price of its currency while inflating the dollar, which in turn encourages American companies to import goods from abroad.

The group’s estimates are conservative, it says, as they don’t account for jobs in wholesale trade or advertising, or jobs that could be created when workers re-spend their earnings. Walmart, however, says EPI’s figures–which rest in part on company reports from 2004–are guesswork and underplay jobs created in the American logistics industry.

Walmart also points to a program, announced in 2013, to increase U.S.-made purchases by $50 billion over 10 years. But critics counter that $50 billion is small change as the retailer has annual sales approaching $500 billion. “Since 2001, Walmart’s growing trade deficit with China has displaced more than 100 U.S. jobs for every job that Walmart has created in the United States through its ‘Invest in American Jobs’ program,” EPI says.

It’s pretty undeniable that Walmart has a big effect on the jobs market. The real question is whether you think Walmart has a responsibility to support U.S. manufacturing, even if it means higher end-prices, and whether you think U.S. workers benefit by bringing assembly line-type jobs “back home.” Walmart’s success rests partly on a bet that Americans care more about lower prices than they do about manufacturing, though that conundrum could change.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.

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