Walmart Didn’t Compete. It Replaced.
Local stores vanished. So did everything that held communities together.
Just a quick note before we get into it. Some of the ideas discussed here build on and diverge from the insights in The Atlantic’s piece, The Walmart Effect.
It’s a solid read if you want to dig further.
…
They said it was a success story.
A triumph of efficiency over tradition. A low-price revolution that would lift all boats. But the closer you look at Walmart, the more the glossy narrative unravels into something colder, more extractive, and far more corrosive than its defenders ever dared to admit.
Two new studies have effectively driven a stake through the heart of the “Walmart is good for America” myth. The numbers don’t lie. When a Walmart Supercenter opens in a community, incomes fall, poverty rises, employment drops, and taxpayers quietly start subsidizing the very business model that was supposed to save them money.
For decades, the mainstream economic narrative held Walmart up as a beacon of market success. Sure, the wages were low, but the savings were real. You could stock your pantry for less, and in a country increasingly obsessed with consumer prices as the holy grail of economic health, that was enough to win over economists, policymakers, and consumers alike. Jason Furman’s 2005 declaration that Walmart was a “progressive success story” became the party line, echoed by editorial pages and White House councils alike. The argument was brutally simple: who cares about low wages when groceries are cheap?
Turns out, those groceries aren’t cheap enough to justify what comes with them.
In a dataset stretching back to 1968, researchers Lukas Lehner, Zachary Parolin, Clemente Pignatti, and Rafael Pintro Schmitt found that within ten years of a Supercenter’s arrival, household income in the surrounding community drops by six percent. That’s roughly $5,000 per year, adjusted for 2024 dollars. And it doesn’t just hit the stereotypical minimum wage retail worker. The pain bleeds across sectors: manufacturing, agriculture, services. Everyone feels it. The so-called “Walmart Effect” is less a trickle and more a flood.
As also detailed in The Atlantic’s comprehensive analysis, Walmart’s arrival not only undermines incomes but reshapes entire labor markets through monopsony power and local business extinction, effects that ripple across communities in ways consumer price indexes can’t capture.
Even if you accept Walmart’s own rosy projection—that each household saves about $3,100 a year from lower prices—you’re still $1,900 in the red. And most economists think that $3,100 number is an overstatement. Even in the best-case scenario, Walmart makes people poorer.
But there’s more. A second study, by economist Justin Wiltshire, looked at counties where Walmart failed to open due to local pushback and compared them to places where it succeeded. The findings were just as stark: earnings declined, unemployment rose, and economic concentration followed. The mere presence of Walmart distorted local labor markets so thoroughly that its gravitational pull could be measured across sectors, across years.
Here’s what happens. Walmart moves in. It undercuts every local business on price, burning through mom-and-pop shops like a slow-moving wildfire. Those local stores close, and with them go the relationships, the local sourcing, the reinvestment. In their place? National supply chains, Chinese imports, and a handful of low-wage, part-time jobs with no benefits.
Monopsony power is the term economists use when one buyer dominates a labor market and can dictate wages. Walmart is the textbook case. When it becomes the only game in town, wages don’t need to rise. Employees can’t leave because there are no other employers. And when wages are low enough, guess who picks up the slack? The public. Food stamps, Medicaid, housing subsidies—all funded by taxpayers, all effectively subsidizing the Walmart payroll.
This is no longer abstract theory. Talk to anyone who’s watched a town get gutted by a Supercenter. The pattern is depressingly consistent. One day you have local grocers, hardware stores, regional pharmacies. Then Walmart arrives. It offers prices that local shops can’t match because those prices are artificially suppressed by scale, logistics, and political muscle. The locals try to compete. They slash prices, cut hours, lay off staff. Eventually they close. Some end up working for the same corporation that ran them out. Others leave town.
The pain doesn’t stop at the storefront. Look closely and you’ll see food deserts forming in the shadows of these big-box developments. You’ll see business owners who once sponsored Little League teams now stocking shelves for barely livable wages. And you’ll see a creeping sense of dependency where once there was local pride.
The ripple effects extend far beyond wages. Suppliers get squeezed. Local producers, once reliant on a network of regional buyers, get cut out. Walmart’s global sourcing strategy—with 60 to 80 percent of goods historically coming from China—doesn’t just hurt American manufacturing. It reconfigures the local economy around imports. When Wiltshire tracked the aftermath of Walmart’s arrival, he found a 3 percent drop in total employment, focused primarily in goods-producing establishments. That’s code for factories, farms, bakeries. Local wealth creators.
And while Walmart touts itself as a job creator, what kind of jobs are we really talking about? In many regions, Walmart is the largest employer of people who also rely on government aid to survive. That’s not job creation. That’s labor market domination dressed up as civic engagement. Add in part-time scheduling, anti-union practices, and overt resistance to full-time employment and benefits, and you get a system optimized to extract maximum labor with minimum cost—not just to Walmart, but to the public.
So how did we get here?
Blame the consumer-welfare standard, the Chicago School relic that redefined antitrust enforcement around one metric: prices. If a merger didn’t raise consumer prices, it was greenlit. If a company lowered prices, it was blessed. This narrow lens allowed Walmart to grow unchecked, regardless of its broader effects on employment, market concentration, or community health. As long as milk stayed cheap, regulators looked the other way.
But cheap milk isn’t much consolation when your job’s gone, your neighbor’s business is shuttered, and your tax dollars are backstopping the biggest retailer in the country.
The Biden administration tried to change the calculus. For the first time in decades, antitrust guidelines started including worker welfare as a legitimate concern. New FTC and DOJ enforcement criteria targeted wage-fixing, no-poach agreements, and monopsonistic practices. But with the return of Trump’s team, notoriously inconsistent on corporate consolidation, the future of that progress looks fragile. The Walton dynasty can breathe a little easier.
And yet, the case against Walmart is no longer anecdotal. It’s no longer speculative. It’s empirical. It’s quantitative. It’s peer-reviewed. It’s math.
For those still clinging to the myth of Walmart as a net positive, it’s time to follow the money. Not just the savings at the checkout line, but the hidden costs: the taxpayer subsidies, the lost wages, the shuttered businesses, the social infrastructure eroded by a business model that thrives on absence. Absence of alternatives. Absence of regulation. Absence of accountability.
In economic theory, perfect competition is supposed to reward the most efficient firms. But Walmart’s efficiency is built on market distortions. When you’re big enough to dictate wages, destroy suppliers, and rewire entire counties to serve your logistics model, you’re not efficient. You’re dominant. And when that dominance hollows out the towns you claim to serve, the only thing left is the price tag.
Cheap, maybe. But the damage runs far deeper.
So what’s the alternative?
Communities don’t have to passively accept extractive retail as the only model. Across the country, we’re seeing early but promising growth in cooperative grocery stores, regional producer networks, and employee-owned businesses—alternatives that trade efficiency for resilience and local accountability. These models won’t replace Walmart overnight. But they prove something important: scale isn’t destiny, and economic power doesn’t have to be centralized. What matters now is whether we’re willing to build for the long term, together.