Opinion

Bringing Jobs Back To North America

Walmart and other retailers have made bold claims indicating that they are bringing manufacturing jobs back to North America.  Wal-Mart announced last year that they would spend an extra $250 billion over 10 years on domestic produced goods in the United States.

In this political election year, it is not surprising to hear politicians promising to bring jobs back.

It is often cited that Wal-Mart and other large retailers in the 1980’s were in search of competitive positioning went oversees to procure goods at a cheaper cost and then sell them at the most attractive prices.  Grow their marketshare and size of basket by offering attractive prices.

A decade or more later, the reality is that most domestic businesses that have purchase orders for large retailers are mechanizing their processes that were once major sources of jobs.  This mechanization creates lower-paying unskilled jobs which will not increase disposable income (and thus expand the economy).

It is a vicious circle where consumers seek the lowest prices in response to their declining disposable income and retailers strive to offer the best possible prices.

When disposable income shrinks or remains stagnant, this typically increases convenience store sales as more and more people live paycheck to paycheck and consume more impulse purchases.