The phenomenon of big box economics brings with several ethical concerns that taint its most favorable effect, that of bringing lower-priced goods to the American market. Whether manufacturers who produce these goods keep their factories on United States soil or abroad, many of the persons who work within them suffer under conditions that no American would be required to endure. On American soil, such workers (who are likely to be illegal immigrants) are often paid at the lowest rates possible, and along with this comes the lack of accompanying benefits, such as health or accident insurance (Mitchell, 36).
Many manufacturers are often drawn to foreign soil because minimum wages are much lower in some countries, making the costs of production fall to a level that increases their profit margins significantly. Despite the fact that higher profit margins lead to greater overall taxes paid to the government, these practices do impact negatively on the American economy. One way in which this negative impact is felt is through the removal of jobs from the American arena into other countries.
Many of these factories employ thousands of workers, and each of them represents one unemployed American that would otherwise be contributing to the overall national income (GDP) of the country. This negatively affects the unemployment rate within the country, and therefore counteracts the aforementioned positive benefits in the area of taxes by making it necessary for the government to pay out unemployment benefits. The employment of low-paid immigrants or the outsourcing of jobs also forces Americans to settle for lower wages, as any refusal to accept these would simply induce manufacturers to apply to the overabundance of these foreigners.
This leads to a lower standard of living for Americans. One researcher has also shown that big-box retailers whose low-cost commodities put local retailers out of business also hurt the local banks, which traditionally have strong relationships with the small retailers (Mitchell, 42). In America’s banking crisis today, such retailers are likely to continue exacerbating the economic problem, making it that much more difficult for the economy to recover from recession. Reference Mitchell, S.. Big-box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses. Boston: Beacon Press, 2006
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