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Big Retailers Like Walmart Spur Small Business Growth and Create Jobs

Hector V. Barreto
Hector V. Barreto is President & CEO of Barreto Inc., an international business consulting firm based in Southern California, as well as Chairman of the Latino Coalition. Barreto served as the 21st Administrator of the U.S. Small Business Administration under President George W. Bush.

Opponents of Walmart’s planned Neighborhood Market in downtown Los Angeles are trying desperately to paint a portrait of David versus Goliath – mom-and-pop shops against Walmart.

But when it comes to economic growth, small businesses and large companies actually support each other. Indeed, the entrance of a large retailer like Walmart into a new marketplace is the key to helping many local vendors to grow.

As a former U.S. Small Business Administrator, I advocated for the small businesses that are vital to this country’s economic fabric and ingenuity. We helped minority- and women-owned businesses to expand and flourish, and awarded more loans to small business owners than any previous administration.

But during my time at the SBA, I learned that small businesses cannot flourish without a strong and healthy free-market that is friendly to companies of all sizes.

The positive impact Walmart would have on Los Angeles’ small businesses can be explained by the basic law of supply and demand. When a large retailer like Walmart enters a new market, it needs local suppliers to help fill its maintenance and product needs, which means surrounding vendors benefit.

According to Dun & Bradstreet, an independent firm that compiles commercial and business data, Walmart spent $25.85 billion for merchandise and services with over 4,000 suppliers in the state of California in fiscal year 2012. The number of supplier jobs that result from Walmart’s relationships with such vendors is approximately 281,785.

As the chairman of The Latino Coalition, a national organization that represents Latino interests with senior executives of Fortune 500 companies and government agencies, I am also concerned that opposition to a new Walmart store will hurt the ability of Los Angeles residents – Latinos, in particular – to find good jobs.

Too many Latinos are struggling to find work, a problem that was exacerbated by the Great Recession. As The Los Angeles Times reported in February, “the jobless rate for Hispanics hit a peak in November 2010 at 13.1% nationally and 14.7% in California.” Those rates have subsequently decreased slightly to 10.5% and 13.8%, respectively, but more needs to be done to help all state residents find work.

With over 72,000 associates in California alone, Walmart is proving to be a dependable source of good jobs during a difficult economic downturn and recovery.

Companies look for marketplace demand before they feel confident enough to retain and hire more employees. Walmart would help spur that demand in Los Angeles and, in the process, also hire new employees for its own Neighborhood Markets.

The result is clear. Small businesses such as suppliers would expand, Latinos and other California residents would finally get access to more jobs, and the local community would experience lower prices as a result of a free-market that works for everyone.

Walmart critics should drop their shortsighted opposition and look at the big picture. It would be a disservice to Californians to do otherwise.

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