Large, National Chains Generate More Wealth Disparity Than Locally Owned Small Businesses.
Inequality and wealth disparity run rampant in the United States. While there are many causes for this inequity, large corporations and firms are certainly a driver.
This 2015 study found that large firms pay higher average wages, but those wages are concentrated among “high-skilled” employees, while low and medium-skilled employees make equal or less than small firms. A strong relationship has been found linking the growth in firm sizes and levels of income inequality. The means by which this occurs varies, but includes the prioritization of shareholder value, executive compensation, tax avoidance, and market power towards monopolization.
Another study found that a small number of huge firms earn "supernormal" returns, roughly ten times the median return for all firms, a trend that has tripled in the last thirty years. In this climate, a few dominant, monopoly-esque firms extract more income than possible in strictly competitive markets. Top-level employees capitalize most on these gains, increasing wage inequality.
Supporting small local businesses can curb the inequalities present in large, national corporations. Minority-owned businesses also disproportionately face financial barriers; When we support local businesses, especially those owned and operated by historically marginalized groups, we help to bridge the wealth gap.
Let’s buy local to build community wealth, reduce the wealth gap, and fight financial inequality.
Sources:
Wage Inequality and Firm Growth, National Bureau of Economic Research, January 2015
A Firm-Level Perspective on the Role of Rents in the Rise in Inequality, Jason Furman, Columbia University, October 2015
