When Wal-Mart Metastasizes, Neighborhoods Get Poorer
February 10th, 2011Old news, but worth repeating.
Via: Reuters:
Wal-Mart’s lengthy struggle to open in New York City has hit fresh problems — a controversial report that said America’s biggest discounter does not just sell cheap, it makes neighborhoods poorer.
The report concludes that Wal-Mart, the biggest U.S. private employer, kills jobs rather than creates them, drives down wages and is a tax burden because it does not give health and other benefits to many part-time employees, leaving a burden on Medicaid and other public programs.
The New York City Council will hold a public hearing on Thursday on the impact a Wal-Mart would have but the retailer has declined to attend.
Wal-Mart dismisses the critical report — released in January by City University of New York’s Hunter College Center for Community Planning — as “randomly selected statements from … flawed studies.”
The report is based on 50 studies of Wal-Mart openings and comes as the company tries to gain a foothold in some of New York’s poorest neighborhoods.
“The overwhelming weight of the independent research on the impact of Wal-Mart stores … shows that Wal-Mart depresses area wages and labor benefits … pushes out more retail jobs than it creates, and results in more retail vacancies,” the report concluded.
Wow. A lot of the information in this article is, shall we say, controversial.
I think one thing that goes undisputed is that Walmart saves its customers money. That is the reason people go there. Richard Vedder and Wendel Cox have estimated that shopping at Walmart saves the average family $900/yr.
http://www.financialpost.com/story.html?id=fc106c92-b9f6-4496-8870-7f215b641414&p=1#ixzz1DkFp1Akq
“One frequent criticism of Wal-Mart is the charge of exploitation of workers. Wal-Mart is accused of paying substandard wages and provides few, if any, benefits to its employees. This depresses the income of workers in the area, the argument goes, and forces even full-time workers to rely on the state for health care and other services normally provided by employers.
Despite these criticisms, Mssrs. Vedder and Cox demonstrate that retailing was easily the largest source of new jobs between 1998 and 2004, and that more than half of all new retail jobs in this period were created by Wal-Mart.
The authors also counter that Wal-Mart employees, essentially unskilled retail workers in suburban areas, in fact earn slightly more than the national average for equivalent jobs.”
They also say that when everything is accounted for, such as stock options, the average Walmart employee receives slightly higher than the average benefits package.
I mean, if employees didn’t like it so much, wouldn’t they leave? Is anyone truly anchored to a Walmart job as opposed to a Target or Kmart job?
As far as making an area poorer, let’s look at public transportation. It’s been found that when a public transportation hub is put up somewhere that the area around it gets poorer.
That’s not, however, because the hub makes the city poorer. In fact, just the opposite has been found. It’s an example of how poor people, and maybe businesses catering towards poor people gravitate toward one area.
So, this is one example of how one type of business could theoretically decrease the value of one area while adding to the prosperity of the entire city. …Moreover, I don’t concede that this is happening with Walmart (not that I really know), but I’m just saying that there’s more to look at than the immediate neighborhood.
Now, I (typically) don’t like all these big stores. I think whenever a business gets too big it’s typically a result of government intervention. In retail, I’m guessing zoning laws play a big role. They increase the cost of land available for retail and raise barriers to entry for new businesses.
That said, Walmart seems to be the best player within the skewed system, and I think the attacks from them typically come from competitors.
…There may be some sort of union rules going on here, but I don’t know that Walmart treats unions any differently than any of its competitors.
Obama economic adviser Jason Furman also says the same thing about Walmart:
http://www.cato-at-liberty.org/wal-mart-could-help-dc-in-more-ways-than-one/
You can only guesstimate, but “all-in-all” walmart prolly does more good than harm, even if only a little.
Walmart: The High Cost Of Low Price
http://video.google.com/videoplay?docid=6548480812335235955