Wal-Mart’s Effect on Local Economies

An article in this month’s Federal Reserve Bank of Minnesota’s gazette publication examines Wal-Mart’s effect on local communities. From the fedgazette:

[Wal-Mart] kills jobs and downtowns, say critics, and destroys community character. It’s been accused of discriminating against women, using illegal immigrants, requiring work off the clock and being overly aggressive in stopping the formation of labor unions among its workers.

It’s been blamed for sprawl and traffic congestion, as well as aesthetic offenses. For example, as the company upsizes from discount stores to supercenters in many towns, it often leaves behind an empty shell whose only visitors are the weeds that crop up in the unused parking lot, which might itself be in view of the new store. That new store, critics contend, probably received infrastructure upgrades that Wal-Mart strong-armed from local communities, lest it find a better offer elsewhere. The company adds a final dash of salt to the wound by repeatedly fighting (and mostly winning) property tax assessments on its stores.

The study finds that retail wages fell in every county examined with a Wal-Mart store, and that employee benefits were better in counties without Wal-Marts. Additionally, and perhaps most notably, the authors found that poverty rates were significantly higher in counties containing a Wal-Mart store. These findings seem to counter the authors’ assertion that Wal-Mart’s impact on local economies is minor.

This report is one of several dozen inquiries into Wal-Mart’s impact on local communities. Other such reports have examined Wal-Mart’s heavy reliance on public subsidies, the company’s influence on wages and stores’ damage to local ecosystems. Previous reports as well as scholarly papers and investigations can be found in our Research Center. More articles and reports on Wal-Mart’s negative impact on local economies can be found here.

Wal-Mart Has Minor Effect on Local Economy, Fed Says [Bloomberg News]

Posted by Alex Goldschmidt on Wednesday, January 09, 2008

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COMMENTS

The Fed? That bastion of support for lowly capitalists? It’s the Fed, and other legal and governmental manipulators, that prevent this market from being free.

Because of the government’s “stringent socio-economic controls” some go so far as to call our system corporate fascism.

Ken V in Texas
Wednesday, January 09 at 01:54 PM

There is a discussion of this on economist Mark Thoma’s blog as well.

http://economistsview.typepad.com/economistsview/2008/01/the-wal-mart-ef.html

robertdfeinman in Long Island, NY
Wednesday, January 09 at 03:32 PM

bullcrap walmart kills jobs.walmart has no control over how much other stores charge for merchandise,or pay their employees.wages better in walmart less areas?more ufcw union bs.why the hell is traffic congestion never an issue when target,home depot,costco,or any large shopping mall complex or strip mall built?could someone please give me one solid answer on that?

matthew vantress in gresham oregon
Thursday, January 10 at 06:38 AM

I read the comments there, at least down to yours, Robert. I found this portion of the study’s disclaimer interesting:

Most important, none of the findings can be considered causal in nature. In other words, the findings don’t tell us whether Wal-Mart’s presence (or lack thereof) is responsible for either positive or negative outcomes over the period studied. Proving a causal relationship between Wal-Mart and local economic trends is beyond the scope of this analysis.

In even other words, the “study” took a pile of international data, snazzed it up with some pretty bar graphs, but as they used to say in the Nam: “It don’t mean nothin’!”

Ken V in Texas
Thursday, January 10 at 07:48 AM

Ken V : I’d say that those $$$$$$ millions spent this past year,on Capital (no,that’s not a typo) Hill, by WalMart lobbyists, are providing a return on the $$$$ investment for the corporation.

ddrb in
Saturday, January 12 at 05:09 PM

Ken V : I muddled through the charts and text of the fedgazette article,too. What was of particular interest was chart 9-taxable sales. I would question f the taxable sales in the counties with W/Ms were subject to the tax loophole(Geoffry Loophole),where almost half of the taxable state sales revenue would be diverted and written off.This would make a huge difference in the actual tax PAID ,not just $$$ amounts of taxable sales recorded. The Penn State study of county poverty is,IMHO, far more controlled and definitive in its findings-with controls built in . I agree,Ken,this is a mostly “fluff” and not much “stuff” piece of cotton candy spin.

ddrb in
Tuesday, January 15 at 11:14 AM

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