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New Study Examines Wal-Mart’s Effect On Poverty Rates
For Immediate Release
Wednesday, May 17, 2006
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Washington, D.C., Wednesday, May 17, 2006 – A study published today in the latest issue of Social Science Quarterly examines the effect of Wal-Mart stores on local poverty rates. The study found that nationwide an estimated 20,000 families have fallen below the official poverty line as a result of Wal-Mart’s expansion. During the last decade, dependence on the food stamp program nationwide increased by 8 percent while in counties with Wal-Mart stores, the increase was almost twice as large at 15.3 percent.
The study, authored by Stephan Goetz, professor of Agricultural and Regional Economics at Penn State University, found that local infrastructure subsidies given to Wal-Mart “may not be warranted” and that Wal-Mart stores have displaced the “local class of entrepreneurs” and “destroyed local leadership capacity.”
Key findings from the report are excerpted below.
“After carefully and comprehensively accounting for other local determinants of changes in poverty, we find that the presence of Wal-Mart was unequivocally associated with smaller reductions in family-poverty rates in U.S. counties during the 1990s relative to places that had no stores…
“Thus, our results provide clear evidence that the spread of Wal-Mart stores during the 1990s was associated with higher usage of food stamps per capita…
“The public costs that the chain imposes by raising the poverty rate suggest that public infrastructure subsidies may not be warranted or, as a minimum, that these two types of costs need to be added together to assess the overall cost of the chain to the community…
“In conclusion, the costs to communities in terms of labor displacement and higher poverty need to be weighed against the benefits of lower prices and greater shopping convenience. Similarly, once local businesses have been driven out, the possibility of monopolies or oligopolies emerging in retailing (both on the input and output side) needs to be considered carefully by public policymakers.”
Click here to visit Social Science Quarterly’s website.
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