blevkog

2 words, Kev - 'Tax Revenue' - Municipalities have bought into the meme that big stores mean more revenue and that besides, if they refuse them, they'll just move down the road to the next municipality and set up there. They had something similar happening here in St John's in re: the former Memorial Stadium which got bought out by Loblaws to turn into a Supermarket - although, truth be told, I did support that, since noone else was able to come up with a workable alternative development plan. In the meantime, if you have to shop big box, might I suggest Costco? They actually have pretty progressive policies with regards to employee salaries and benefits.

Actually Dan, I'll give you two more words: "Cheap Stuff". These stores survive because people continue to shop there. North Americans are so addicted to buying "stuff" and to getting it as cheaply as possible, that the majority of us don't bother to assess whether we NEED said item, or what the social costs are, both here and in the third world where our cheap "stuff" is made. Before anybody comes back with any whingeing on how they can't afford not to shop at the cheapest place possible... I realise there are demographics and instances where financial constraints are very real. What I'd ask is this... how much of what comes through Mallwart's swinging doors is something someone REALLY needs? As in can't live without? How much is frivolous shopping? How much is merchandise that it's nice to have?

Oh, I understand what motivates people to shop there, what I want to know is why do municipalities allow these places to set up shop? By and large I'd be willing to bet that the net result of their presence is less for the town:
- less tax revenue because shops in the city that paid more tax/sq. foot are gone
- more costly infrastructure projects to expand facilities to far-flung pieces of nowhere
- loss of potential recreation and park area

I would love to find a report by an economist that lays out the effects of these beasts on local economies. I'm willing to bet that it ain't good.

Its probably a different manifestation of the same disease: Thinking that new jobs are created (which looks good to the public), and thinking of the additional tax revenue... Without thinking the situation through to the fact that you lose more businesses, and so more jobs and more taxes, as these predatory outfits move in. In short, Shortterm/ imaginary gain, without considering the ramifications.

Those reports exist.... Ive seen them. I'll see if I can't find one or two

From Smarteconomist.com

Report 122
How Wal-Mart Affects Local Jobs and Wages
Report on "The Effects of Wal-Mart on Local Labor Markets", a Working Paper by David Neumark (Public Policy Institute of California) Junfu Zhang (Public Policy Institute of California) Stephen Ciccarella (Public Policy Institute of California)
At IssueWith over one million employees and 3,600 stores in the Unites States only, Wal-Mart is the largest corporation in the world. Its success has lead to numerous policy debates over the “Wal-Mart effect” on local economies. The paper attempts an answer to two recurrent questions: Does Wal-Mart create or destroy jobs? Does Wal-Mart lower local wages?
ApproachThis is an empirical paper using hand-collected database which combines employment and payroll data from the US Census Bureau’s County Business Patterns and Wal-Mart administrative data on 3,600 Discount Stores and Supercenters. The paper estimates the effect of Wal-Mart on local wages and employment using an original statistical technique; it is accessible to readers with some background in econometrics.
FindingsThe authors find that a eight years Wal-Mart presence reduces local employment by 2% to 4%. There is also evidence that workers’ payroll in the retail sector declines, and that the earnings of businesses fall. Looking at the overall impact of Wal-Mart on the local economy, there is evidence of a slight increase in employment and of a decrease in retail prices. At the same time total payrolls - per worker and per person - decline by about 2% and 5%, respectively. These results imply that residents of a local labor market earn less after the opening of Wal-Mart stores, but that their purchasing power increases.
NoveltyThe originality of the paper lies in its particular statistical technique. Indeed, the authors use detailed information both on store location and on Wal-Mart expansion timing strategy to distinguish between the effect of Wal-Mart stores on labor markets and the impact of the labor market on Wal-Mart location decisions. This technique provides substantially new insights.

Review
With a total revenue of $285 billions in 2005 Wal-Mart can be classified as the largest company in the world. Its workforce represents almost 1% of the total employment in the United States, and nearly 10% of retail employment.

Wal-Mart has encountered increasing resistance from local communities. Two of the most frequent criticisms are that Wal-Mart does away with more jobs than it creates in a community, and that Wal-Mart’s wage levels lower the standards for all workers, not just by creating low-wage jobs but also by driving down salaries across the board. Wal-Mart repeatedly disputed these claims. Lee Scott, Wal-Mart’s CEO, asserted that “there are some who say that Wal-Mart’s wages and benefits have some kind of negative impact on wages across the board. That’s just plain wrong.”

In this paper the authors seek to analyze these critiques using a formal and innovative econometric procedure. They collect and study empirical evidence to answer the following two questions: Does Wal-Mart create or eliminate jobs? And does Wal-Mart indeed push down earnings?

To this end the authors compiled an original dataset combining data on employment and on Wal-Mart store location. Employment and payroll data are drawn from the US Census Bureau’s County Business Patterns. In addition they obtained administrative data from Wal-Mart on 3,600 Discount Stores and Supercenters. This information refers to every Discount Store and Supercenter still in operation in the United States at the end of the fiscal year 2005. For each Discount Store and Supercenter the data include store number, street address, city, state, ZIP code, square footage, store type, opening date, store hours, latitude, longitude, county, and Metropolitan Statistical Area code.

Using these data, the authors estimate Wal-Mart impact on local labor markets. A relevant estimation issue is to be considered when calculating this impact. Clearly when Wal-Mart opens a new store in a new location it affects employment level and the average payroll in that particular local market. Nevertheless it may be the case that the decision to open a new store depends on information Wal-Mart has on that local market. To put it differently, there can be situations in which Wal-Mart decisions affect the local labor market and situations in which local labor market trends affect Wal-Mart location strategies. For example, if Wal-Mart tends to enter fast growing areas in booming periods, we may expect to observe an employment rise in response to Wal-Mart’s entry, even if the store actually has a negative effect on employment.

To distinguish between cases in which Wal-Mart influences the labor market and cases in which the opposite occurs, in fact, is not easy. The authors attempt to solve this problem with a novel econometric procedure. In particular, they use detailed information on the geographic and time pattern with which Wal-Mart stores open, slowly spreading out in waves from its first stores in Arkansas. This new approach provides estimates which are substantially more precise than those of previous studies.

The main result is that Wal-Mart has an overall negative impact on retail employment. More specifically, the typical period Wal-Mart stays in a local economy, eight years, reduces local retail employment by 2% to 5%. In contrast, there is evidence of an increase in employment in general merchandising, the retail sector Wal-Mart belongs to. It seems, therefore, that Wal-Mart presence reduces overall retail employment, while shifting its composition toward general merchandising. In other words, the arrival of Wal-Mart effectively leads to the exit from business of retail shops in the same county. Moreover, Wal-Mart is found to locate new stores in areas where the retail sector is expanding.

There is also some evidence that payrolls per worker also decline in the retail sector, but this effect is contained. Notice that a decline in payroll does not necessarily imply a decline in hourly wages, since payroll data do not distinguish between full-time and part-time workers, and therefore do not reflect changes in the composition of employment.

Do these effects on the retail sector carry over to the whole economy? Total employment appears to increase, albeit modestly, and the change varies across regions - it is positive on the two coasts, and negative in the South. At the same time, the data strongly suggest that total payroll per worker declines, by up to 2%. This implies that following the entry of Wal-Mart stores residents of a local labor market earn less, and is related to a shift towards lower-paying jobs and the use of part-time workers. Finally, the authors find unambiguous evidence of the negative effect of Wal-Mart stores on retail employment, total employment and total payroll per person in the South, where there are more Wal-Mart stores on both a total and per capita basis, and where they have existed for a longer period.

It is important to stress that these results do not necessarily imply that Wal-Mart stores have a negative impact on the welfare of residents in the markets that these stores enter. The estimates obtained only consider Wal-Mart impact on labor markets. Indeed, when a new store appears, there is a reduction in market prices, and this increases consumers' purchasing power. Besides, if prices are lowered at Wal-Mart as well as in other stores, the gains for consumers may be widespread. This positive effect on purchasing power may in fact be larger than the negative effect on labor market this paper analyzes.

The paper provides a rigorous and relevant empirical analysis, often lacking in policy discussions. In fact, the result could be valuable for managers of large companies as well as for local governments. From a managerial perspective it is useful to anticipate the effects of a new store on local labor markets and this paper provides techniques to predict it. From a public policy perspective, this paper offers arguments to be used in favor or against large companies' entry in a market, replacing informal evidence and one-sided studies sponsored by interested parties such as Wal-Mart, its competitors or union groups.


Also Try:

http://www.wakeupwalmart.com/research/

http://www.ag-econ.ncsu.edu/VIRTUAL_LIBRARY/ECONOMIST/novdec05.pdf

http://www.bigcitiesbigboxes.com/2005/11/fast_company_re.html




But, in all fairness:
http://www.walmartfacts.com/wal-mart-effect.aspx

Good points Roger, I'll admit to only occasionally shopping at Walmart, and only for DVD's, of which there's a dearth of local vendors.

I am no economics major by any stretch of the imagination. However, I am not blind and stupid. I have read enough to get the sense that Malwart (thanks Kev for the spoonerism) is not good for anyone except their executives. Seeing the stories here and the well explained comments simply cements my resolve never to buy anything at Malwart. Edith and I have only made one purchase at Malwart and that was because a coworker gave Edith a gift certificate. So instead of donating the money to Malwart we bought some DVDs. May I never have to go back again.
I read not too long ago that Malwart had to (ordered by the courts I think) to revamp their benefits packages for their part-time employees (are there actually full-time employees?). They had to shorten their waiting peroids to qualify for benefits from 2 years (thats right two years!!!) to 6 months (the same as their full time employees). The waiting period according to the article is around the longest in the industry standards. Now once they get the benefits package, it is apparently the barest of packages and not really worth the effort. This article was refering to the Malwarts located in one of the south western states I do believe. I am unaware of the benefits here in Edmonton nor the rest of Canada however, I am sure they don't offer much either.

my personal view is that "tax revenue" and "cheap stuff" gives credit for deeper consideration than actually happens here. If there's one thing I believe about municipal government it's that the invariablly believe that all development is a good and positive thing. Theres generally very little long term thinking, something they're not much good at anyway, so we get stuck with big-box developments because the corporate accounts guys waved some pretty numbers around and neglected to mention that the new jobs keep people barely above the poverty line if they're allowed to work that often, and that the required infrastructure will be a bare bones affair until they go after the city to spring for the desperatly needed upgrades two years later. A case in point regarding corporate bullying. Here in Riverview the town council was told by the local Superstore to approve their re-development plans or "we'll Shut down and never come back". The council,being gutless folded, even though no-one else believed Superstore or wanted the expansion. More on this later.

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