"We know now the true economic impact a Wal-Mart store has on a neighborhood when it moves in," Christopher Fowler, who conducted the research for Puget Sound Sage, said. "The research shows that the negative impact is due to the use of the Wal-Mart business model. A new 'generic' grocery store does not equal economic harm, but a new Wal-Mart does."
"When Wal-Mart comes to town, it is going to reallocate sales and its impact is going to be a function of the difference between what is currently being paid in wages at the existing stores and what Wal-Mart pays," Fowler said.
That redistribution in sales is estimated at $25 million annually, according to the research. This means that nearly $660,000 in wages is lost annually.
"Wal-Mart may say they help people 'Live Better,'" said David West, executive director of Puget Sound Sage, a nonprofit public policy organization that looks at regional economic issues. "But this study shows that communities will be much worse off, with lower wages and less money in the community, after a Wal-Mart opens."
The losses are tied mainly to the low wages Wal-Mart pays its employees.
"These impacts stem from the low wages Wal-Mart pays to its hourly associates compared to the wages earned by comparable employees of existing retail grocery stores," the researchers said. "The difference in wages, which we estimate to be at least $3 per hour, has the capacity to impact not only the workers themselves, but also the people from whom they purchase goods and services."
One important caveat to this research: It applies only to areas where consumer demand for products is already being met. In areas where demand is not being met, however, there is a benefit to having a Wal-Mart since it makes more products available to consumers, Fowler said.