"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."
This should be good (and by good I mean bad economics).
"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.
But where do the Wal-Mart employees come from? Presumably they are providing higher wages (or benefits) to attract the workers.
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.
By redistribution of sales, I assume we are talking about consumers buying cheaper products and thereby saving money?
"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 study may show that, but this story sure doesn't explain it that way.
The losses are tied mainly to the low wages Wal-Mart pays its employees.
I agree that may be a cost, but what about the benefits of having Wal-Mart? The reason 'generic' stores go out of business when Wal-Mart comes in is that consumers are able to save money (which can be spent elsewhere in the community) relative to shopping at the 'generic' store.
"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."
Again, what about the savings to consumers who shop at Wal-Mart instead of the more expensive 'generic' store? Those savings go to the purchase of other 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.
Scratching my head.
via www.mnn.com
