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01.08.2008 5:19 pm

Wal-Mart is no job-killer, study finds

St. Louis Post-Dispatch

Terry J. Fitzgerald of the Minneapolis Federal Reserve Bank is the latest economist to study Wal-Mart’s effect on small towns, and his findings won’t be welcomed by the Wal-Mart bashers out there. According to an article  in the bank’s Fedgazette, Fitzgerald’s research doesn’t support the widely held belief that Wal-Mart is bad for small towns. He looked at 40 counties that got Wal-Marts between 1986 and 2003 and compared them with 49 similar sized, non-Wal-Mart counties. Here’s how the article describes the findings:

For example, Wal-Mart is widely believed to destroy local firms and jobs and to have a dampening effect on wages. But fedgazette findings suggest the opposite: Firm growth, employment and total earnings were somewhat stronger in Wal-Mart counties and, in some cases, even in the retail sector. The research does suggest that retail earnings per job fell in virtually all counties studied. But they actually fell by less in Wal-Mart counties.

The study also showed little evidence that Wal-Mart was laying waste to small businesses:

Median establishment growth in Wal-Mart counties, for example, was stronger than in non-Wal-Mart counties, particularly among smaller employers.

It’s true that Wal-Mart generally chooses to locate in counties with larger populations and healthier economies, so this research doesn’t amount to an endorsement of the giant retailer as a job creator. Fitzgerald and co-author Ronald A. Wirtz conclude:

In sum, fedgazette findings suggest that Wal-Mart has a slightly positive effect on counties where the retailer decides to set up shop. But the effects are small; one could call the results mostly a wash

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8 comments

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With all due respect,the study compares apple and oranges, Mr. Nicklaus. Critics charge, rightly, that Wal-Mart destroys the economies of smaller towns. The pro-Wal-Mart study examines not the towns involved, but the counties.

When we moved to Pacific in 1993, Wal-Mart was the main general merchandise store in town (There was one Dollar General). Wal-Mart left circa 1996, and no incentive, TIF proposal, or any other perk could get another similar general merchandise store in town in the 12 years since. Now, we’re in Franklin County. One could cite the staggering growth of retail in the town of Washington 12 miles away(they just got a Hyper-Wal-Mart, Kohls, big Penneys, super Schnucks and heaven knows what else in the same time period) as being “great growth in the county”. Sullivan, 30 miles away, has exploded, too. But it doesn’t do us any good, except lessen our chances to get anything bigger than another Dollar General. I, quite proudly, managed to do all my Christmas shopping neither in Washington,nor Sullivan and without darkening the door at Wal-Mart.

In this case, a rising tide does not lift all ships.

— Teresa
10:40 pm January 8th, 2008

Nicklaus is a long-time Wal-Mart defender/apologist. I am sure this isn’t the last pro-WallyWorld word we hear from him.

Though, I would like to see the report take into account the affect on local and state government by Wal-Mart. I found the following story of most interest (and typical of Wal-Mart).

http://www.newsobserver.com/front/story/861773.html

— suzyjax
8:56 am January 9th, 2008

Wal-Mart and its anti-worker mindset is leading our beloved country’s race to the bottom. It is amazing to me that David rarely, if ever, cites studies which contradict his rightwing, Friedman-style economic bent. For example, a recent study by a California university showed that a simple increase across-the-board of one penny in every product sold by Wal-Mart would be enough to give its downtrodden workers and their families adequate health care coverage. Raising the pay of its workers to $10.00 an hour, hardly an outrageous sum, would cost the average Wal-Mart shopper (if ALL of the cost of this increase were passed through to the consumer)an extra nine dollars per year. I bet if the general public were aware of these facts, they would be getting on Wal-Mart pretty hard about their stingy attitude toward their workers. Of course, this also explains why Wal-Mart works so hard against allowing their workers free-choice regarding unionization. It is well-known that after the Meat-Cutters Union won an election in just one store in Texas in 1998, Wal-Mart closed all of its fresh-meat operations in that area in order to prevent the union from negotiating with a properly-certified labor organization. Unions built our middle class and the super-rich are working hard to shrink it. Wake up, David and Wake up, America!

— whiterosesociety
9:04 am January 9th, 2008

Congrats, Teresa. I’m glad your family liked those Dollar General chocolate covered cherries.

Can either of you three tell me how reporting the results of a study qualifies one as an apologist?

Suzy, if you could legally, according to current law, reduce your taxes, would you do it? If not, why?

— Amazedbythelunacy
10:47 am January 9th, 2008

Amazed: Failing consistently to report results from diverse studies on this economic matter makes one, ipso facto, an apologist for the one side that is consistenly represented. By the way, does any other far right wing, plutocratic think tank(the Show-Me Institute)get any more ink in the P-D’s Business Section than Republican financier Sinquefield’s Show-Me Institute? Rightwingers only cry about “fair and balanced” in the other sections of the paper–they obviously “own” the Business Section! Wake up, America!

— whiterosesociety
10:59 am January 9th, 2008

Did the Show-Me Institue or Sinqa somebody even appear in the article?

I only saw Terry J. Fitzgerald, economist with the Minneapolis Federal Reserve Bank.

Resume reading things that didn’t actually appear now, Whiterosesociety.

— Amazedbythelunacy
12:38 pm January 9th, 2008

Amazed: nothing exists in a vacuum. I believe it is permissible to bring up other items, especially ones related to the blog in question, during one’s comments. My point was that David skews the discussion by highlighting studies which back up his conservative economic viewpoint. The Show-Me Institute is frequently spotlighted in David’s work, while other viewpoints are neglected. Rex Singuefield is a super-rich Republican funder who also funds the far right wing think tank called the Show-Me Institute. I like Naomi Klein’s definition(paraphrased here) of a think tank: composed of hacks paid to think by the makers of tanks! Change is coming, folks and it is about time! Wake up, America!

— whiterosesociety
12:53 pm January 9th, 2008

I’ll quote the conclusion of David’s post:

“It’s true that Wal-Mart generally chooses to locate in counties with larger populations and healthier economies, so this research doesn’t amount to an endorsement of the giant retailer as a job creator. Fitzgerald and co-author Ronald A. Wirtz conclude:

In sum, fedgazette findings suggest that Wal-Mart has a slightly positive effect on counties where the retailer decides to set up shop. But the effects are small; one could call the results mostly a wash.”

Heaven forbid that anyone on either extreme should be able to accept the rational concept that Wal-Mart, or practically any other aspect of the economy now or historically, has characteristics that benefit some people and harm others. Recognizing that, on balance, the benefits of free market competition generally exceed the disadvantages, I first pay attention to the specific issue (such as the real economic impacts of Wal-Mart, positive and negative) and then look for ways to compensate people who “lose” without totally wiping out the benefits to people who “win.” And the most impartial way of doing that is for the people who “win” — and therefore realize higher incomes — to pay a higher portion of their incomes to taxes than those who “lose.”

— Ted44
2:09 pm January 9th, 2008