Studies paint mixed picture of big box’s economic impact

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By ERIC A. HOWALD
Of the Keizertimes

The supporters of the measure to limit big box stores in Keizer discovered early on the difficulty in disentangling the generic big box from the spectre of Walmart.

Given that 90 percent of the country’s population lives within 15 miles of a Walmart, it’s also where most researchers direct their efforts when testing the popular assumptions about the impact of big box stores.

In the past few weeks, we’ve talked to the people behind the movement, examined the potential effects of the Keizer measure, and looked at how other cities have handled big box limitations. In this final installment, we take a look at what research has been done that rejects and supports the many varying claims concerning big box impacts.

In recent months, both sides of the battle over Keizer’s big box limitations have claimed themselves to be protectors of Keizer’s local business and local jobs. Researchers have found that the effects of a Walmart moving into town depends somewhat on the overall economic picture of the area.

In a study conducted by the Federal Reserve Bank of Minneapolis, researchers compared small counties that recently opened a Walmart with those that didn’t. They stressed that while the study discovered trends, Walmart could not be accused of being the cause.

The study found:

• Firm growth, employment and total earnings were somewhat stronger in Walmart counties and, in some cases, even in the retail sector.

• When earnings fell across the board they decreased by less in Walmart counties. However, when earnings began to recover, they recovered more slowly in Walmart counties.

• Non-Walmart counties saw stronger growth in total compensation — wages plus benefits like health care and retirement contributions — for wage and salary workers.

Another study conducted by researchers from the University of California, Irvine, Clark University and Cornell University looked at U.S. Census Bureau’s County Business Patterns data between 1977 and 2002, and arrived at a more severe conclusion.

“On average, Wal-Mart store openings reduce retail employment by about 2.7 percent, implying that each Wal-Mart employee replaces about 1.4 employees in the rest of the retail sector,” the study states.

A study that examined Walmart effects on sales of existing businesses in Mississippi, found that sales of competing grocers declined by as much as 19.1 percent after five years; sales at building material stores declined by up to 14. 9 percent after five years; total sales at existing businesses rose after the first year a supercenter opened before declining by 2.8 percent.

The study also offers the following bit of advice for city officials looking at the issue of allowing Walmart stores in their neighborhoods:

“Quite often city councils and city staff are so anxious to attract new businesses that they will offer very attractive financial incentives and perhaps change zoning status in order to attract supercenter type stores. Their primary motivation seems to be the belief that these new businesses will increase the property tax base, increase sales taxes (where local sales taxes are in play) and increase employment. These are worthy goals, but many times, the net increases are minimal as the new big box stores merely capture sales from existing businesses in the area. A reduction of sales for existing businesses usually translates into fewer employees, less sales tax and lower property tax collections from the local stores.”

A study commissioned by the city of Barnstable, Mass., looked at the city costs for several different types of nonresidential developments within their township and found that big box developments cost the city about $468 per 1,000 square feet when all associated costs (capital improvements, city staff services, police, public works, etc.) and revenues were taken into consideration. The most lucrative nonresidential developments were determined to be specialty retail stores.

In regard to crime around Walmart stores, only one study looked at the issue and it was commissioned by Wake Up Wal-Mart, a campaign group founded by the United Food and Commercial Workers Union. It appears to be the least professional of the studies included in this article, but one part of the study contrasts the difference in police calls to “high-incident” Walmarts and Targets located within 10 miles of those stores.

“The average number of police incidents reported for these WalMart stores was 770 per store in 200 … the average number of police incidents reported among nearby Target stores was 170 in 2004,” the study states.

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