Everyone has strong opinions about Walmart and what’s more, people have a vested interest economically in the outcome both ways. But what are the facts?
We are not the first community to be impacted by the arrival of Walmart. There were more than 1,749 communities nation-wide, as of 1998 — and I’m sure many more since — that have real-life experience that we can learn from. So I did some research to better understand the probable impacts. Most people on both sides with strong opinions have not looked at this in an impartial manner, but rather through the lenses of their own emotions and economic situations.
From research, what are the impacts on jobs, other businesses, sales tax, property tax and wages?
Impacts on Jobs and Other Businesses
 We need jobs in our community. I think most if not all would agree with that statement. But will the probable addition of a Walmart actually create them as some town leaders speculate? In searching for an answer to that question, I found an interesting study by Emek Basker, University of Missouri – Department of Economics which was published in the Review of Economics & Statistics, February 2005, titled, “Job Creation or Destruction? Labor-Market Effects of Walmart Expansion.”
This study examines the impact of the arrival of a Walmart store on retail and wholesale employment. It looks at 1,749 counties that added a Walmart between 1977 and 1998. It finds that Walmart’s arrival boosts retail employment by 100 jobs in the first year—far less than the 175-200 jobs the company says its stores create, because its arrival causes existing retailers to downsize and lay-off employees.
Over the next four years after a Walmart opens its doors, this continues with a loss of 40-60 additional retail jobs as more competing retailers downsize and close. This works out to a net gain of just 40-60 retail jobs. So for every Wal-Mart job created, the job multiplier for the county can be expected to be much less than one — for every job created, a number will be lost.
On the other hand, according to the research of Kelly D. Edmiston, Senior Economist, Community Development at the Federal Reserve Bank of Kansas City for every job created by a local business, the total impact to the community averages two jobs—one in the company itself and the equivalent of another in local service and other indirect jobs from recirculation of income within the community. Also, because local business owners live and work here, they are invested in the community. With Walmart or another Big Box, profits, rather than being kept in the community and recirculated or invested, are exported to headquarters or elsewhere. So rather than enriching the community through the recirculation of income, many of the dollars leave.
Perhaps we would be better off to invest in “growing our own” as an economic development strategy?
Sales Tax Diversion
Often sales tax revenues are allowed to be skimmed with a “vendors fee” that would potentially allow Wal-Mart to keep a portion of the sales taxes they collect from local shoppers. Walmart has pocketed an estimate $70 million in sales tax diversion nationwide over the past decade according to a 2008 study by Philip Mattera with Leigh McIlvaine for goodjobsfirst.org. In this first-ever comprehensive national analysis of the subject, Good Jobs First found that Colorado had a 3.33% discount rate with no maximum — at a cost to the state of $68,582,000 (see CRS 39-26-106).
Sales Tax Increment Financing (STIF)
Some localities also divert a portion of the sales tax generated by a new retail project to finance tax-free, low-interest bonds that directly subsidize the retailer or pay for infrastructure improvements at the site of the new store or shopping center. This is known as sales tax increment financing or STIF. In Colorado, Walmart is estimated to get $9 million per year according to the Philip Mattera with Leigh McIlvaine study.
Property Tax
Looking to Cortez as an example, Walmart successfully appealed property taxes from 2001-2005 in the amount of $87,969. If something similar happens here, local businesses and property owners would be disadvantaged, paying the full load while Wal-Mart pays less. Imagine what this amount of money invested in our downtown with crumbling infrastructure could do.
Wages
At the January 3 Town meeting, Josh Phair of Walmart stated that average wages for Colorado employees amounted to $13.08 per hour. However, “average” indicates little since that figure is calculated from wages of the highest-paid employees, along with the lowest-paid employees.
So what is the median wage which is more representative of the actual? According to research that Jim McQuiggin of the Pagosa SUN obtained from market research analysts IBISWorld, a Walmart associate makes $8.81 an hour on average. Two years ago, research by consumer group, Los Angeles Alliance for a New Economy found that Walmart employees earn 20 percent less than the average U.S. retail worker, and some $10,000 less than what the average two-person family requires to meet its basic needs.
Looking at our own county data from the 2011 Region 9 EDD Community Economic Development Strategy (CEDS) which was sourced from the Bureau of Economic Analysis — which lags two years behind the current year — Archuleta County has 831 jobs in wholesale and retail, representing 15% of total county employment and 17% of county income ($38,596/employee or about $18.55 per hour).
831 jobs, many of which will be at risk. $18.55 per hour on average versus $8.81 for Wal-Mart.
In conclusion, based on my research, Walmart will add a few low-wage jobs, but take away many higher paying ones in other local businesses. Sales taxes will likely not be a full benefit to us locally, or at the state level. Property taxes will likely not be as positively impactful as predicted.
I don’t see how this enriches our community. Sure, Walmart will be richer, but in my view our community as a whole will be poorer.
Personally, I know where I stand.
Some of our community should not be enriched at the expense of others — especially when 86% of the folks in the community (county) do not have a voice in Town Council decisions, and when Town voters are not representative of our community as a whole, to whatever extent their input is actually considered.
At least I’ve tried to set aside my emotions and look at this impartially. I urge all of you to do your own research and draw your own conclusions, then send your input to your Town and County government representatives. |