New York, NY. Hunter College Report Says Wal-Mart Is An Economic Trojan Horse
A report released this past week by the Hunter College Center for Community Planning & Development, and the New York City Public Advocate, concludes that "the opening of a Wal-Mart in New York City would likely eliminate more jobs than it creates, result in the loss of independently owned small businesses, and create an increased burden on taxpayers."
The study, "Wal-Mart's Economic Footprint: A literature review," refers to Wal-Mart as an economic Trojan Horse.
The job of the New York City Public Advocate is that of a watchdog, ensuring that all New Yorkers receive the City services they deserve and have a voice in shaping the policies of their government." The Public Advocate is an ex-officio member of all City Council committees, and has the power to introduce legislation. Through the office's powers of appointment, the Public Advocate also influences City planning, the budget process, and the management of retirement funds.
"The history of the last decade tells us that Wal-Mart stands to be our City's Trojan Horse," said New York City Public Advocate Bill de Blasio. "Wal-Mart's record of driving small businesses out of town and paying below-poverty line wages to its employees will only exacerbate the current decline of New York City's middle class. We must do everything we can to spur job creation in New York City, but that does not include opening our doors to a proven job killer."
"Studies from all across the country show that Wal-Mart's arrival does not bring the increase in jobs and retail spending that the company promises," said Brian Paul, Center Fellow and Masters of Urban Planning Candidate at Hunter College. "Instead, Wal-Mart captures spending from existing stores, driving them out of business and replacing existing retail jobs with lower-paying Wal-Mart jobs. This is not only about one store in East New York. Wal-Mart is planning a massive expansion into urban markets. Allowing one Wal-Mart to enter New York may open the floodgates and devastate small businesses in neighborhood retail districts throughout the city."
The findings from this review include the following: Wal-Mart's opening would result in a net loss of jobs, and fewer small businesses. Wal-Mart store openings kill three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter. Wal-Mart's entry into a new market does not increase overall retail activity or employment opportunities. Research from Chicago shows retail employment did not increase in Wal-Mart's zip code, and fell significantly in those adjacent.
Wal-Mart's entry into a new market has a strongly negative effect on existing retailers. Supermarkets and discount variety stores are the most adversely effected sectors, suffering sales declines of 10 to 40% after Wal-Mart moves in. Stores near a new Wal-Mart are at increased risk of going out of
business. After a single Wal-Mart opened in Chicago in September 2006, 82 of the 306 small businesses in the surrounding neighborhood had gone out of business by March 2008.
The value of Wal-Mart to the economy will likely be less than the value of the jobs and businesses it replaces. A study looking at the estimated future impact of Wal-Mart on the grocery industry in California found that, "the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year." Chain stores, like Wal-Mart send most of their revenues out of the community, while local businesses keep more consumer dollars in local economy: for every $100 spent in locally owned businesses, $68 stayed in the local economy while chain stores only left $43 to re-circulate locally.
The literature review also examined Wal-Mart's impact on costs to taxpayers. "Wal-Mart has thousands of associates who qualify for Medicaid and other publicly subsidized care, leaving taxpayers to foot the bill. For instance in Ohio Wal-Mart has more associates and associate dependents on Medicaid than any other employer, costing taxpayers $44.8 million in 2009. According to estimates, Wal-Mart likely avoided paying $245 million in taxes 2008 by paying rent to itself and then deducting that rent from its taxable income. Wal-Mart has admitted a failure to pay $2.95 billion in taxes for fiscal year 2009.
According to the Hunter college researh, Wal-Mart's low paying jobs contribute to the decline of the Middle Class. Median household income declined by 1.8% nationally and 4.1% in New York City in 2009. "This decline will be exacerbated by low paying Wal-Mart jobs."
Wal-Mart's average annual pay of $20,774 is below the Federal Poverty Level for a family of four. A Wal-Mart spokesperson publicly acknowledged in 2004 that, "More than two thirds of our people... are not trying to support a family. That's who our jobs are designed for." Wal-Mart's 2010 health care offerings have a high annual deductible of $4,400 which means a family would have to spend $5,102 of their own money on health care before Wal-Mart's insurance pays anything. Based on the average salary of a Wal-Mart employee this payment represents almost 25% of their annual income.
The report reviewed more than 50 studies between 2002 and 2010 of Wal-Mart openings in other cities , and concluded that neighboring small businesses are driven to close because of competition. The report warns that Wal-Mart would be a burden on the city's taxpayers, because of their increased subsidized healthcare needs and their past history of failing to pay billions in taxes.
"Studies from all across the country show that Wal-Mart's arrival does not bring the increase in jobs and retail spending that the company promises," said Brian Paul, Center Fellow and Masters of Urban Planning Candidate at Hunter College. "Instead, Wal-Mart captures spending from existing stores, driving them out of business and replacing existing retail jobs with lower-paying Wal-Mart jobs."
What you can do: Wal-Mart's PR campaign to squeeze its way into New York City has continued to escalate, despite the release of the Hunter College study.
The retailer has behaved very much like a political figure running for office in New York: doing polling, setting up a website (walmartNYC.com) and lining up support from prominent area political leaders, including New York city Mayor Michael Bloomberg.
The Wal-Mart website quotes a spokesman from the office of the Mayor of New York City saying: "This city does not have the legal right to prevent any business that can come here that complies with our laws. And if Wal-Mart wants to go into a place as of right they have a right to do that. I've always thought that the more competition the better. People that live in this city are going outside the city to shop at Wal-Marts. So if they're going to shop at Wal-Marts... they might as well have the jobs here and the tax revenues here. But the city does not have the right to say to one business, 'You can't come here.' And we're not going to do that."
The company has sent fliers to thousands of city residents. The New York City Council scheduled a hearing on Wal-Mart's potential impact, but Wal-Mart boycotted the event. "They've made a decision to take it to the people," said one city councilor from Bedford Stuyvesant. "But I would've liked a bit more respect for city government."
On Wal-Mart's website, the company asks visitors to sign a petition for Wal-Mart in New York City which says: "I support Wal-Mart in New York City because I want more money for the city, support for local community organizations, fresh produce, job opportunities, affordable prescription drugs and investment in local businesses."
The Speaker of the New York City Council, Christine Quinn, remains outspoken in her opposition to Wal-Mart. "If you're proud of who you are, if you're proud of your product, if you think you're the best thing since sliced bread, why wouldn't you come and tout it? They're not showing up [at the hearing] because they don't have the stuff they say they have. They don't have the data to refute what myself and others are saying."
Wal-Mart's "community affairs" manager fired off an angry letter to the city council. "I respectfully suggest the committee first conduct a thoughtful examination of the existing impact of large grocers and retailers on small business in New York City before embarking on a hypothetical exercise."
"Wal-Mart can't buy a fig leaf large enough to hide all the harm they would do to our communities and workers if they were to open here," said Stuart Appelbaum, the president of the Retail, Wholesale and Department Store Union. "New York is not for sale."
Readers are urged to go to walmartnyc.com and click the "contact us" tab. Then click "contact Wal-Mart Community," and submit the following message:
"The New York City Public Advocate says just one Wal-Mart store in the city would 'devastate small businesses.' It seems as though its hard for Wal-Mart to escape its own history. Your success has come largely at the expense of other merchants, so it's no wonder that local communities don't want you. Who would knowingly invite a cannibal to dinner? Now you're having to resort to creating websites to encourage people to support you, like a politician running for office.
Who would ever have thought that a retailer would have to learn how to be a community organizer to get accepted in new communities? If Wal-Mart is such a great neighbor, why aren't people welcoming you with open arms? Fortunately, Wal-Mart has enough stores already, and your same store sales are slumping anyway. So perhaps its time to focus on internal issues, like the quality of your workplace and employee compensation -- rather than conquering new territories.
Start by shutting down your PR operation, and redirect that spending to your frontline workforce. It would help your employees save money and live better."