Wal-Mart, the world’s largest retailer, has benefited from more than $1 billion in economic development subsidies from state and local governments across the United States, according to a new study by Good Jobs First, a Washington, DC-based research center ( available at http://www.goodjobsfirst.org ). “Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance,” said Philip Mattera, research director of Good Jobs First and principal author of the study.
The study found more than 240 cases in which the construction of a new Wal-Mart facility was assisted by taxpayers. Apart from 160 retail outlets, the study found subsidies at 84 distribution centers, representing more than 90 percent of the network of huge warehouses Wal-Mart has built to facilitate its expansion. Mattera stressed that the $1 billion figure is necessarily an understatement, given that public disclosure of subsidies is severely limited.
The value of subsidies for individual distribution centers ranged as high as $48 million (with an average of $7.4 million), while for retail outlets the largest was $12 million (average: $2.8 million). Subsidy deals were found in 35 states, with the most in California, Illinois, Missouri, Texas and Mississippi. In dollar terms, Louisiana, Florida and New York also ranked high.
“That a company with $9 billion in profits can wrest subsidies from state and local governments shows that the candy store game is out of control,” said Greg LeRoy, executive director of Good Jobs First. “The subsidies to Wal-Mart are particularly troubling, given that it uses taxpayer dollars to create jobs that tend to be poverty-wage, part-time and lacking in adequate healthcare benefits.”
The study recommends that states prohibit subsidies to retailers except in distressed areas that lack adequate retail outlets for necessities such as food. Any retailer receiving subsidies should be required to pay a living wage.
The study was funded in part by the United Food & Commercial Workers, but the union played no role in the research or analysis. Good Jobs First is a non-profit research center promoting accountability in economic development.
Creating poverty-level, part-time jobs without adequate healthcare is the American way!
This doesn’t count their legion of workers whose income is often supplemented by government-funded low income and poverty progams.
Why on earth would a community give any kind of break to Wal-Mart moving in. Bizzaro-do they know what happens when Wal-Mart sets up shop on the outskirts or far suburbs of town (where they always take root)? It’s like Economic Cleansing.
How does Wal-Mart bring in more money and economic growth to your community. Existing businesses that pay their workers better take a hit from Wal-Mart.
The only thing Wal-Mart brings is short term employment for construction of their shopping center and lower cost of goods to the public. However, their increased buying power has no effect on community growth, because Wal-Mart doesn’t exactly create good jobs in the community or reinvest it in other community projects. All the profits go to their destestable corporate headquarters in Arkansas.
Wal-Mart serves as an impediment to rural growth. Rural growth in American is largely driven by tourism and retirement, low-cost manufacturing, and natural resource usage (farming, mining, and forestry). The establishment of Wal-Mart and other “big box” stores stifle the establishment of the small businesses in the area which would then reinvest in the community while they grow their businesses.
There’s a certain degree of protectionism in that assertment above, in the sense that government should step in to support inefficient businesses. Populism is sometimes prudent, and if there was truly a healthy economy between the businesses then the comparative gap in cost of living between an infested community and a Wal-Mart free community will not be that great, and the benefits to the community will be worth the cost.
There’s a huge demographic shift away from the Great Plains region.
Yeah, but it’s being balanced out by booming rural growth in parts of the Rocky Mountain states and areas near and east of the Mississippi.
Once again, God forbid anyone be allowed to make their own decisions. What could the people running small towns possibly known about running a small town?
I’ll have you know I post on an INTERNET message board and read several somewhat biased and not incredibly well educated blogs a day. If I don’t have a firm grasp on economics and urban growth policies, no one does.
Protectionism and subsidies are invariably a bad idea on principle, but I assume that Midnight and routlaw don’t agree with that. Also, Jason is pretty much right. I don’t think there are any industries that get fed by small towns that aren’t massively dependant by my tax dollars.
Why would you automatically assume those people running those small towns know best? It’s not like they’re any less human than the rest of us and certainly subject to the big sales pitch from someone coming in and promising increased revenue down the line for a few tax abatements here and there now.
Do I think all small town governments are run by idiots? Not at all. But to suggest that every town has well-educated forward-thinking people elected locally is equally silly.
God knows, there’s enough anecdotal stories from newspapers in Ohio of dumb politicians throwing money away in the most obviously wasteful manner possible.
In general, any money from the government into the real world spells trouble. The government doesn’t know how to spend money on anything besides infrastructure, education, and national defense. And it fucks up all of those, so never mind.
But the point is, bringing a Walmart into a town is not a bad thing just because some lobbying group press release says so. Walmart provides a lot of tax revenue and jobs.
It’s just tremendously annoying to read this shit from Midnight Son(who I know has never taken an economics class in his life) telling small town folk that they are better off unemployed instead of making $8/hr at Walmart.
It’s not that I think small towns don’t know what they’re doing; it makes perfect sense, and if I was trying to keep my small town alive I’d do the same thing.
The issue I have is that they’re shaking down the cities to get out of taxes. What is it with cities and whoring themselves out for jobs? It’s a classic lose-lose scenario for everyone involved but the companies; why the heck should the taxpayers of the communities have to subsidize the businesses that locate there?
I’m sure that when Wal-Mart wants to build in a new town, there are a few palms greased, legally, that help open the doors.
Also, and I kind of hate to say this, but if some mom and pop stores are wiped out, how much does that hurt the community? It’s likely that Wal-Mart provides cheaper goods and better selection than the stores it displaces.
I think the biggest issue is that Wal-Mart is able to stay non-union and competes (and competes well) with union stores.
The taxpayers don’t “have” to do anything. They, through their elected representatives, are perfectly capable of telling Wal-Mart that they won’t be giving them any tax incentives. And, of course, Wal-Mart is perfectly free to elect not to open a store in that town.
And that’s the choice: subsidize, or lose the new buisiness.
It is unsurprising that many small towns would elect the former. Yes, this will put a few small businesses out of business. Welcome to capitalism. If you can’t provide additional service sufficient to entice consumers to pay your higher prices, then your cheaper competitor will prevail. And Wal-Mart will provide many more jobs than those small businesses provide. Yes, they may be lower-paying jobs, but ask yourself: is it better to have a community with a handful of relatively high-paying jobs and lots of unemployment, or to have a community where jobs are plentiful but less remunerative?
A responsible town leader will look at more than just the health of Joe’s Hardware Store and Bobby Ray’s Sporting Goods. He’ll look at the health of the whole community. And he can rationally conclude that a community where more people are working, productive members of society is a better community than one with long unemployment lines.
And, of course, the real beneficiaries of Wal-Mart moving in are the community’s poor (and yes, they existed before Wal-Mart). The money they save at Wal-Mart might be trivial per-item, but it adds up. Maybe not enough to retire to Boca, but enough to have nice meal out every now and then or take the family to a ballgame or buy a few nice things for their home.
Those small improvements in the lives of many – the little things that make life worthwhile – are always discarded as irrelevant. And why? So the wealthy can cling to their picturesque notions of a Norman Rockwell middle America? So charming main street shops can be preserved on the backs of the poor?
And Wal-Mart will provide many more jobs than those small businesses provide.
This is dubious. Esepcially with regards to the long-term economic outlook of the town. Profits from small business remain in the community and reinvestment-and the corresponding job growth that comes with it-is more likely than with Wal-Mart, where all the profits are shipped back to Bentonville. A local business that is successful can bring on more help or open new branches to accomodate different areas of the town.
“Yes, they may be lower-paying jobs, but ask yourself: is it better to have a community with a handful of relatively high-paying jobs and lots of unemployment, or to have a community where jobs are plentiful but less remunerative?”
That’s a great question. And I don’t think the answer is as clear as you’re implying it is. With lower-paid, no-benefit workers come increased subsidies for their welfare (food programs, subsidized housing and daycare) as well as less tax receivables. And that’s assuming Wal-Mart truly brings more jobs than it kills off, which is a subject that it well open to debate, with findings varying on both sides of the fence from a cursory google seach on the matter. Some reports say there is net job loss when a Wal-Mart comes in over time, some say there is a job gain. The only definitive job gains from Wal-Mart come right when the store is opened and from the construction of the Wal-Mart and its shield generator on the moon of Endor to prevent it from Rebel attack. :wink:
The betterment in the quality of living for people who have a Wal-Mart to purchase lower-cost goods with is one that I haven’t seen much research on, but does make some empirical sense. I would think, however, that competition between local merchants would drive down prices even without a Wal-Mart around to set a bottom-tier absolute.
A snapshot of Georgia’s program for uninsured children shows that it’s packed with kids of Wal-Mart employees.
A state survey found 10,261 of the 166,000 children covered by Georgia’s PeachCare for Kids health insurance in September 2002 had a parent working for Wal-Mart Stores.
That’s about 14 times the number for next highest employer: Publix, with 734.
Wal-Mart is the state’s largest private employer. But when the top four companies on the list are measured by number of PeachCare children per the number of employees in Georgia, Wal-Mart still dominates.
The survey findings surface as Wal-Mart’s pay, benefits and corporate policies have come under fire nationally. Labor unions and other critics have denounced the Arkansas-based retail giant for what they call low-wage, low-benefit jobs. And unions fear the influence Wal-Mart practices could have on employee benefits in all industries.
So we should give money, to put people on welfare? Though I do love Damien’s picturesque conversion of Walmart shopper’s lives, filled with ballgames and apple pie. Then to only create a strawman a few lines later so he can use this line So the wealthy can cling to their picturesque notions of a Norman Rockwell middle America?
That depends on the answer to this question: what were those people doing before Wal-Mart came along? If they were umemployed, or employed under worse conditions, then they are better off. It’s better to have partially-subsidized working poor than a class of poor entirely bereft of job opportunities.
I don’t think there was anything “picturesque” about my description. I specifically said the improvements were small. And surely you can’t deny the accuracy of my portrayal – saving fifty cents on diapers and a dollar ten on baby clothes and twenty cents on ligh bulbs and so on eventually adds up to enough dough for small but meaningful purchases.
Methinks you need to revisit the definition of “straw man.” I’m surprised you don’t know it, since you employ it as a tactic so frequently.
As you note, this is a disputable point. I’m inclined to believe that it is true, however, for the simple fact that small towns continue to try to attract Wal-Mart stores. It isn’t like Wal-Mart appeared on the scene yesterday, after all. Its impact on small, local businesses is well known. I suspect that if the economic impact of attracting a Wal-Mart was favorable less often than it was unfavorable, you’d see less incentivizing on the part of small towns.
That isn’t to say that it’s always a favorable outcome, of course; I’m sure that there are communities for whom Wal-Mart has been a net loss. But I’d lay good money down on the proposition that attracting such a store is beneficial more often than it is not.
Assuming, of course, that the small business owner doesn’t just dividend out all his profits and invest them in his personal E-Trade account.
It also ignores the fact that Wal-Mart employees spend money at local establishments, and that the lower prices available to Wal-Mart frees up money to be spent elsewhere.
Well, obviously I’m painting in broad strokes. But neither do I think the answer as muddy as you’d like it to be.
You make the same mistake as Chet: assuming that the bulk of those workers were employed at above-subsidization levels before Wal-Mart comes into town.
I think it a mistake to presume less tax recievables, too, particularly at the local level. Increased employment means more sales and property tax revenue (rememeber, renters pay property taxes as a component of their rent).
You assume competitive local merchants, which isn’t always the case. People will drive a ways to go to Wal-Mart because they can take care of a raft of shopping needs under one roof. They may not be willing to drive all the way across town to check out a store where they can only buy one or two things. And, of course, Wal-Mart’s price edge stems from things simply unavailable to small businesses: a sophisticated inventory management model and tremendous economies of scale.