How Terrible: Walmart Plans to "Dump" Six Stores, 1,600 Jobs and $21 Million in Charity on Wash. D.C.

Great post by Mark Perry of "Carpe Diem."

"Washington, D.C.'s unemployment rate has been rising over the last year, and at 11.1% in September was more than two percent above the 9% jobless rate for the country (which has been falling, see chart above). Further, more people in the District are now unemployed - 37,034 - than at any other time in the city's history. So you would think that if an employer promised to bring 1,600 permanent jobs and 600 construction jobs to the city, and also pledged $21 million in charitable donations over the next seven years, that District residents would be thankful, grateful and appreciative, and would welcome that employer with open arms.

Well, think again if that employer is Walmart, and if the District resident is Washington Examiner columnist Jonetta Rose Barras who editorialized yesterday in a column titled "Occupied by Walmart":

"It was bad enough that District elected officials, particularly Mayor Vincent C. Gray, stood by as Walmart announced its intention to dump six stores into neighborhood commercial corridors, creating an environment ripe for the retail behemoth to bully small businesses. The executive exacerbated that short-sighted economic development strategy by signing the "Community Partnership Initiative."

Despite the peacocking by Gray and others after the agreement was signed, the District is receiving mostly crumbs. Walmart has committed to providing $21 million in charitable donations over the next seven years, an average of $3 million a year. That's a pittance."

MP: So instead of gratitude for the thousands of new jobs and millions of dollars of charity Walmart will bring to the District, Ms. Barras ungratefully describes that as "mostly crumbs" and is outraged because Walmart is "dumping six stores" into the District and giving "only" $21 million in charity to the city??

I'm pretty sure that most District residents view this differently, and are grateful that Walmart is "dumping" six stores, 1,600 permanent jobs, 600 construction jobs and $21 million on the District. Especially the 37,000 residents who are unemployed.

Update in response to some of the comments:

A few years ago, when Walmart opened a store on Chicago's west side it created more than 400 good-paying jobs, made the neighborhood safer and helped to revitalize and stabilize the area, which then attracted new stores including a Menards, a CVS pharmacy, two new banks and an Aldi Grocery Store. Local Chicago alderwomen Emma Mitts credited Walmart for attracting many new stores to the neighborhood, and says that "traffic is so heavy on the weekends that it's hard to get up and down the strip, and that's a good thing and I'm so grateful for it."

Although Walmart frequently gets blamed for putting local merchants out of business when it opens a new store, this story provides some evidence to the contrary - by stabilizing a rough area on Chicago's West Side and attracting thousand of customers for "everyday low prices," Walmart actually helped to attract new businesses to this Chicago neighborhood, including direct competitors like Menards, CVS and Aldi.

In other words, Walmart provides many significantly "positive externalities" and "spillover benefits" to the communities in which it operates, even though it frequently gets more attention for some of the "negative externalities" and "spillover costs" it might impose. For neighborhoods like the west side of Chicago, it sure looks like the positive externalities (jobs, tax revenues, great safety, more commercial activity, etc.) far outweigh any negative externalities."

Wal-Mart does far more than churches to assist needy people

See The Retail Principle of Doing Good. It was a letter to the editor in the 11-23-11 WSJ.

"Aaron Belz ("How Calvinists Spread Thanksgiving Cheer," op-ed, Nov. 18) describes a Santa Monica, Calif., church distributing holiday food baskets. But the truth is, Wal-Mart and its counterparts spread far more holiday-food cheer than do churches and public-service groups.

Scholars estimate that the presence of Wal-Mart in a community reduces food prices somewhere between 10% and 15%. That's equivalent to shoppers receiving an additional 5.2 to 7.8 weeks of "free" food shopping. That Wal-Mart's customer base is skewed toward lower-income shoppers reinforces the beneficent consequences of its price effect.

Telling of the good that big-box retailers do for their customers doesn't pack the same "feel good" punch as Mr. Belz's account of a California church. Hey, the idea that one can do good while doing well in the marketplace has always been a tough sell.

Lest you think me a curmudgeon putting down church efforts, let me say that I contribute to my church's food and winter coat drives. And my church is part of the same denomination as the church Mr. Belz describes (Presbyterian Church in America). That I also believe that my local Wal-Mart does far more than my church to assist needy people often causes me to feel like the odd man out.

T. Norman Van Cott

Department of Economics

Ball State University

Muncie, Ind."

Wal-Mart brought much-needed competition to financial services.

See Walmart Serves Underserved and Unbanked Customers with Everyday Low Banking Fees by Mark Perry of "Carpe Diem."

"YAHOO FINANCE -- "Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the huge retailer would drive small bankers out of business and potentially conflate its banking and retail operations. Ever since, Wal-Mart has been quietly building up à la carte financial services, becoming a force among the unbanked and “unhappily banked,” as one Wal-Mart executive put it.

Jennifer Tescher, chief executive at the Center for Financial Services Innovation, which focuses on finding financial services for those not well served by banks, said Wal-Mart brought much-needed competition — and lower fees — to financial services.

“I think it’s one of the best things that has happened in the last 10 years for underserved consumers,” she said. “There is now much more choice in the marketplace for consumers, where they can vote with their feet.”

Even before the recent outcry against banks, the services had become popular with cash-poor customers, many of whom never had a bank account and found the services more affordable than traditional check-cashing operations. Now newcomers to the ranks of the banking disaffected are helping to swell the numbers, Wal-Mart officials said."

MP: Gotta love Walmart for improving the lives of millions of low-income Americans on a daily basis."

A case against the case against Walmart

Great article by Art Carden in The Washington Examiner. Carden is an assistant professor of economics at Rhodes College in Memphis.

"As people crowded into local D.C. grocery stores last weekend, gobbling up a limited supply of water and canned goods in preparation for Hurricane Irene, some may have found themselves pining for the open aisles, vast selection, and efficient check-out operation offered by Walmart.
These shoppers may get their wish in time for next year's hurricane season, as the retail giant has announced plans to open four stores in the District starting in 2012.

A coalition of labor unions and advocacy groups calling itself "Living Wages, Healthy Communities" has staked out opposition to this plan, arguing that the big-box behemoth claims jobs, reduces wages and destroys communities. Research suggests that these claims are little more than myths.

That people want jobs at Walmart is obvious -- new Walmarts in cities like Cleveland, Oakland, Calif., and Glendale, Ariz., have received thousands of applications for hundreds of jobs. But does Walmart displace as many or more jobs than it creates? Studies show that the effect of Walmart on retail employment is, at worst, ambiguous. The economist Emek Basker estimated that new Walmarts cause net job creation in the retail sector, albeit with slight job losses in wholesale. Another study estimated that each new Walmart job displaces 1.4 retail jobs, but still creates enough new labor in other sectors that its overall effect is neutral.

This is consistent with state-level data, which suggests there is no detectable "Walmart effect" on the performance of the small-business sector.

Does the retail giant drive down wages, as its critics suggest? A trio of researchers estimated that Walmart might have lowered total retail wages by some $4.5 billion in 2000. But does it actually reduce their purchasing power? Based on estimates of Walmart price effects, Charles Courtemanche and I made a back-of-the-envelope calculation that Walmart Supercenters (i.e., those that sell groceries) alone saved the average household $177 in 2002. If we multiply that conservative estimate by the number of households in the 2000 census, we get a savings of $18.7 billion -- more than four times the supposed loss in earnings.

Walmart's effect on prices -- particularly food prices -- is one of the reasons economist Jason Furman called the company "a progressive success story." Walmart's effect on food prices disproportionately benefits poorer households, which tend to spend a larger percentage of their income on food than wealthier households.

Another common objection from Walmart critics is that the company destroys communities and saps them of the social capital they need to really flourish. In two 2009 papers, Courtemanche, Jeremy Meiners and I explored a range of indicators that measure "social capital" and "individual values" and found that evidence for this claim is pretty weak. Most likely, Walmart just doesn't matter.

In a paper critical of the company's practices, historian and business ethicist James Hoopes conceded that Walmart employees have "high morale" and that "it is not known how many Walmart workers have real prospects of moving on to better-paying jobs, how many have working spouses or partners, how many are single, how many are supporting children, how many are pensioners supporting Social Security, how many live below the poverty line, how many are homeless. A study answering those questions would be a great contribution to understanding our society today."

Such knowledge would not merely be "a great contribution." It is absolutely necessary for anyone to make the kinds of claims that Walmart's critics make routinely. The burden of proof in this situation is not on Walmart, but on those condemning the corporation."