Stories of local, mom & pop businesses going under in the wake of a newly-opened Walmart are old hat by now. But even so, all those anecdotes – numerous though they may be – lack a certain amount of concrete-ness (which is why the plural of anecdote is not data).
But no longer. Now we have research and data on our side in the battle against cheap Chinese-made plastic gewgaws and deplorable labor practices:
“No matter which direction you go from Walmart, there’s a very high rate of business closures in the immediate vicinity, and the further away you get there’s less and less,” says University of Illinois Chicago economics professor Joe Persky, one of the authors of the study, which was just published in Economic Development Quarterly.
Farther out from the store, about four miles or so, the rate of closure is about average, or roughly 24 percent of small businesses, according to Persky. “Small businesses often close. They have a high turnover.”
But the closer a store was to the Walmart location, the greater the likelihood it would close. Persky and his colleagues found that for every mile closer to the Walmart, 6 percent more stores closed. Close in around the store’s location, between 35 and 60 percent of stores closed.
Walmart has long presented itself as an engine of economic growth, which is an argument the company invariably makes whenever its plans to open a store are not just actually threatened, but even slightly inconvenienced in some way. Here in St. Petersburg, Walmart demanded – and got – tax breaks for building a new Sam’s Club store on a site they claimed was more expensive than they’d anticipated because the groundwater beneath the site was contaminated by chlorinated pollutants. They pressured the city to designate the site a brownfield site, so that the company could qualify for huge tax breaks – the same strategy, it turns out, they followed four years ago for a new Walmart on the corner of 34th Street and 1st Avenue North.
Walmart neglected to explain how, exactly, chlorine-polluted groundwater would make it more expensive for them to build a Sam’s Club on that site. Well, perhaps “neglected” is too strong a word. They probably just felt that threatening to take their ball – and their low-paying jobs – back home to Arkansas was a better strategy. And apparently, they were right.
Honestly, I think the city would have come out ahead if they’d given the tax break money to local unemployed people directly. If the jobs Walmart creates are simply going to result in the destruction of other jobs, then what interest does the city have in paying Walmart a rebate to open a store here?
Meanwhile, about 200 miles to the south, residents of Miami’s Midtown neighborhood refused to roll over for Walmart‘s plans to change the nature of their entire neighborhood by adding a cargo bay to a proposed store there. The cargo bay would have opened up onto a main thoroughfare; residents were naturally worried about the traffic problems such a facility would inevitably bring. But at a hearing on the subject, locals brought up Walmart’s business-killing reputation as well:
For much of this year Walmart and adversaries have dueled over building in Midtown. A store there would be one of only a few the world’s largest retailer has built in an urban core. Plans are in place for similar outlets in Chicago and the Washington D.C. areas.
The retailer says a shop at Midtown could mean up to 350 jobs, and would add another variety of retail to a growing neighborhood that could well absorb it. Proponents say they don’t need the behemoth that sucks the life out of nearby small businesses and doesn’t fit with new cool motif of central Miami …
[Said] Raymond Machado, executive director of the Wynwood Homeowners Association: “In Wynwood we’ve lived with nothing but drugs, so we’re used to traffic. We want this project for the sake of the community, and jobs.”
I don’t know anything about Wynwood, but I can understand Machado’s position. In fact, I agree with him: having a Walmart in your neighborhood is definitely preferable to having a local economy built on the illegal drug trade.
But with that caveat in place, it seems clear to me that luring a Walmart to your neighborhood is an economic solution of last resort. Yes, it’s better than abject poverty and rampant unemployment. But Walmart has a history of promising big and not delivering – remember, they pioneered the tactic of abandoning perfectly functional stores for larger Supercenters just a mile or so down the road. Those empty big-box stores are not easy to find new tenants for.
And now, thanks to Persky and his data, we see that their record on economic health and growth is equally suspect. Walmart’s top priority is not America, or your community, or you. It’s profits. And that’s fine – this is America, after all, and there’s nothing inherently wrong with turning a profit. But you might want to consider that when they come around, asking to build a new store in your backyard.