Wednesday, May 11, 2011

A Wash

"In considering whether to encourage or oppose Wal-Mart’s entry into the District, our results suggest that job creation should not be an overriding factor. Consumers who shop at Wal-Mart certainly feel they benefit from its availability. However, others may feel that a highly profitable national retailer could adopt more generous labor standards and make a serious effort to preserve neighborhood identity. An open and vigorous debate about these trade-offs is worth having."

David Merriman and Joseph J. Persky, "Chicago precedent: One Wal-Mart's arrive was a wash for workers," The Washington Post, May 6, 2011.

This is the kind of objective assessment that typically is ignored in economic development decision-making about public investment. It takes all the fun out of making the deals. And it's relevant for new supermarkets, shopping centers, etc., even though the analyses may differ. Investing in retail is usually just moving the money and jobs around.

The summary of the Chicago study did make me curious. How many of the small businesses surrounding the new Wal-Mart in Chicago would have closed anyway? They are not exactly a stable group. I would have been intersted, more specifically, in the job quality comparisons -- health and safety, flexibility, credentialling, wage theft, benefits. How many of these small businesses were absentee owned? Also, while retail sales may not have increased overall, there is at least the urban legend that you can buy more for less at Wal-Mart. Well, how much?

But in the end, these days in particular, we make these investment arguments with jobs in mind. And it seems to be a wash.

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