The Wal-Mart Conference: Is Wal-Mart Good For America?

A year in the making, an independent academic conference about Wal-Mart provides unprecedented information about the company and offers mixed results.

3 minute read

November 8, 2005, 9:00 AM PST

By Chris Steins @planetizen


"One of the world's most private of public companies went public in an unusual way yesterday when it hosted a presentation of nine academic papers on Wal-Mart's impact on the economy, the retailer's latest move to repair its image. The conference's sessions featured statistics, charts and econometric models. The papers focused on different aspects of the world's largest retailer, finding positive and negative impacts."

Global Insight is an independent consulting firm that was retained by Wal-Mart to provide an economic analysis of Wal-Mart's impact, and to organize the conference. Global Insight's unique study includes the following analysis:

Wal-Mart both sponsored the study and provided unprecedented access to detailed data on sales, employment, and wages at Wal-Mart stores and Wal-Mart Supercenters, going back to the mid-1980's; detailed data on its purchases from its suppliers in 2004; and, a sampling of employee wage data by store and job category for October 2004. Global Insight structured the study to determine the net economic impact of Wal-Mart at the national, city, and county level.

According to the study, Wal-Mart had a positive impact on employment nationwide, generating 210,000 jobs by 2004, a 0.15% increase relative to the number of jobs that would have existed without Wal-Mart. Labor market dynamics, embodied in Global Insight's Model of the U.S. Economy, resulted in nominal wages across the whole economy declining 2.2% by 2004. This decline was more than offset by the fall in consumer prices, creating an increase in real disposable income of 0.9% by 2004. "Consumers earned less in nominal dollars, but their income bought them more in the economy with Wal-Mart because of real disposable income gains," the study concluded."

To supplement the national analysis, the study includes an in-depth examination of the Dallas-Ft. Worth area where Wal-Mart has a significant presence. Consumer cost savings in the area are estimated at 4.0% by 2004. "The impact of the cost savings in conjunction with other direct, indirect and induced impacts has led to 6,300 more jobs and a 2.6% increase in real disposable income in the area," the study said.

The Global Insight study also included an analysis of the effects on the structure of county-level retail employment when Wal-Mart enters or expands in a market. The study shows that with the opening of a typical 150-350 person Wal-Mart, retail employment increases by an average of 137 jobs over the near-term and levels off to a 97-job increase over the long-term. It also leads to net job losses in food stores, and apparel and accessory stores, and net job gains in building materials and garden supply stores, and general merchandise stores. According to the study, while Wal-Mart does appear to displace other retail establishments in a county, it also serves to stimulate overall retail sector development."

Monday, November 7, 2005 in The New York Times

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