Sunday, December 18, 2005

 

Wal-Mart Economic Impact - Follow-up Post

Back in October, I mentioned that Wal-Mart was sponsoring a debate (of sorts) to determine its economic impact. Sorry about the lack of timely follow-up, but better late than never, right?

To no one's surprise, the report sponsored by WM was positive:

It released a study by Global Insight, a Boston-based economic research firm that Wal-Mart had commissioned to conduct a yearlong study addressing such issues as prices, jobs and wages.

Wal-Mart's study found that Wal-Mart has a largely positive effect on Americans' lives, and that its low prices give consumers more buying power by holding down prices throughout the economy. It also concluded that Wal-Mart jobs generally pay market-rate wages.

And this is certainly interesting:

Global Insight found that Wal-Mart's presence holds down prices of consumer goods in the U.S. by 3.1 percent.

But what about the company's wages and (purported) lack of benefits?

In California, where such fears led to a five-month grocery strike in 2003, a team of urban planners compared Wal-Mart's wages and benefits with those of union supermarket workers in the San Francisco Bay Area. They concluded that union workers received an hourly wage of $15.30, versus $9.60 for Wal-Mart workers. Adding in benefits, union workers earned an equivalent of $23.64 per hour, almost twice the $11.95 earned by Wal-Mart workers.

[SNIP]

Michael Hicks, an economist at the Air Force Institute of Technology in Ohio, tested that theory and found that for every new Wal-Mart store, roughly 16 Medicaid cases are added to that county's rolls. In a second study, he concludes that, on average, every new Wal-Mart worker costs a state an average of about $900 in new Medicaid costs.

I'm finding it hard to draw any meaningful conclusions from any of this, especially considering that the impact on Wal-Mart's suppliers is not taken into consideration.

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